Ecommerce is driving Digital India towards prosperity

Bittu Dutta is a talented, young individual from West Bengal’s Nadia district. He took over the business of making hand and powerloom cotton sarees from his father in 2013. Some six years later, a strong sense of purpose and a desire to grow the family’s legacy business led him to the vast potential of e-commerce. He explored selling via e-commerce, and there has been no looking back since. Today, he employs 25 weavers and knows he won’t be found wanting to cater to his customers, now spread across the country.

Bittu’s life is a story shared by millions who have embraced digital commerce since its advent in India some two decades back. Today, large e-commerce companies cover over 80% of pin codes in the country, making access to products easier for smaller towns, Morgan Stanley recently said in its report, ‘Why This is India’s Decade’. This has solved the much-needed solution of access for India’s aspiring classes. According to a joint study by Bain & Company and Flipkart, ‘How India Shops Online 2022’, three out of five shoppers today belong to tier-2 or smaller cities, while one in three belongs to low-to-middle income segments. And, as an ICRIER 2022 report titled ‘MSMEs Go Digital – Leveraging Technology to Sustain during the Covid-19 Crisis’ asserts, ecommerce has accelerated business, strengthened supply chains, and scaled jobs for MSMEs. The sheer impact e-commerce has had on people’s lives, across the seller ecosystem and customer ecosystem in the country is boundless and makes for a riveting narrative.

Social Impact

E-commerce has provided the perfect springboard to give wings to the people of the world’s fifth largest economy, which according to the International Monetary Fund, should be the third largest in five years. What’s heartening is that India’s small towns and cities are carrying the flag of this paradigm shift. According to the Bain-Flipkart study, there has been around 35% year-on-year growth in the online seller base, with nearly 40% of new sellers belonging to tier-2 and smaller cities.

Another study by IIM-A ‘Digital Retail Platforms and Consumer Emotions: An Indian Perspective’ survey’ found that consumers in tier 2 to tier 4 cities outperform their tier 1 counterparts when it comes to shopping online. On the whole, consumers visit ecommerce platforms as frequently as two to three days, demonstrating how deeply embedded e-retail has become in the lives of India.

It is important to note how e-commerce has provided women with new opportunities to start their businesses, allowing them to become self-employed and financially independent.

What this quiet revolution is also unleashing is a great social equalizer. As more women and other disadvantaged sections of society join the workforce – be it as an executive or in services like security, sorting, and packaging – they are able to contribute more meaningfully to their family income. This is not only improving their self-esteem but also earning them respect from their families and society, in the process also helping them have a greater say in the running of the household and education and important aspects of their children’s lives.

Boosting local economies

With more youths getting work closer to their native places, this is also likely to mitigate migration issues and therefore help reduce pressure on urban infrastructure while nudging the authorities

in tier-2 cities and beyond to beef up their roads, water, and power systems. Further, the establishment of warehouses and sortation centers, many in far-flung areas, has boosted local economies and created several ancillary opportunities for food suppliers, packers and movers, and local transportation services, thus also giving a leg up to residential and commercial real estate prices in those areas. It has upskilled the local talent in modern supply chains and integrated them into its flourishing retail ecosystems.

E-commerce platforms have also played a stellar role in onboarding micro, small and medium enterprises, kiranas, individual shop-owners, and small business entities and connecting them to the unlimited possibilities of e-commerce by mentoring and training them, facilitating easier credit and providing them with the right technology to improve their internal processes and improve their manufacturing and services. All this has set in motion a virtuous cycle where various market forces are feeding off each other, enabling a robust and fast-growing e-commerce ecosystem.

Touching Lives

A key feature of the growth of e-commerce in India has been the players’ focus on problem-solving and addressing consumers’ pain points - offering a wide assortment of products and enabling their easy discovery on the platform, quick deliveries, online payments, hassle-free returns, and so on. Unarguably, the experience of a consumer today on any of those parameters is pleasant and positive. As e-commerce has grown, there has been a demand for interfaces in multiple regional languages, to which all platforms have responded well. Consequently, this has helped them establish and nurture trust with people from various states, small towns and villages, and the hinterland, as folks are most comfortable with and appreciate interacting in their native language or one they are most familiar with. Such initiatives, borne out of study of consumer behavior, shopping patterns and feedback, have propelled the Indian e-retail market to the top of the league, with the Bain-Flipkart study projecting it to have the world’s second-largest shopper base in one-two years.

According to the Morgan Stanley report, the Indian retail market has a $1.1 trillion incremental opportunity in 10 years, while e-commerce penetration could nearly double to 12.3% by 2031 from 6.5%. As the report points out, while large horizontal e-commerce platforms have brought over 1 million sellers onto their platforms, a shift accelerated by Covid, the penetration of small, medium and micro businesses that have gone digital for commerce is still only 1.6%. The scope remains immense. Similarly, the Bain-Flipkart report estimates India’s e-retail market to increase to $150 billion–$170 billion by 2027. This implies a 25%–30% annual growth and a doubling of market penetration to 9%–10% over the next five years. As the e-commerce juggernaut rolls on, it is now touching people’s lives more intimately. As Morgan Stanley says, the digital revolution has already changed the way India handles documents, invests, and makes payments, and it is also set to alter the way India lends, spends, and insures.

India is now in a purple patch. Our steps to stay on course will be crucial to ensure we empower society and the economy with a reliable and sustainable sector.

Author: Rajneesh Kumar, SVP & Chief Corporate Affairs Officer, Flipkart Group (Views are personal)