Online retail in Indian garners $60B GMV in FY23; Flipkart Group maintains market share: Redseer

E-tailing in India is gaining popularity. This is with respect to increased proliferation of smartphones and the internet. Online retailer’s highly relevant and affordable supply along with standardized experience on the platforms, make eCommerce attractive to shoppers.

D2C brand growth has also spurred traditional players to take the digital route offering a competitive shopping experience and encouraging consumers to shop online.

According to Mrigank Gutgutia, partner, Redseer, “The e-tailing market in India has been slowing since the pandemic to grow GMV at 22 percent in FY23 to reach $60 billion.”

He further adds, “Despite losing momentum, e-tailing today is 2.5x of pre-covid levels and is performing much better than overall retail consumption, which has been tepid in the recent quarters due to inflation concerns.”

Over the last three years, new users who are willing to try eCommerce throughout the country have increased, and non-metro users account for a large share of the total user base in FY23.

However, the growth pattern in FY23 (and likely going forward as well) is different wherein the ‘regular shoppers’ i.e. the monthly user base is now larger than ever before.

Monthly shopper base (MTU) which stood at ~65 Mn in FY23 is now 31 percent of the annual e-tailing shopper base – the same metric which was just 23 percent in pre-pandemic era.

This goes to show that e-tailing user base is maturing and customers now shop online more frequently across a range of categories.

In contrast to the pre-covid levels e-tailing market has grown deeper across categories, with more users making purchases online. Although mobile phones dominated the category divide in FY19, fashion is now the single largest category with 27 percent share whereas BPC, grocery and home categories are the fastest growing.

Gutgutia adds, “Strategic partnerships of e-commerce platforms with global and Indian brands along with a change in shopper mix and an increasing share of women shoppers has resulted in an explosion of fashion sales.”

With 1.2x better take rates, the revenue from product sales across India e-tailing has grown 3x from $2 Bn in FY 2019 to $6 Bn in FY 23.

Advertisement revenue has been another facet of e-tailing that has also experienced a steep growth, with ad monetisation generating more than $1.2 billion in FY23.

Increasing MTUs has widened the reach of e-commerce platforms, making them attractive for brands. 1P customer data enables better ad placements for advertisers and shows the product to high-intent customers leading to higher conversion rates.

The report mentions, “Flipkart Group has been resilient in terms of market share in the last few years despite growing competition - and is especially growing much faster than industry in recent quarters.”

The ecommerce giant’s group market share stood steady at 48 percent in FY23 and has resiliently withstood competition from other incumbents owing to a large selection, varied affordability constructs and strong understanding of needs of the vast e-tailing shopper base in India including those from T2+ cities.

“Ad revenue is growing significantly faster than the overall digital ads market reaching a 15 percent share of the digital ads market in FY23. Global platforms have more than three percent of fulfilled GMV coming from ads business, and the Indian market can grow much further,” the report concludes.