Unicommerce, India‘s leading e-commerce-focused SaaS platform, today released an impact report on the e-commerce industry, which throws light on the performance across verticals and key trends shaping the sector.
The report extensively covers trends related to e-commerce growth, region-wise consumer demand, return orders, and D2C trends and how it affects the industry in the post-COVID-19 world.
The report titled ‘E-commerce Trends Report 2020’ focuses on the growth of e-commerce in India along with detailing out changing consumer behavior and the industry response to address the newly emerging e-commerce trends.
First, of its kind, the report also throws light on the D2C approach and omnichannel solutions adopted by the e-commerce players, which will significantly shape the supply chain ecosystem in India, and impact the industry in the long run.
Additionally, the report also touches upon the initial e-commerce recovery across different segments as we prepare to enter the post-COVID-19 world and comprehends its impact on different aspects of the e-commerce ecosystem like returns, shipping, developing brand websites and technology adoption.
Highlights of the report:
E-commerce in the post-COVID-19:
- After the lockdown was announced, the problem of limited availability and fear of getting infected created a new shift in consumer behavior and their buying patterns leading to a new wave of online consumers.
- The overall e-commerce has not just recovered but witnessed an order-volume growth of 17% as of June 2020. Consumer buying patterns and preferences have changed significantly, with categories like health & pharmacy and FMCG & agriculture seeing a surge and exponential growth, with the rising number of first-time online shoppers.
- After e-commerce resumed operations post COVID-19, the return rate has seen a dip of ~10-30% depending on the category. The reduced return can be attributed to the new safety norms, increasing demand for essential products, which are generally non-returnable.
- However, it will be interesting to see if the trend of lower returns continues in the long term. There is an increasing trend of consumers buying directly from brands’ websites. Retail brands are now strengthening their online capabilities and opting for different approaches to connect with consumers.
- In the last one year, there has been a considerable growth of 65% for brands developing their website, which led to an increase in self-shipped orders. However, the percentage of self-shipped orders declined from 35% in February 2020 to 30% in June 2020.
- The decline in self-shipped orders can be attributed to brands trusting marketplace logistics due to better service levels and lower unpredictability during current uncertain times.
Brands going direct to consumers:
- As the e-commerce ecosystem matures in India, there is an increasing trend of brands going directly to consumers to offer a great experience to their patrons. While the brands have created their website, the brands continue to sell on the marketplace as it still drives the majority of the order volume.
- The number of consumers shopping directly from the brand’s website is increasing at a much faster pace than marketplaces. Brand websites have witnessed 88% order volume growth as compared to 32% order volume growth on marketplaces.
- The top 3 segments that have seen an increasing penetration of D2C brands are Beauty & Wellness, Fashion & Accessories, and FMCG & Agricultural sectors.
In the last one year, there has been a considerable growth of 65% for brands developing their website, which has also led to an increase in self-shipped orders
India’s e-commerce annual growth pre- COVID:
- India’s e-commerce sector has been on constant growth, the e-commerce order volume saw a growth of 20% while the GMV witnessed a surge of 23% with an average order size of INR 1100.
- Beauty & wellness is one sector that has witnessed an unprecedented order volume growth of 130% followed by FMCG & agriculture and health & pharma with a growth of 55% and 38% respectively.
- These are emerging sectors with the potential to accelerate e-commerce growth in India.
Rising demand from the hinterland of India:
- All leading e-commerce companies are focusing on cities beyond the metropolitan cities. Currently, Tier II and beyond cities contribute around 66% of the total online consumer demand in India and this share is expected to rise in the coming years.
- Tier III and beyond cities witnessed 53% growth, making it the fastest-growing region. It’s also observed that the top 5 cities of Tier III contribute only 22% of the overall Tier III order volume, however, in the metro’s top 5 cities constitute 90% of the overall order volume.
- The top 3 states, by e-commerce volume, are Delhi, NCR, Maharashtra, and Karnataka, and they constitute 65% of overall consumer demand.
Return orders on the decline:
- Managing return is an integral part of running an eCommerce business. The total percentage of returns (as a percentage of forwarding dispatches) saw a decline of 13% as compared to last year and it constitutes 17% of the overall order volume as compared to ~20% in the previous year.
- E-commerce companies have invested extensively to reduce COD returns as they constitute a large part of overall returns.
- The return percentage on COD orders has reduced from 27% in 2019 to 20% in 2020 and for prepaid orders, the total return has decreased from 12% in 2019 to 11% in 2020. Even after such a remarkable reduction in COD returns, it’s still almost 2X returns on prepaid orders.
- Another interesting trend observed is Tier II and beyond, which has seen a significant reduction of 23% in overall returns. This change can be attributed to increased technology adoption, improved last-mile delivery, and customer-centric return policies
Commenting on the report’s release, Kapil Makhija, CEO, Unicommerce said, “As the world is grappling with the effects of COVID-19, the eCommerce industry in India has seen a major boost since the beginning of this year.
With this report, we wanted to throw light on the enormous growth opportunity that lies in the eCommerce industry in India. With changing consumer buying patterns and preferences, the rise of new first time online users, increased focus on digitization by retailers, brands opting for D2C models, etc., we are confident the eCommerce industry will emerge as the most promising market across the globe with tremendous growth potential in the future.
We at Unicommerce are committed to simplifying e-commerce selling and this report is a vital step in the same direction. Through this report, we aim to decode the changing consumer patterns, and provide detailed insights on delivery and returns so that it can help the brands and e-tailers plan their e-commerce strategy much more comprehensively.”
With e-commerce at its all-time high, Unicommerce is uniquely positioned to provide e-commerce supply chain technology cloud solutions to help industry players of all sizes to manage their business efficiently. Established eight years ago, Unicommerce is a market leader processing over 20% of India’s e-commerce volume in the country and works with leading online players across segments.
The company processes 700k+ order items per day, amounting to US$ 2.5 Bn+ GMV for over 10,000 registered customers across India, Middle East, and Southeast Asia.
