D2C brands drive growth for e-tailers
- India’s online retail market is expected to grow at 32% with the potential to touch $225 billion
Internet-first or direct-to-consumer (D2C) brands are driving growth in India’s e-tailing space with a robust 45% compound annual growth rate and has the potential to reach $ 70 billion over the next few years, said a joint report by Unicommerce, an integrated software as a service platform for post-purchase experience management, and retail consultancy Wazir Advisors.
India’s online retail market is expected to grow at 32% with the potential to touch $225 billion, it said in the first edition of India’s Retail and E-commerce Trends Report for FY22.
D2C brands reported faster growth on their own websites at 80.4%, and a healthy 59.6% on e-commerce sites.
Sales growth on e-marketplaces was driven by beauty and personal care followed by fast-moving consumer goods, health and pharma segments. While beauty and personal care reported order volume growth of over 143% in FY22, FMCG and agriculture grew at 61.7%, and health and pharmaceuticals 62.4% over the last two years. Fashion and accessories reported order volume growth of 59.7% , while electronics and home appliances grew 34.7%, during the period.
India’s smaller cities were propelling online retail expansion, the report added. In the last two years, e-commerce growth was driven by consumers from tier II and tier III cities, with the young and aspirational purchasing across segments to transform India’s e-commerce landscape, it said.
Shoppers from tier II and III cities accounted for 61.3% of the market share in FY22, up from 53.8% in FY21. Order volumes from tier II and III cities grew at 92.2% and 85.2% from the year ago, respectively. In contrast, tier I cities grew at a slower pace at 47.2%. “In the last two years, India’s retail industry saw a remarkable evolution with wider technology adoption, readiness to try new platforms, and changing mindsets of brands,” said Kapil Makhija, chief executive, Unicommerce.
The report paints a holistic picture of consumers’ shopping behaviour in the last two years, which is expected to aid retail brands analyse business performance and plan future strategies accordingly, he said.
“We have seen retail bounce back from the severe impact of the pandemic. Overall retail sales are back at pre-covid levels with strong growth in the e-commerce industry. It will be interesting to see how the industry adapts to rising shoppers of tier-II and tier III cities and how it will impact traditional and organized retail,” Pakhi Saxena, practice head, retail and consumer packaged goods, Wazir Advisors, said.
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First Published:2 Aug 2022, 11:27 PM IST
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