E-commerce channel has disrupted the traditional distribution, wholesale and retail model of India in the past decade. However, even in 2019, its contribution to the overall retail landscape was less than 15%. The contribution varies significantly by industry. For instance:
For FMCG, the contribution was less than 5%
For consumer electronics, the contribution was less than 15%
For Automobiles, the contribution was less than 2%
For Travel & Tourism, the contribution was more than 40%
The pandemic in 2020 accelerated the adoption of the E-commerce channel across industries. This happened because of the following two reasons:
Change in consumer behavior. Consumers were reluctant to go out to shop and preferred to shop online for the sake of their safety.
E-commerce emerged as a solution to the retail problem created by the pandemic. The shops remained shut, either due to government guidelines or because of low foot-falls. Brands had to increase investments in E-commerce to bridge the gap.
Let's look at how the channel's growth has accelerated for the consumer electronics industry. The graph in the first image below compares the number of E-commerce transactions between May-2019, May-2020, and May-2021. The number of transactions has grown by ~ 20% in the last two years, even after a decline of 23% in May-2020. At the face of it, this sounds too good to be true.
We can see the complete story by breaking down the number of transactions between various product categories.
Air Conditioners, External Hard Drives, and Televisions saw a reduction in the number of transactions.
Trimmers, Mixer-Grinders, Induction-Cooktops, Air-Coolers, RO Water-Purifiers, and Washing-Machines saw an increase in the number of transactions.
Combining this data with average prices, we can get the trend in value terms.