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3 Trends Shaping the Indian E-Commerce Landscape

Last updated: 07-02-2019

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3 Trends Shaping the Indian E-Commerce Landscape

Indian e-commerce has become one of the most dynamic sectors in recent years, with sales poised to reach US $71.94 billion by 2022—more than double that of 2018, eMarketer estimates. Fueling this expansion are big-name players, including Flipkart, Amazon, and Paytm Mall, and a growing base of Internet and mobile shoppers.

Despite this strong growth, retail e-commerce accounted for just 2.9% of India’s total retail sales in 2018, according to eMarketer. The recent need for changes inforeign direct investment policy underline the growing influence this sector exerts on consumer behaviour.  

Here is my take on the leading digital trends seen across the e-commerce sector that are set to power growth in the years to come.

1.  Traffic Mix And Engagement Indian e-commerce companies have primarily focused on increasing traffic to their domains to grow sales and revenue. Although this is largely true for any business in any country, it makes a lot of sense for e-commerce in India, where only a quarter of the population shops online.

In 2018, roughly 80% of the traffic to Indian e-commerce websites was a combination of direct traffic (42.3%) and referral traffic from search (36.4%), with social media making up 9.3% and other sources covering the rest, according to an internal study by Adobe’s Digital Strategy Group.

Mobile phones emerged as the greatest source of website traffic last year, comprising close to 75% of total visits, the study showed. Brands leveraged deep user engagement and retention on apps for growth, with Indian shoppers spending between 2.5 minutes to 3.5 minutes on average per session.

My take: These trends signal a shift in the value of owned media versus paid media and, more importantly, the importance of driving sustained business growth through a great digital experience.

2. Shifting Product Discovery Patterns Another growing trend is a change in how consumers discover products. But with massive adoption of big e-commerce portals such as Flipkart and Amazon, and niche retail category portals such as Myntra (fashion) or Nykaa (cosmetics and beauty), product discovery patterns are shifting quickly. These days consumers often start their product purchase cycle directly at the e-commerce portal of their choice.

This consumer behaviour is also reflected in advertising analytics. Not only do Amazon’s headline search ads get more clicks, they also have a higher conversion rate than Google’s ads. In fact, both Amazon’s search ads and sponsored product ads convert at a rate nearly 3.5 times that of Google’s product listing ads.

My take: The stark difference in conversions is probably due to the nature of the two platforms: people go to Amazon intending to buy; they go to Google intending to do research. 

3. Vernacular Content And Voice Searches As more and more Indian smartphone users gain access to low-cost Internet, there is a greater demand for content in local languages. Google’s latest “Year in Search Report: India” found that 63% of searches related to apparel came from India’s top eight cities, while the non-metros are mainly responsible for driving the growth in search queries, with year-on-year growth at 75%. It is projected that by 2020, more than 50% of the total online consumer base will come from outside the big cities. 

Also of note, Indian consumers have enthusiastically adopted voice search. Twenty-eight percent of all search queries are now done through voice, with voice searches in Hindi growing at a whopping 400% year-on-year growth. This underscores the massive opportunity to engage regional audiences through vernacular content.

One in three fashion-related queries is research-based—that is, “How to …?” or “What are …?” With huge demand for content, many e-commerce players are trying to capitalize on this opportunity. For instance, Amazon has come up with a Hindi version of its app, while retail giant Paytm Mall’s app is available in 10 regional languages. Similarly, Google’s merchant center is available in Hindi, while the Gboard (Google keyboard) is available in 33 Indian languages.

My take: Vernacular content and voice as a medium are going to play important roles in the growth story of Indian e-commerce if the industry is going to reach $200 billion in sales by 2027, as is predicted by Morgan Stanley.

Note: Varun Kapoor will cover more trends shaping e-commerce and digital transformation during the CMO Masterclass at Adobe Symposium 2019 in Mumbai.  


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