E-commerce Market in India 2023 - 2028

E-commerce Market in India 2023 - 2028

Electronic commerce, commonly known as e-commerce, serves as a business model facilitating commercial transactions via electronic networks, predominantly over the Internet. In India, e-commerce encompasses all four primary market segments: business to business (B2B), business to consumer (B2C), consumer to consumer (C2C), and consumer to business (C2B). E-commerce empowers businesses to establish a digital market presence, offering an economical and efficient distribution channel for their products and services.

Market Insights:

In 2022, the Indian e-commerce market achieved a valuation of INR 8,876.33 billion. Projections indicate that by the conclusion of 2028, it is poised to surge to INR 50,015 billion, demonstrating substantial growth at a robust compound annual growth rate (CAGR) of approximately 31.46% over the period spanning 2023 to 2028. E-commerce enterprises are progressively directing their focus towards the largely untapped potential in tier II, tier III cities, and rural regions to broaden their market presence. Significant transformations in consumer purchasing behavior, notably in categories such as health and pharmaceuticals, groceries, and food deliveries, have been observed.

Market drivers:

The growth of the e-commerce market in India has been facilitated by the presence of reasonably priced hardware, including laptops, notebooks, desktop PCs, and smart handheld devices, as well as the widespread adoption of the internet. With the rising levels of foreign direct investment (FDI) in the Indian e-commerce sector, domestic companies will have the opportunity to expand their e-commerce operations. Furthermore, the rapidly expanding middle-class population and increased income mobility will play a significant role in propelling growth within the e-commerce industry. The convenience of transactions and the availability of diverse payment methods are pivotal factors that influence the trajectory of the e-commerce market's development in India.

Market challenges:

In India, the rural population remains largely unaware of the internet's existence and its various applications. New entrants in the market face significant challenges due to the dominance of well-established players with global reach and substantial financial resources, including Amazon India, Flipkart, Snapdeal, and Info Edge India. These major players encounter difficulties related to aspects like delivery logistics, customizing product offerings, ensuring cybersecurity, and managing payment processes. Additionally, the on-ground uncertainties associated with the unreliable cash-on-delivery (COD) mode have adversely affected the profitability of e-commerce companies.