E-commerce is impacting Indian jobs and consumer welfare

A recent report of Pahle India Foundation (PIF) in collaboration with People Research on India’s Consumer Economy (PRICE) offers insights into these effects, based on a survey of consumers, online sellers and traditional offline retailers across urban India.

The survey, conducted across 35 cities in 21 states and Union territories, included over 12,000 participants—8,209 online consumers, 2,031 offline sellers and 2,062 online sellers.

Also read: Dark horse rising in online clash for festive season supremacy

One key revelation is the widespread adoption of e-commerce in urban areas. Over 90% of respondents spend more than one hour online each week, with 40% spending over 10 hours.

This engagement drives e-commerce activity, with 85% of users shopping online weekly. Additionally, 67% of respondents reported making purchases on e-commerce platforms within the last 30 days, highlighting a growing dependence on online shopping for daily needs.

These platforms meet a broad range of consumer needs, from electronics to daily essentials, delivered with the convenience that defines online shopping.

In terms of payment preferences, the study shows that ‘cash on delivery’ (COD) remains the most popular method, used by 90% of respondents, followed by UPI at 81%. While other digital methods like credit and debit cards are available, they account for less than 10% of preferred payment options.

Also read: Despair in kiranas as quick commerce roars ahead

This reliance on COD and UPI reflects ongoing trust issues with other forms of digital transactions, suggesting a need for efforts to build confidence in such payments.

The study also assesses the broader impact of e-commerce on consumer welfare, focusing on six metrics: convenience, competition, consumer confidence, access and inclusion, cost-effectiveness and grievance redressal.

Convenience emerged as the most significant driver of consumer welfare, allowing consumers to shop easily from home.

Competition, offering consumers more choices and increased consumer confidence are also positive factors. However, cost-effectiveness and grievance redressal scored lower, indicating that consumers still face challenges in resolving issues and finding the best prices.

While e-commerce growth has benefited consumers, it has posed significant challenges for traditional offline retailers. Only 10% of offline sellers have listed their products on e-commerce platforms, with Flipkart, Amazon and Meesho being the most common.

The low adoption rate highlights barriers faced by small, traditional retailers in moving online, such as technological challenges, lack of digital literacy and concerns over increased costs and competition.

The survey found that 27% of offline sellers who had previously listed their products online eventually withdrew, citing these challenges.

Despite these hurdles, there is growing acceptance of digital payment methods among offline sellers, with 54% using point-of-sale (POS) systems. However, a significant portion—30%—still do not use digital technologies, potentially putting them at a disadvantage.

This resistance underscores the need for policies that make digital tools more accessible and user-friendly for small businesses.

In terms of employment, the e-commerce sector has seen a marked increase in job opportunities. The survey shows a 42% net increase in management roles among online sellers, reflecting the growing complexity of e-commerce operations.

Other roles, including marketing, sales and customer support, have also seen significant growth, all critical for maintaining competitiveness in the digital marketplace. However, this growth has led to a churn in the workforce, with traditional roles being replaced by tech-driven positions, underscoring the need for reskilling.

Also read: Zomato: fast delivery, faster investor reward

The survey also found that online sellers are increasingly adopting digital technologies to improve their operations. About 58% use digital marketing tools, while 54% employ retail operations management software.

This has contributed to higher sales and profitability, with 50% of sellers reporting a rise in sales and 42% noting an increase in profits due to their adoption of digital tools.

The findings of this study carry important policy implications. The gap in digital adoption between online and offline sellers suggests the need for government intervention to support traditional retailers.

Policies that promote digital adoption through subsidized training programmes and improved access to digital infrastructure could help bridge this divide.

Financial incentives to encourage small retailers to list their products on e-commerce platforms could also enhance their participation in the digital economy.

Addressing trust issues with digital payments is critical. Strengthening consumer protection laws, especially for digital transactions, and launching awareness campaigns on the safety of online payments could reduce reliance on COD and foster greater trust in non-UPI digital transactions.

To sustain the positive employment impact of e-commerce, addressing the skills gap is essential. Investing in vocational training programmes focused on digital skills, such as social media management and data analysis, could help workers adapt to the evolving job market.

Also, improving infrastructure for logistics and delivery services will be crucial as e-commerce continues to grow.

While e-commerce offers significant opportunities for growth and innovation, it also presents challenges, particularly for traditional offline retailers. The findings highlight the need for targeted support and policy interventions to ensure that the benefits of e-commerce are widely shared across the economy.

As e-commerce expands, addressing these challenges will be key to ensuring that the digital revolution benefits all sections of society.

The author is managing director and chief executive officer of People Research on India’s Consumer Economy.