Unicommerce, an ecommerce enablement SaaS platform on Thursday launched the third edition of its annual trends report, the ‘India E-commerce Index’ 2023. Indicating a maturing ecommerce landscape across the country, India’s ecommerce industry has recorded an impressive 26.2 per cent year-on-year (YoY) order volume growth in FY-2023 supported by a 23.5 per cent rise in annual GMV (Gross Merchandise Volume) compared to the previous financial year.
The report throws light on the consistently rising consumer inclination towards online shopping and provides a rationale for the rapid adoption of omnichannel strategies by brands to cater to the rising demand across both physical and digital channels.
Electronic Peripherals & Home Appliances, Eyewear & Accessories most demanded during FY-2023
The ecommerce space has witnessed robust growth in the electronic products & peripherals segment with a notable 46.8 per cent YoY order volume growth and GMV grew by 20.6 per cent in FY-2023, the report stated. This can be attributed to the inclusion of newer brands that were seen offering economical products across the segment.
The Eyewear & Accessories segment recorded a substantial 44.6 per cent YoY order volume growth during FY-2023. The segment’s GMV saw a significant uptick and rose by 52.8 per cent annually during the same period as compared to the last financial year.
The Beauty & Personal Care segment recorded a reasonable 26.6 per cent YoY order volume growth and an 18.9 per cent YoY growth in GMV during FY-2023. Driven by the increasing number of young consumers, the Fashion & Accessories segment witnessed a YoY order volume growth of 19.5 per cent along with a rise in its GMV by 15.3 per cent during FY-2023.
Newer Ecommerce categories Home Decor, Health & Pharma showcase fast growth
With rising demand for artifacts, kitchenware, wall hangings and plant accessories, the Home Decor segment witnessed strong YoY growth of 27.2 per cent in its order volumes during FY-2023. As a result of brands offering high-quality products, the segment’s GMV increased by 46.5 per cent annually during the same period as compared to FY-2022 resulting in a jump in the average order value by 15 per cent during the period.
Health & Pharma, which has become an important ecommerce segment as consumers continue to shop for medicines and nutraceuticals online, recorded a YoY order volume growth of 22.1 per cent during FY-2023. With the segment catering to the discrete needs of a diversified audience, the segment’s GMV rose by 38.5 per cent leading to the average order value growing by 13 per cent during the same period.
Marketplaces witnessed faster growth of 31.2 per cent in FY-2023
As brands continued to adopt a mixed approach to serve their customers across their brand websites as well as marketplaces, FY-2023 saw consumer preference move slightly towards marketplaces which witnessed a 31.2 per cent YoY order volume growth during the period. Brands continue to offer exceptional experiences via their brand websites, providing exclusivity and personalization and saw a YoY order volume growth of 24 per cent during FY-2023.
With a rising number of Beauty & Personal Care brands offering higher discounts across marketplaces, order volumes grew exponentially by 80.1 per cent during FY-2023 whereas, brand websites witnessed a 20.5 per cent rise among the segment during the same period as compared to the last financial year.
On the other hand, Electronics Products & Peripherals and Home Appliances saw a higher YoY order volume growth across brand websites recording a 55.4 per cent increase during FY-2023 while marketplaces witnessed a YoY order volume growth of 36.7 per cent within the same segment. Other segments like Home Decor, Fashion & Accessories and FMCG saw higher YoY order volume growth across marketplaces during FY-2023 witnessing 39.1 per cent, 27.1 per cent and 23.6 per cent respectively during the same period.
Tier I cities showcased faster growth while Tier II and Tier II cities demonstrated immense potential
As offices return to regular operations, there has been a notable shift of consumers shifting back to Tier I and metropolitan cities for work, resulting in Tier I cities exhibiting fast growth in order volumes relative to Tier II and Tier III cities. Tier I regions indicated the highest YoY order volume growth of 31.1 per cent during FY-2023, followed by Tier II and Tier III cities which witnessed YoY order volume growth rates of 23.3 per cent and 22.4 per cent respectively, during the same period. Consistent e-commerce growth in Tier II and Tier III cities underscores their substantial untapped potential. These cities are witnessing continued e-commerce adoption driven by increased online consumer activity and small businesses from these regions venturing into e-commerce as potential sales channels.
The market share of Tier II and Tier III cities stood at 18.6 per cent and 37.1 per cent respectively in FY-2023, reducing slightly from 19.2 per cent and 38.6 per cent respectively during FY-2022. Tier I cities however observed a slight increase in market share during the same period which stood at 44.3 per cent in FY-2023 as compared to 42.2 per cent in FY-2022.
Brands fight Order Returns to enhance the consumer experience
The FY-2023 exhibited a slight rise in order returns which stood at 10.4 per cent as compared to 9.8 per cent order returns in FY-2022. The report further attributed the rise in order returns largely due to Cash-on-Delivery (COD). In FY 2023, the return rate for Cash on Delivery (COD) orders stood at 20.9 per cent, a slight uptick from the 19.3 per cent recorded in FY 2022. Conversely, returns on prepaid orders exhibited a marginal increase, rising from 5.6 per cent in FY 2022 to 5.8 per cent in FY 2023. The notably lower return rate on prepaid orders has prompted companies to incentivize such orders, reflecting a strategic approach to minimize returns and enhance customer satisfaction.
Also, COD orders continue to account for more than 60 per cent of the overall returns, while prepaid orders accounted for 39.2 per cent of the overall returns.
Interestingly, returns on marketplace orders grew by 26.3 per cent in FY-2023, while it was 24.2 per cent in FY-2022. With greater use of technology and deeper consumer connect, D2C brands witnessed a marginal reduction in order returns which stood at 6.2 per cent in FY-023 as compared to 6.3 per cent during FY-2022.
Omnichannel becomes central as a brand strategy
As the demand for omnichannel strategies rises, new-age brands have integrated this approach into their business models, while traditional enterprises are adopting cutting-edge technology to establish a cohesive framework that serves both their physical and online sales channels. The number of online orders shipped-from-store reported a 44.6 per cent growth during FY2023 compared to the previous financial year.
Stores continue to adopt omnichannel technology to serve their customers better and enhance their shopping experience. During FY-2023, the number of stores that implemented omnichannel operations rose by 58.4 per cent as compared to the last financial year.