E-commerce Sector

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With a CAGR of 21.5%, the Indian e-commerce market is seeing the highest growth worldwide. By 2030, the industry is anticipated to grow to 350 billion US dollars.

A variety of causes, such as the following, are fuelling the expansion of the e-commerce industry: the country of India's growing smartphone and internet use.

The middle class amid India's rising wealth. The backing of the government for e-commerce through projects like the Digital India programme.

The gross merchandise value (GMV) of the Indian e-commerce sector was more than $55 billion in 2021. The typical Indian internet buyer makes monthly purchases of $150. The three most popular online shopping categories in India are groceries, electronics, and clothing.

The major segments of the e-commerce market in India are:

Retail (including apparel, electronics, and grocery)

Travel and tourism

Education

Healthcare

Food delivery

The major players in the Indian e-commerce market are:

Amazon India

Flipkart

Myntra

Snapdeal

Paytm Mall

Key Facts

sector size: By 2030, it is projected that the Indian e-commerce sector would have grown to US$350 billion from its value of $55 billion in 2021.

CAGR: The Indian e-commerce market is expanding at a rate of 21.5% CAGR.

In India, there are 180–190 million internet buyers.

The typical Indian internet consumer spends $150 USD every month.

Clothing, electronics, and groceries are the three most popular categories for online purchases in India.

Opportunities

Internet and smartphone use are both on the rise in India, where the percentage of internet users using smartphones is now at a record high. As a result, India's e-commerce sector is sizable and expanding.

Indian middle class becoming more wealthy: The Indian middle class is expanding quickly, which is increasing discretionary income. As a result, there is a growing demand for more expensive goods and services, which presents new business potential for online retailers.

Support from the government: The Indian government has put in place a variety of measures to encourage the expansion of e-commerce in India. The implementation of these measures, which include the introduction of the Goods and Services Tax (GST), has Internet and smartphone use on the rise in India, where the percentage of Internet users using smartphones is now at a record high. As a result, India's e-commerce sector is sizable and expanding.

Indian middle class becoming wealthier: The Indian middle class is expanding quickly, which is increasing discretionary income. As a result, there is a growing demand for more expensive goods and services, which presents new business potential for online retailers.

Challenges

Consumer mistrust: Indian shoppers continue to lack confidence in the safety and security of online transactions. Numerous issues, including the worry about fraud and the lack of transparency in the e-commerce process, are to blame for this.

High logistics costs: E-commerce businesses find it challenging to offer competitive rates due to India's high shipping costs. To expand their company, e-commerce enterprises must overcome this difficulty.

a small number of dominant players: A few major firms, like Amazon India and Flipkart, control the majority of the Indian e-commerce sector. Because of this, it is challenging for new competitors to compete in the market.

Regulatory obstacles: These include a number of regulatory challenges that can face the E-commerce sector like High taxes on sales and the restriction on Foreign investment.

Analysis

Revenue Growth: Over the past three years, India's e-commerce industry has seen a tremendous increase in revenue. Revenue increased significantly from 2021 to 2022 by 27.30%, and from 2022 to 2023 (anticipated), there will be an additional notable rise of 19.20%. This suggests a favourable trend in the business, and the Indian e-commerce market appears to be flourishing.

CAGR for revenue: For the three-year period (2021-2023), the compound annual growth rate (CAGR) for revenue is around 22.66%. This suggests that India's e-commerce industry has had a strong and steady development trajectory over this time.

Operating Profit: In India's e-commerce industry, operating profit has been rising in tandem with sales. An operational profit of 1.8 billion US dollars was recorded from 2021 to 2022, and it grew to an expected 2.4 billion US dollars in 2023. This demonstrates that the sector is successfully running its business and making more money over time.

As you can see, India's e-commerce market is expanding quickly, with revenue increasing at a CAGR of 21.5% over the past three years. Though at a slower rate than revenue, operational profit is also increasing. This is because e-commerce businesses must spend money on marketing and customer securing owing to the high expense of transportation.

Long-term View:

The e-commerce sector in India is expected to grow rapidly in the long term, with the market size reaching US$350 billion by 2030. The growth of the e-commerce sector will be driven by a number of factors, including the increasing penetration of the internet and smartphones, the growing affluence of the Indian middle class, and the government's support for e-commerce. The e-commerce sector in India is ripe for disruption, and there are a number of new startups that are challenging the dominance of established players. The future of e-commerce in India is very bright.

Analyst  -  Roshan Patel

info@smartinvestment.in
 

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