Evolution of Online Shopping in India

December 9, 2020

One of the earliest use cases for the internet in India has been online shopping. It dates back to the '90s when an auction website called was introduced ito the public. 

In the year 2005, eBay took over, and in the following years, online shopping platforms such as Flipkart, Amazon, Snapdeal, ShopClues emerged. 

The emerging e-commerce market holds immense growth potential, and since the middle class is slowly beginning to make the most of the internet, it's likely that the market will see further growth in this area.

With Flipkart’s entry into the market in 2007, this marked a pivotal point in the growth trajectory for online shopping as a larger variety of household items became available for customers to order online. Even though they were still hesitant since online shopping was back then, relatively new and quite a lot different from conventional shopping, it could provide them with the ease of getting the items that they want right at their doorstep. 

In 2010, websites like Myntra and MakeMyTrip joined the bandwagon, and online shopping continued to grow further. Two years later, Amazon partnered with and entered the Indian market. 

 The Indian market had a massive user base of approximately 475 million users in the year 2019. This user base makes up about forty percent of the entire population of India. Currently, Flipkart and Amazon are the two platforms that dominate the market. 

Why the growth has been slow-paced:

A drawback of online shopping is that rural areas don't have access to internet facilities, so people belonging to these areas aren't able to make the most of this service. With at least 60% of the population still living in rural areas, it stands to reason that slower and inconsistent access to the internet for rural dwellers is why online shopping has had very slow-paced and inconsistent growth in India. 

Another reason why online shopping has remained on a less steep growth trajectory is that consumers are used to getting a feel of the product physically, which isn't possible with online shopping. This may be a reason why 'Cash On Delivery' is a preferable choice for Indians. 

According to TranslateMedia, COD makes up about 75% of online purchases. For consumers who are new to online shopping platforms, it is a mode that they trust, and since they can check the product upon arrival, it may be less problematic for them. Websites that offer COD as a mode of payment can accumulate more customers than those who don't. It can also garner consumer trust.

Online Shopping And Its Impact On Offline Platforms

In the past couple of years, online shopping platforms like Flipkart, Amazon, etc., have impacted the shares of offline platforms. As a result, stores have decided to dive into the online marketplace to allow buyers to buy online and offline. According to Jefferies, websites initially used discounts and deals to lure customers into shopping online, but current trends show that online shopping has become more of a convenience-driven habit. 

Flipkart's co-founder, Sachin Bansal, said that the e-commerce market would increase and reach 50-70 Billion dollars by 2020. Currently, fashion, footwear, books, video games, music, and movies are categories that see the most amount of purchases online, followed by electronics. In contrast, the home decor and furnishing category is one that sees a minimal amount of purchases. 

The rising consumer class and the growing internet access have given e-commerce the push that it needed, paving the way for a new realm through which companies can offer their services and products. A report found that online shopping continues to grow even though it has a small base. Upon observing consumer behavior, it was found that trends have been changing somewhat quickly, and there have been noteworthy jumps in the number of people using e-commerce channels. 

Now that the Indian government has been trying to introduce the internet to remote areas and smartphones are available at lower prices, consumers are rapidly turning to online shopping. The middle class is now financially capable of affording basic necessities, and shopping platforms such as Amazon provide them with a fast and efficient way to order their groceries online. 

With so many payment gateways offering one-touch payment options in addition to attractive cashback, deals, and discounts, consumers are more open to making payments online. However, a chunk of the Indian audience may still be reluctant to switch to non-cash payment modes.

Another interesting aspect of online shopping is how one can track their orders with a click. With super fast logistic services, brands can easily send their products to consumers in any part of the country. They even provide tracking information, which allows the consumer to keep an eye on their package. 

Send more than money.