By Praveen Nijhara
If there was one trend worth talking about in India, it would be consumption. It was the truth for the past decade and will remain so for the next two decades. This is consumption maha a trend that will define India in the future as its economy grows and its markets continue to open up more to the world.
About 5 years ago, Reliance launched Jio. It has shaken up the telecom market by offering the lowest data rates in India. This led to an explosion in data consumption and was the tipping point for every Indian in remote India to have internet access. So you can think of the Indian e-commerce boom as before and after the Jio era. The rise in digital literacy has converted many mom-and-pop shoppers to online shoppers. People are now buying electronic devices like televisions, refrigerators, air conditioners, household groceries and even medicines and pharmaceuticals on e-commerce.
Venture capitalists (VCs) have backed this consumption model with big investments and the tap has just been turned on. Indian e-commerce projections of reaching over $100 billion by 2025 to $350 billion by 2030 are no longer considered a pipe dream. India’s e-commerce, with a CAGR of nearly 20%, has put all global manufacturers and e-commerce brands on high alert. Hence, you have an Amazon that is determined to win over the Indian consumer at all costs.
So what will drive Indian e-commerce in the future?
1. Direct to Consumer (DTC)
India has seen an explosion of DTC e-commerce in 2021, 2022 will be no different. Many will target product niches that have not been addressed by major e-commerce brands. Many categories such as pet grooming, eyewear, pharmacy, telemedicine, which relied on traditional delivery models and therefore had barriers to entry, have now been disrupted thanks to DTC. Social DTC has become a possibility that has driven e-commerce to act as a catalyst for growth in small towns and industry. In fact, a place like Uttarakhand will be seen as a hub for health and lifestyle focused DTC in the coming years.
2. Adding value and personalization
Until now, e-commerce was more about discounts. Turnaround i.e. sourcing products and their white labeling has also seen great momentum and is fueling much of the DTC segment. What we will now see is the next wave of e-commerce where retailers will be looking to create highly customizable products. While Lenskart has made this possible in eyewear, there are people like Toesmith trying something similar in shoes.
3. ESG (Environment, Social & Governance) in e-commerce
Customers are keen to engage with socially responsible brands. What we see is that the customer becomes better informed and makes responsible decisions that correspond to his philosophy. As we go on, we will see more; brands and e-commerce platforms will be forced to be more environmentally friendly and sustainable. The world is witnessing a major shift in the way business is conducted and how brands behave in public. Expect a full-scale slump throughout the year and brands doing better. The future trend will be e-commerce, synonymous with “responsible social consumption”. Perhaps e-commerce platforms and brands will hire audit firms and the above will be part of their balance sheets.
4. Immersive Technology
E-commerce has already seen a wave. You can point a wall on your smartphone and paint it in the shade you want, place furniture in a room to see what it would look like in real time, take an augmented reality tour of the apartment example you want buy sitting at home during the Covid Lockdown. It’s all here and it’s here to stay. The more it will only get better. In fact, experiential e-commerce will be the flavor of the year and 2022 will be ripe with experiences on this front. Expect DTC brands to be very innovative in this space as they seek to differentiate themselves from the big players.
5. Giving a voice to Bharat
The one area that every e-commerce player is passionate about is voice. We are a multilingual population; we can speak english but prefer to think in our mother tongue. 75% of searches on Google occur in native Indian languages, and 2021 has seen a 270% growth in voice searches.
As we continue to battle another wave of the pandemic, Indian e-commerce will continue to thrive. The investments are enormous; new players are on the horizon and innovative breakthroughs are expected. A billion Indian consumers for e-commerce was born a few years ago. They started taking their first steps in 2020. This year, we can expect to see them grow from toddler to teenager with a distinctive voice and choice.
(Author Praveen Nijhara is the Managing Director of Hansa Research Group. Opinions expressed are personal.)