With popularity comes competition and the latest consumer and industry trends are leaving businesses scratching their head. To maintain a competitive edge in India’s rapidly evolving eCommerce market, firms must meet evolving demands and outpace competitors by embracing true digital transformation.

What makes India’s eCommerce market stand out?

India’s emergence as a global eCommerce hub is by no means a sudden trend. For years, the country has seen increasing rates of internet penetration and activity across age groups, with no signs of slowing down. With a projected 1.3 billion internet users by 2030, digital commerce naturally dominates as one of the primary online activities for Indians. In 2023, India already saw 300 million shoppers buying their favourite clothing, food, electronics, and other products online, a figure expected to grow past 500 million within the next decade. 

Comparing these numbers with global figures underscores India’s spotlight position in the digital commerce realm. The nation’s unparalleled growth rates for internet and commerce activity, coupled with a steady rise in domestic income towards middle- and upper-class brackets, have been fuelling the nation’s demand for online shopping.  

India’s macro-economic indicators affirm this trend: the eCommerce market is predicted to surpass $100 billion by 2028, with the Food and Beverage (F&B) sector contributing over a third of the forecasted market size. Other booming sectors include Fashion, Electronics, and Media, each experiencing double-digit growth compared to 2023.  

However, despite optimistic forecasts, firms cannot blindly enter the Indian market and expect instant success. In a world where brands all too often assume different markets to behave alike, some enter India with a home-replication strategy, only to be disillusioned by the nation’s unique business climate.

At the core of this distinctive climate, evolving consumer characteristics and behaviours are reshaping what, how, and where shoppers buy their favourite products.

India’s changing consumer characteristics & behaviours 

As India's eCommerce market continues its rapid growth trajectory, businesses must adapt to the nation's evolving consumer landscape. Three key factors are fundamentally reshaping Indian consumer characteristics and online shopping behaviours.

Digital savviness 

India’s boasts an average age of just 32 years, significantly younger than Europe’s average of 44. This contrast is even more pronounced in the online realm, where tech-savvy Indian Gen Z’s and Millennials continue to dominate internet activity. Housing over 250 million Gen Z’s, more than half of which reside in relatively affluent Metro- and Tier 1 cities, these young shoppers are driving a new wave of digital commerce in India. They blend traditional and new digital-led demands, such as a desire for vernacular language support and interactive shopping experiences, driving new expectations in the digital marketplace.

Regional distinctions 

Although average income is rising across India, regional differences in household wages – and their impact on online consumption – cannot be ignored. Not only do rural areas pose challenges regarding last-mile distribution, but they also engender unique purchasing habits. While shoppers in India’s Metro cities are commonly described as “loyalists”, confiding in well-known brands and valuing trust, rural shoppers have become “explorers”, favouring new product discovery over sticking to trusted brands.  

Changing consumer journeys 

The smartphone has become the pedestal for India’s commerce activity, with over 80% of Indian shoppers engaging in handheld online shopping. And while browsing products on the phone was synonymous with surfing on a ported desktop website only a decade ago, recent technologies have now enabled a unique, smartphone-led consumer journey.  

Starting from the inspiration phase, the integration of social media and eCommerce, often through influencers or sponsored content, has revolutionised how users discover products. Gone are the days of targeted search – consumers now “stumble” upon products while exploring social media and commerce platforms. The ubiquity of reviews has simultaneously allowed for immediate product comparability, with shoppers gravitating towards the highest-rated goods on marketplaces or brand apps. This journey extends post-purchase, where consumers are targeted through social media ads, loyalty programmes, and personalised recommendations, all aimed at encouraging repeat purchases.

Solving India’s eCommerce Puzzle 

In efforts to meet consumers’ changing needs, three business models have taken over India’s eCommerce market.  

Marketplaces  

With over two-thirds of Indians preferring marketplaces over brand websites and multi-brand stores for big-ticket purchases, these platforms offer unrivalled brand access, convenience, and competitive pricing. For brands, marketplaces provide expanded consumer reach, lower entry barriers through (partial) ownership of marketing and operational costs, and access to valuable consumer data for strategic decision-making. 

Direct-to-consumer (D2C)  

Projected to contribute $20 billion to India’s eCommerce revenue by 2030, D2Cs face a vastly different set of benefits and challenges. Higher profit margins are obtained by removing the intermediary, while direct access to shopper data allows for personalised offerings and greater responsiveness to consumer demands. Nonetheless, D2Cs often face significant marketing expenses, high customer acquisition costs, intense competition, and limited brand visibility. 

Omnichannel models 

Offering seamless integration of on- and offline experiences, omnichannel models create a friction-free journey, boosting satisfaction and loyalty. Brands can utilise increased engagement and retention to provide more cross- and upselling opportunities. Operationally, omnichannel benefits such as improved inventory visibility are not just favourable for shoppers, but also help brands boost sales while cutting inventory management costs.  

Selecting the right business model is only one piece of the puzzle – being on top of innovative trends and technologies is equally crucial for staying ahead of the curve. If there’s one lesson businesses can learn from recent years, it’s that innovative trends and technologies possesses a unique ability to shape consumer-brand interactions. While these trends show transformative potential, they represent a mere fraction of the innovations shaping India’s eCommerce landscape. Other notable developments, whether it be increasingly engaging brand apps or advanced analytics, continue to offer unique opportunities to thrive in India’s ever-evolving market.

Completing the eCommerce puzzle

Selecting the right business model is only one piece of the puzzle – being on top of innovative trends and technologies is equally crucial for staying ahead of the curve. If there’s one lesson businesses can learn from recent years, it’s that innovative trends and technologies possesses a unique ability to shape consumer-brand interactions.

Collaborative commerce 

Collaborative commerce has blurred the lines between consumers, brands, and social media influencers. On platforms like Myntra, these entities converge to create immersive experiences where consumers engage in co-created content, on-platform shopping, and live interactions. For brands, this engagement drives traffic and sales through increased visibility, targeted marketing, and personalisation opportunities, while also generating valuable insights to further refine marketing strategies.  

Streamlined supply chains 

India’s warehousing and logistics sector has been instrumental in the country’s recovery from the pandemic, steadily rising to a projected $35 billion by 2027. This growth is fuelled by a surge in eCommerce activity, increasing disposable incomes and industrial development, but excessive costs, driven by factors such as high supply chain complexity, inefficient operations, and India’s challenging geographical landscape, have continued to plague further progress.  

One of the key cost reduction efforts is the emergence of regional warehousing in India’s Tier 2 & 3 cities. Compared to Tier 1 cities, commercial real estate and labour tend to be more affordable, with space also being more abundant. Situated further inland, these regional warehouses increase connectivity, unlocking previously unattainable regions and fostering economic growth. For industry giants like Amazon and Flipkart, strategically locating distribution centres in these regions has enabled same-day delivery to over 27,000 zip codes, exemplifying the power of this approach. 

Cash on delivery 

Part of businesses’ never-ending quest to increase consumer delight, cash on delivery further increases convenience for shoppers, especially those who may not have access to digital payment methods. For businesses, it helps building trust in their consumer relationships, as well as expanding their customer base. Especially for consumers wanting to try out new brands and platforms for their online shopping, cash on delivery strikes a perfect balance between the comfort of shopping from home and a safe, on-site transaction. 

Meta-driven customer acquisition 

Further upstream in the customer journey and strongly tied to India’s appetite for collaborative commerce, more and more businesses are tapping into the potential of meta-driven customer acquisition. Especially in fashion, where shoppers are increasingly preferring social media browsing for inspiration and product discovery, Meta-driven customer acquisition has become an essential part of the marketing toolkit. When seamlessly integrated with other eCom sales channels, companies typically observe an increase in web traffic while lowering customer acquisition costs. In later stages of the consumer journey, it enables even more opportunities for targeted marketing efforts and personalisation, driving conversion.

While these trends show transformative potential, they represent a mere fraction of the innovations shaping India’s eCommerce landscape. Other notable developments, whether it be increasingly engaging brand apps or advanced analytics, continue to offer unique opportunities to thrive in India’s ever-evolving market.

Navigating India’s landscape 

India’s booming eCommerce landscape presents both unprecedented opportunities and challenges. Shaped by a young demographic, tech-savvy shopper base, and regional differences, the nation’s unique business climate underscores the need for tailored eCommerce strategies. While the rise of marketplaces, D2Cs, and omnichannel models signals a shift towards digital transformation, success hinges on strategic planning and proper execution. Focused integration of technologies and trends that enhance the shopping experience are vital for brands to succeed amidst intense market competition.  

At Metyis, we understand these complexities and are able to offer insights into India's evolving digital landscape thanks to our end-to-end digital transformation expertise spanning AI & Data, Digital Commerce, Marketing & Design solutions, and Advisory Services. Our partnership approach has helped make a positive sustained business impact for our customers across a wide range of industries on a global scale.