Six Reasons to Invest in the e-commerce sector

Smartphone penetration, easy access to high-speed internet (thanks to a revolution by Jio) and increased digital literacy rate have all contributed to an increase in e-commerce activity in India. E-commerce has transformed the way consumers shop in India. The pandemic positively affected1 the usage of Indian e-commerce stores. In the last two years, the e-commerce sector has witnessed astounding growth, as many retail small businesses, startups, and even corporations have ventured into this space to sell their products and services. 

The E-Commerce Industry in India

An online presence has helped brands establish a wide variety of networks across the country. From one operating base, they enjoy the privilege of selling to anyone in any part of India or sometimes across borders. This has enabled various business opportunities across multiple verticals. There is not one commodity that isn't available to buy online. 

India is an expanding economy with over 850 Million active internet users. A number that will soon skyrocket over the roofs. From daily utilities, industrial goods, machinery, groceries, and digital products to online ticket booking for travel and movies are all part of the e-commerce sector. Investing in the Indian E-commerce sector is a wise decision to reap rewards in the future. 

If we dig deeper, startups backed by PE/VC funds control most of the market share in e-commerce. Yet small businesses, retail players and new enterprises are all setting their foot in this space with sustainable growth. Every new entrant has an opportunity, which explains the growth in e-commerce in India.

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Let's Play the Number Games

$46.2 Billion – Indian e-commerce market in 2020

$74.8 Billion – Indian e-commerce market in 2021

Investors consider Indian e-commerce as the best investment option and look to invest more in growing industries. E-commerce has been and will be one of the best investment options in the decades to come. 

Considering all these factors, the Indian e-commerce market is expected to cross the $100 Billion mark in 2024 and reach up to $200 Billion in 2026, accounting for an annualised growth rate of 18.5%.

In 2020, the overall e-commerce sales2 across all platforms were $52.5 Billion, and in 2021, it has increased to $84 Billion. 

The rise of D2C startups, thrasio models, and easier selling platforms like Amazon FBA, which handles most of your order management and logistics, are all backbone of this booming sales. Early Indian startups like Flipkart, Snap deal, OLA cabs, Red bus and Book my Show are all forerunners in this space. 

6 Reasons to Invest in Indian E-Commerce Sector

Here, we will list 6 honest and strong reasons backed by solid research to tell why e-commerce is the best bet for your bucks. Let's discuss.

1. Market Size

India just became the eighth-largest e-commerce market, trailing behind France in terms of market size. Online retail sales are growing at 30% YoY. Faster adoption of 4G networks and rapid development on the technological front has forced consumers to cope with it. The urge to upgrade to the latest digital products, which Indians consider an upgrade in their lifestyle, is a reason that the Indian e-commerce market is raging towards the $200 Billion market share. 

2. Growing Demand

Beauty, Personal care and wellness is one part of e-commerce that is attracting the highest demand3, growing at 36% per year. Today, consumers expect customised products as per their needs. Nykaa, Mama Earth, and the Man Company exceed customer expectations and have a solid market share in their respective segments. 

3. Global Reach

Indian brands, with their top-notch product quality and irresistible marketing strategies all under affordable prices, are taking their brand to the global stage. Foreign currency inflow with the purchase of Indian brands is making investments in e-commerce brands a lucrative deal.

4. Leverage of Technology

Investments in e-commerce are an indirect way of investing in technology. All their sales are driven by a robust online store with online payments4. They have healthy balance sheets with minimum liabilities that will help to save costs in the long run. 

5. Government Initiatives

Government schemes heavily support e-commerce in India. The government also takes part through online e-procurement facilities to encourage the purchase of goods and services for government uses through online portals. As a result, GeM (Government e-marketplace) port served 7.96 million orders worth $20.40 Billion to 55,433 buyers from 30 lakh registered buyers.

6. Investment Interest by PE/VC firms

PE/VC firms are bullish on e-commerce startups in India and betting all their money on them. As a result, e-commerce funding grew by a whopping 600%, attracting $134 Billion in investments. 

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Conclusion

Online grocery, medicine, and food delivery are all growing at a rapid pace in urban areas. Whilst the rural part of India is still untouched, considering the opportunities ahead and the booming economy, e-commerce will be the best shot to shoot at for your investments. 

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