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E-Commerce reported 31% growth in Q3 2020 vs Q3 2019; Tier III and beyond cities are driving India’s e-commerce growth with over 90% growth

Blog: NASSCOM Official Blog


 Unicommerce, India‘s largest e-commerce focused SaaS platform, released e-commerce trends for the third quarter of the year 2020. Post the lockdown has been lifted across the country, this was the first quarter in which businesses were operational in the majority part of the country. Hence, the report analyzes how e-commerce fared in this quarter as compared to the same time last year. The report also sheds light on the performance across all the major product categories, region-wise consumer demand, rising D2C trends and reducing returns.

The surge in demand due to the pandemic continues to drive order volume for e-commerce players in India.  The e-commerce industry witnessed an order volume growth of 31% for Q3 2020 (July-September), as compared to the same period last year. The e-commerce industry is growing faster than anticipated and has already shown 1.5X growth compared to last year. As per the report, while the order volume has increased significantly, the corresponding GMV has increased only by 24%  due to 5% decline in the average order value. While people are ordering more online, consumers are getting value conscious, and ordering lesser value products. In addition, the overall category mix is changing due to high growth of personal care and health & pharma categories driving the overall average order value down.

Some of the key trends are as follows:

Tier II and Tier III cities driving growth

The huge growth of e-commerce is driven by consumers living in Tier II and Tier III cities of India. The increasing focus on regional markets and the rising adoption of smartphones is driving growth from Tier II and beyond cities. The Tier III and beyond cities have showcased a growth of over 90%,  and is almost double the growth recorded in the Unicommerce annual report released in August. While Tier 3 may be rising as most of the workforce may have gone back to their home towns, but as they begin to come back to their work locations, we may see higher growth in Metropolitan and Tier-1 cities in the months to come.


New emerging product categories


The overall e-commerce growth has shown a great sign, with newer product categories driving high growth, particularly personal care with over ~100% order volume growth and health and pharma with ~75% growth. However, these categories still hold a very small share in the overall e-commerce volume and will continue to grow at a much faster pace for a few quarters. The electronics and fashion continue to be the biggest category with the maximum share of order volume, although they have lower growth (For example, fashion and accessories segment has demonstrated ~30% order volume growth).

The product mix has also changed substantially across most of the categories for example: in fashion and accessories-women’s topwear and mens shirts were the most ordered items in Q3 2019 and now face masks and womens’ kurtas along with loungewear items such as track pants and nightwear are the most ordered products. Similarly, in the personal care segment, Face/body wash, face scrubs and creams were the popular products in Q3 2019, now these products have been replaced by more of organic and self grooming products, female grooming products, serums and disposable cutting capes owing to the majority of people still reluctant to go to a local parlor/salon.

Growth of D2C Brands

Post the pandemic, D2C has emerged as the preferred choice for both sellers and consumers. Sellers now understand the importance of D2C as they need a platform to connect with consumers and consumers prefer to shop from a brand they trust. In Q3 2020, Brand’s own websites reported an astonishing growth of over 78% as compared to 35% from the marketplaces during the same duration. The significantly higher order volume growth (more than 2X) demonstrated from the websites has led to more and more brands developing their own website. There has been almost 51% growth for the brands developing their own website in the Q3 2020 as compared to last year.

Reduction in the return order

Another great news for the e-commerce ecosystem is the reducing return orders. There has been a significant dip of ~22% in returns per forward order, which is probably indicative of a maturing e-commerce ecosystem. Companies are deploying technology solutions to ensure error-free order deliveries. Fashion & accessories and personal care are the biggest gainers with ~30% drop in return orders.

Speaking on the report, Kapil Makhija, CEO Unicommerce said “It’s overwhelming to see this level of growth of India’s e-commerce ecosystem. The pandemic has changed the dynamics of the retail ecosystem substantially. Ecommerce is no longer the supporting vertical and has now taken a front seat. With the increasing focus of companies on investing in online channels and rising interest in adopting technology solutions to improve business operations, we firmly believe this growth momentum will continue for the next few quarters. Overall, we’ve got a great response for our annual trends report and we are confident that this new report for the last quarter trends will help e-tailers plan their future business strategy efficiently, particularly for the upcoming festive season. The Unicommerce team is committed to simplifying e-commerce selling and we will keep coming with new innovative ways to help our sellers.

The post E-Commerce reported 31% growth in Q3 2020 vs Q3 2019; Tier III and beyond cities are driving India’s e-commerce growth with over 90% growth appeared first on NASSCOM Community |The Official Community of Indian IT Industry.

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