Attractiveness: ecommerce: Attractiveness & non-public care proceed to force India’s ecommerce expansion: record

Ecommerce sales volume grew 69.4% in FY22 compared to 44% in FY21, according to a report by Unicommerce in collaboration with Wazir Advisors. Beauty and personal care category continued to drive this growth, with a 143% increase in volumes year-on-year.

“Many digital-first brands have emerged over the last two years in the beauty and personal care segment, which provides tough competition to traditional players,” the report said. “Interest from investors and the rising number of ‘House of Brands’ further support growth in the segment.”

Meanwhile, gross merchandise value (GMV) grew by 73.6%, outpacing order volume growth. This showed that consumers were more confident of spending on discretionary items in FY22 than in FY21, when the GMV growth was just 37.2% and volume growth was 44%.

The faster GMV growth has resulted in a 2.5% increase in average order value, the report said.

The beauty and personal care category was followed by footwear, eyewear, fashion and accessories as people started stepping out more often, it said. Footwear, fashion and accessories have traditionally been the biggest contributor to overall ecommerce order volumes over the years.

Other segments that were non-existent prior to the pandemic but have grown significantly in the last two years are FMCG & agriculture, and health & pharmaceuticals, the report said. The FMCG & agriculture segment reported 61.7% order volume growth, while order volumes for health & pharmaceuticals grew by 62.4%.

The pandemic accelerated the shift online and many traditional brands have built ecommerce capabilities, the report added.

“The FMCG industry is a great example of traditional focused brands moving online,” it said. “Leading brands such as

, , , and built extensive digital presences to capture newer opportunities. The online sales channels of these industry leaders cater successfully to the needs of new-age online shoppers.”

Despite clocking strong year-to-year growth in FY22, ecommerce is seeing consumption growth moderating across categories thanks to rising inflation, especially in segments considered to be discretionary,
ET reported on July 25.

D2C vs marketplaces

Brands across segments are building a strong online presence and focussing on selling directly to consumers. Sales on brands’ websites grew by 80% in FY22 compared to 59% growth on marketplaces like Amazon and Flipkart.

“Companies have realised that it’s important to invest in strong brand website operations to develop a connection with consumers,” the report said. “Brands focus on delivery of an elevated shopping experience for consumers using the brand website. Shoppers are now aware of the potential deals on various channels and prefer to shop accordingly.”

The report said a key reason behind the rise of direct-to-consumer (D2C) brands is the rising acceptance of supply chain and logistics platforms, which ensure a seamless post-purchase experience.

“Brand websites ensure strong growth for the health & pharmaceuticals segment (84.8%) as well as fashion (89.5%),” it said. “Consumers prefer marketplaces for the footwear segment, as it offers wider shopping options. Having said that, marketplaces are yet to make significant inroads into the eyewear space, which explains the significant growth rate.”

In India, SoftBank-backed Lenskart continues to dominate the eyewear segment online. It was
recently valued at $4.5 billion after raising $200 million in a funding round led by Alpha Wave Global.

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