E-Com Apocalypse & Recovery. What’s Changed?

Part III

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Has the Corona Virus led to higher e-commerce adoption in India? Are a greater number of people across cities prefer to purchase products online?

Internet pundits have been claiming that there is now widespread adoption of online shopping as a result of the lockdowns. However, his is a questionable claim.

It’s true that e-commerce adoption has grown but it seems that this growth has had little to do with Covid — at least in the short term.

Table 1: Percentage of Internet Users who Shop online relative to internet population of that City Tier

Table 2: Percentage of Internet Users who shop online relative to internet population of that City Tier

Table 3: Change in Percentage of Internet Users who shop online relative to internet population of that City Tier

Ostensibly, the increase in e-commerce usage was already taking place –COVID19, only created a stumbling block for consumer adoption.

Sales of Electronics, Mobile, and Furniture products are yet to recover (furniture sales in Tier 1 cities have just about to reach 2019 levels). But sales of Fashion (lifestyle), General Merchandise, Home & (surprisingly) large appliances have recovered.

The Adoption of digital is certainly increasing, we know that from the increase in consumption of news, OTT, and entertainment products but the ride ahead may not be so smooth for e-commerce companies. Consumption has so far seen a recovery (as we showed you here) but its too early to call it a secular trend.

Also, online sales are not a reflection of the real economy since much of India still exists in the informal sector and their consumption doesn’t reflect here. A significant portion of online shopping may be pent up demand from previous quarters, so the next few quarters are critical.

We’ll keep you posted.

Thanks for your time,
- Aman
KalaGato.co