Covid has triggered a long-lasting Indian e-commerce boom


India’s e-commerce industry is set to skyrocket due to the current Covid-19 situation, estimated to record 141 per cent growth through 2025, according to GlobalData. 

The data and analytics company predicts the online retailing sector in India will increase from US$46.2 billion last year to US$111.4 billion in 2025. 

The prediction is based on consumer behaviour during the pandemic which saw a significant surge in demand for online shopping. In GlobalData’s Q1 survey in India, a majority of consumers said that they are still concerned about the impact of Covid-19 pandemic. Online shopping is preferred as it is safer and more convenient. 

Despite the growth of the e-commerce sector, India’s retail industry is facing several challenges resulting from the second wave of Covid-19. As in April, the country’s unemployment rate in retail increased 8 per cent, causing 3.4 million people to lose their jobs. 

“The heightened inflation rate along with an equally high unemployment rate is weakening consumer sentiment and affecting their purchasing power,” said Suresh Sunkara, retail analyst at GlobalData. 

“High fixed expenditures and the absence of seasonal inflow of cash are threatening the existence of retailers.” 

According to Sunkara, with customers fearing contracting the airborne virus, retail stores and malls continue to witness a precarious drop in physical footfall, therefore more retailers are contemplating layoffs and downsizing.

“The most resilient ones surviving this crisis are the omnichannel retailers,” Sunkara said. “As a result, retailers with such an approach have better chances of survival due to the convenience and experience that they offer.” 

Nevertheless, the long-term outlook for the Indian retail industry looks optimistic, supported by rising income, favorable demographics, the entry of foreign players and increasing urbanisation.

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