The biggest beneficiaries of the lockdown have been grocery businesses including Grofers, BigBasket and grocery arms of Flipkart and Amazon that suffered supply chain disruptions, product unavailability, delay in deliveries due to lack of delivery fleet and more.
How e-commerce has become an integral part of everyday life of Indian consumers can be gauged from the fact that the sector has recovered beyond pre-Covid level much before anyone would have expected. The monthly gross merchandise value (GMV) (annualised) of Amazon and Flipkart-led e-retail or e-tail sector, which stood at around $30 billion during January 2020, plunged to a paltry $3.5 billion in April following the nationwide lockdown enforced on March 25. However, contrary to the likely period of six months or above, e-retail has crossed the pre-Covid level to $36.5 billion – around 20 per cent jump – in June itself, according to the data sourced from a RedSeer analysis. The government had allowed e-commerce firms like Amazon and Flipkart, nearly six weeks after the beginning of lockdown, to deliver non-essential goods from May 4 onwards in green and orange zones.
“E-tailing is more than back than what we were seeing in January. There is a systematic shift in offline to online purchase. E-tailing penetration in India as part of overall retail was around 1.5 per cent in 2016. It took around three years to penetrate another 1.5 per cent by 2019 whereas in just six months this year we are seeing it at around 4.5 per cent. So the next 1.5 per cent was added in just six months. But this may not be permanent and we will see some churn here,” Abhishek Gupta, Senior Consultant, RedSeer Consulting told Financial Express Online.
- Amazon Kindle Paperwhite (11th gen), Kindle Paperwhite Signature Edition launched in India: Check price, availability and features here
- Amazon to hold its 2021 fall hardware event on September 28; new Echo devices expected
- Fire TV Stick 4K Max: Amazon adds a faster processor and Wi-Fi 6 support to its popular streaming stick
The share of online retail’s monthly GMV stood at 40 per cent of consumer internet sector’s around $75 billion monthly GMV (annualised) in January, which decline to 35 per cent of sector’s $10 billion GMV in April, and scaled back to 73 per cent in June 2020. However, the overall sector’s GMV was still short of 33 per cent of January figure and stood at around $50 billion in June.
“Most of the categories are above 120 per cent level of pre-Covid situation. It could have been even higher but categories like mobile, which is a very big part of e-tailing, is only about 10 per cent up. Fashion is also still struggling as people are not moving out much and hence aren’t spending on apparels. There was some uptick post lockdown but that was largely because of sale event run by ecommerce companies,” said Gupta.
Importantly, online retail was the only component in the consumer internet market that has been able to achieve the pre-Covid growth. Travel, which suffered a severe blow as customers pulled back on travel plans and consequently hotel bookings also took a hit, has not been able to recover. January monthly GMV (annualised) for travel sector stood at $21.8 billion but declined to scary $0.3 billion in April only to recover 5 per cent to around $2.5 per cent in June. “Some of the sectors like travel may not recover for the whole year,” RedSeer said in its analysis.
Other sectors such as foodtech, mobility, stay, edtech, lending, insurance, and wealth management have been able to recover back to around $11 billion (22 per cent share) from $23.3 billion (31 per cent) in January.
The shift in digital buying during and post lockdown is not because new users are joining the e-commerce bandwagon. It is mostly the existing users who are now using multiple services. “Customer who earlier only used Flipkart is now also ordering food online, getting medicine delivered via online channel, buying grocery as well etc. So use cases have increased,” said Gupta. The biggest beneficiaries due to the Covid lockdown have been grocery businesses including Grofers, BigBasket and grocery arms of Flipkart and Amazon that also suffered supply chain disruptions, product unavailability, delay in deliveries due to lack of delivery fleet and more.