India's e-commerce sector sees big growth in 2021

India's online retail sector failed to match the growth of ecommerce in mature and far larger markets such as the United States and China this year, despite recovering quickly after the nationwide lockdown and the most successful festive sales period ever.

Ecommerce sales are estimated to have risen by only 7-8% in 2020, compared to almost 20% in China and the United States, whose governments made full use of contactless buying options to prop up the economy even while enforcing shutdowns to battle the Covid-19 outbreak, according to Forrester Research.

“We were not lucky like other countries. Growth of ecommerce was less than 10% because we lost a lot of momentum during those three months (of the lockdown) and the companies were not ready to deliver essential goods,” said Satish Meena, senior forecast analyst at Forrester Research.


The overall ecommerce industry’s gross sales are estimated at about $33 billion for the calendar year, he said.

The sector saw big upsides from new online shoppers, existing shoppers buying more food and grocery, and mature shoppers moving more of their spending to online platforms.

Even so, it was not enough for the industry to post mid-to-high 20s growth, as in the last two years.

Depressed consumer spending, an economic slowdown and uncertainty also kept the industry from growing at a faster clip this year.

However, all large players, including Amazon and Flipkart, are expecting strong sales growth in 2021.

“We are expecting growth to come back to normal next year. It might be slightly higher too,” said a senior executive at a leading ecommerce firm, who did not wish to be named as the company does not officially share any guidance. “The number of new shoppers and the categories they are shopping for is certainly a positive.”

The overall economy may still lag till a Covid-19 vaccine is widely available, but several industry experts and executives told ET that ecommerce will continue to grow as consumers, happy with the convenience and discounts of online shopping, will come back.

Online grocery, e-pharmacy and social commerce are the segments that are expected to see a bulk of the action in 2021.

While the entry of Reliance Industries in the online grocery market with Jio Mart has already sparked a rush, consolidation in the e-pharmacy market is also expected to drive competition.

“I think consolidation will continue, both because of offline players looking to get online and also digital players looking to increase their serviceability and bulk up in size,” said Ankur Pahwa, Partner at EY.

Super apps – mobile applications that offer various services within a single app – will pick up in 2021, he said.

For instance, China’s WeChat started off as an instant messaging app, but quickly added payments, ecommerce, food ordering, cab hailing and several other such services to become a super app.

The move to build super apps has already started with many players getting into the game, Pahwa said.

Instant messaging platform WhatsApp, which has enabled payments and also some ecommerce features like a product cart, is starting the journey towards being a credible super app.

Investments in segments such as online grocery and social commerce will maintain their momentum in 2021, experts said.

“Investments will remain strong in live streaming, social commerce, group buying and other similar areas,” said Meena. “Investors are no longer going to invest in a replica of Amazon in India, but will if someone is trying a different model of selling.”

The growth in ecommerce will also drive allied industries such as logistics, supply chain, agri-tech and omnichannel sales solutions, which have already received higher investments in 2020.

(Illustration and graphics by Rahul Awasthi)