E-commerce industry sees order volume growth of 31% during July-Sept 2020

After the lockdown was lifted across the country, this was the first quarter in which businesses were operational in a large part of the country

India’s e-commerce industry witnessed an order volume growth of 31 per cent for the third quarter (Q3, or July-September) this calendar year, compared to the same period last year, revealed a report by Unicommerce, an e-commerce-focused software-as-a-service platform.

The surge in demand is due to the Covid-19 pandemic continuing to drive order volume for e-commerce players in India.

After the nationwide lockdown was lifted, this was the first quarter in which businesses were operational across a large part of the country.

The e-commerce industry is growing faster than anticipated — it has already shown 1.5x growth, compared to last year.

“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,” said Kapil Makhija, chief executive officer, Unicommerce, adding, “E-commerce is no longer the supporting vertical. It has now taken the front seat.”

With increasing focus of companies on investing in online channels and increasing adoption of technology solutions to improve business operations, “we firmly believe this growth momentum will continue for the next few quarters”, said Makhija.

According to the report, while the order volume has increased significantly, the corresponding gross merchandise value has increased only 24 per cent due to a 5-per cent decline in the average order value.

The huge growth of e-commerce is driven by consumers in tier-2 and tier 3 towns. The increasing focus on regional markets and the rising adoption of smartphones is driving growth from tier-2 and beyond. Tier-3 towns and beyond have showcased growth of over 90 per cent, almost double the growth recorded in the Unicommerce annual report released in August.

The overall e-commerce growth is a good sign, with newer product categories driving high growth, particularly personal care with over 100 per cent order volume growth, and health and pharma with 75 per cent growth. Electronics and fashion continue to be the biggest categories, with the maximum share of order volume, although they have lower growth.

In Q3 this year, the brand’s own websites reported a growth of over 78 per cent, compared to 35 per cent 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 per cent growth for the brands developing their own website in Q3, compared to last year.

There has also been a significant dip of 22 per cent in returns per forward order. This is probably indicative of a maturing e-commerce ecosystem. Companies are deploying technology solutions to ensure error-free order deliveries. Fashion and accessories and personal care are the biggest gainers, with a 30 per cent drop in return orders.