The e-commerce market in India is growing leaps and bounds and will continue to see exciting developments in the years to come as the post-pandemic market conditions look significantly promising. A recent report by global financial technology company FIS projected the country’s e-commerce market to grow by 84% to $111 billion by 2024 from about $60 billion in 2020.
FIS’ Global Payments Report that examined current and future payment trends across 41 countries found that mobile shoppers and this category is projected to grow 21% annually over the next four years. The report noted that countries, including India, have seen a shift in consumer behavior caused by COVID-19, and new payment trends are shown to be on the rise.
Experts have already seen an accelerated adoption of digital technologies amid the COVID-19 pandemic. There’s also a huge growth potential amid the emergence of new categories, business models, and companies.
The signs of development are also clearly visible on the wall. Unlike the pre-pandemic era, it is no longer a fight between Walmart-owned Flipkart and Amazon. Rather direct-to-consumer (D2C) brands and social commerce are finding favor with consumers, paving the way for more experiments in the sector with the entry of even newer participants.
From Reliance and Tata to Amazon and Paytm, companies with any presence in India’s tech or financial services ecosystem are making a beeline to set up new umbrella entities for payment systems. For the players planning to establish New Umbrella Entities (NUEs) with the aim is to get an even bigger share in the digital payments sector.
The pandemic has undoutedly created a tectonic shift in the entire digital payment ecosystem. Coming to payment methods, digital wallets (40%) followed by credit card and debit card (15% each) were the most popular online payment methods in 2020. Also, purchases made with digital wallets are expected to increase their market share of online payments by 2024 to 47%. The ‘Buy Now, Pay Later’ emerged as the fastest growing online payment method in India. While it is only 3% of the market currently, it is projected to increase to 9% by 2024 based on the analysis in the report.
“The Indian e-commerce industry has witnessed a huge upsurge due to COVID-19 and there is substantial room for future growth,” Phil Pomford, Worldpay Managing Director (Asia Pacific) from FIS said.
E-commerce capability is no longer limited to just traditional websites, while physical retail has blended with the digital world, he added.
“The shop floor is now in the palm of our hands, and consumers expect the same hassle-free and convenient shopping experience, whether they are purchasing in-app, through their social feeds or in the real world. Merchants will be well-positioned to be successful if they put customer experience at the heart of the checkout process,” Pomford said.
Those who position themselves with digital payments capabilities will be well-positioned to capture the next wave of growth in the retail and e-commerce market in India, he said.
The report also forecasted that the Point of Sale (POS) market in India would increase by 41% between now and 2024 to USD 1,035 billion. The most popular in-store payment method is cash at 34 %, followed by digital wallets (22%) and debit card payments (20%), it added.
On the whole, digital wallets will overtake cash as the most popular in-store payment method by 2024, accounting for 33% of payments. The e-commerce market in the Asia Pacific region is expected to grow at 13 % per annum until 2024, with the highest growth in developing countries. While China has very high e-commerce penetration and high-growth, developed, below-average growth is seen in Thailand, Hong Kong, Taiwan and South Korea.
Going by the report it is clear that high-growth markets include Indonesia, India, Malaysia and the Philippines with over 14 % growth rates, while less matured, low growth markets are Japan, New Zealand, Singapore and Australia.