India expected to become the second largest Ecommerce market: LS Digital Report

LS Digital survey report gives insights into the Indian e-commerce market and takes a closer look at evolving consumer buying behavior.

The past two and half years have been challenging for every business with consumer habits changing dramatically. We also saw a huge shift towards online shopping with people flocking to the online space to look for things, learn something new, be entertained, and even shop from the comfort of their homes. According to an LS Digital report on “The Evolving Consumer Buying Behavior Post-Pandemic”, India stands third place globally for the Ecommerce base and had around 140 million e-retail shoppers in 2020. 

In the fiscal year ending March 2021, the market saw a drop in the overall retail market size, but the e-retail market continued to grow. All the data and research insights point to the vast potential of this industry and the growth opportunities it opens up.  

Prasad Shejale, Founder & CEO, LS Digital said, “This is what urged us to study the current state of Indian consumers, especially in the post-COVID world. With this study, we wish to help brands understand their consumers better and get their marketing strategies in sync with the consumers' priorities and choices. We  hope this understanding will help brands be future-ready, seize the right opportunities that can push their  business forward, and help them take their brand to newer heights.” 

The Indian retail market is among the top five in the world and one of the fastest growing, with reports suggesting that it will grow to $1 trillion by 2025. This opens up multiple opportunities for businesses across the globe to scale up and grow their presence in India.  

Considering the diversity of the Indian market, consumers across different geographies tend to behave differently when it comes to shopping. For a business to succeed in this market, it needs to be aware of the preferences of different types of consumers and have solutions that cater to varying consumer needs.  

“Two and half years into the pandemic, we can all see the buying behavior of online shoppers evolving for good. As the situation normalizes or as we adjust to the new normal, new-age businesses need to be aware of the changing buying behaviors of their shoppers so that they can cater to their needs while optimizing the growth and visibility of their businesses online,” said Prasad Shejale. 

Here are a few insights from the report:

Familiarity and visibility: Horizontal vs Vertical vs DTC  

Horizontal Marketplaces: The Go-To Shopping Platforms for Visibility  

• Horizontal marketplaces are the most visited platforms online with 30% of the respondents visiting once in 15-days to once a month being 42%. 

• Nearly 40% respondents have never visited a DTC site and 20% have never visited vertical marketplaces. • A shopper prefers going to an offline store over DTC sites for research while 85% prefer horizontal marketplaces for research. 

• While vertical marketplaces are fast gaining popularity, they still don’t seem to be the most preferred shopping destination for consumers when it comes to making the final purchase. 

Horizontal marketplaces allow online shoppers to browse through a wide range of products across categories on a single platform, allowing them to store personal and banking details on a single platform while enjoying the freedom to shop conveniently.

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Purchase Behaviour Across Categories  

A deep-dive into shopping behavior across different categories, such as Furniture, Essential Goods,  Fashion, Beauty, and Electronics found the following: 

1) Fashion: 

• Around 71% of buyers prefer to buy fashion products offline while 78% make these purchases from vertical marketplaces. Horizontal marketplaces are close at 74% users making purchases from this platform. 

• 52% of users below the age of 25 are seen to be more likely to purchase fashion items online.  

2) Essential items - groceries and vegetables  

• 86% respondents mostly opt for offline stores to fulfill their grocery needs.  

• Vertical marketplaces are picking up, gaining the confidence of 64% of buyers to trust them for their daily essentials needs.  

• Large number of respondents said they don't trust online platforms for product freshness.  

• Interestingly, 31% women over the age of 45 are more likely to buy groceries online. 

As per findings of a survey done by YouGov, it's a relationship-based business for offline stores that ensures quick delivery to the customer even for smaller value items. However, vertical marketplaces like BigBasket and BlinkIt (formerly Grofers) manage to take a big chunk of the market share, with 64% of buyers shopping from these platforms.  

3) Beauty & personal care products  

Vertical marketplaces offer a wide variety of beauty labels making it easy for buyers to research and buy their favorite products. 

• 72% of shoppers prefer vertical marketplaces for personal care products. 

• Around 69% of buyers mentioned that most of the time, they prefer offline stores to buy beauty products. 

• 36% do not prefer to buy these products from DTC sites. 

Creating an omnichannel experience through the use of AI (Artificial Intelligence), Machine Learning (ML),  and Virtual Reality (VR) will pave the way for brands to garner a significant market share. 

4) Electronics & gadgets  

Retail shop owners still seem to be confident of the shoppers flocking to their stores for making expensive electronics purchases. However, according to a survey report, brands cannot ignore the presence and visibility of horizontal marketplaces. 

• 83% of shoppers are inclined towards horizontal marketplaces for buying electronics. 

• 62% do not consider DTC sites for such purchases. 

• 41% women are more likely to buy electronics from horizontal and vertical marketplaces.  

5) Furniture  

Buying furniture is usually a very personal and complex decision, often involving more than 1 family member. While offline stores clearly take the lead here, online stores are not completely ignored.

• Around 65% shoppers are drawn to offline stores for purchasing furniture  

• Only 34% of users prefer marketplaces (horizontal and vertical) for such purchases. 

Key driving factors for making a purchase  

Shopping behavior changes significantly across categories, certain patterns can guide brands to elevate the customer experience.  

• Price still appears to be the most important factor in decision making 

• Genuine reviews guide consumers to make the right decision.  

• A seamless return policy seems another must-have for consumers to trust and buy the product. Easy returns are even more important than the delivery speed. 

• When it comes to price sensitivity, it is observed that 28% users above the age of 45 years are the least price-sensitive while 88% male users are more price-sensitive compared to female users. 

Consumers need assurance that they are buying the right product at the right price. Price, reviews, and return policy help bridge the gap between researching and clicking that "Buy" button.  

Summing it up

LS Digital’s report indicates that buying behavior has evolved but also fluctuates across different categories.  Every category is unique and dependent on the way users interact, learn and purchase from every category varies.  

There can never be a foolproof approach that can help brands decide whether to invest in their own setup or  focus more on marketplaces. This has become even more complex in the post-covid world. It is important for  brands to create a tailored marketing strategy based on their customers’ preferences. They also need to consider factors like their product/service USPs, similarities or differences of their offerings in comparison with other players in the market, investment, etc., and decide on the best route that creates a win-win situation for their customers and the brand.