India's internet economy likely to reach $1 trillion by 2030: Experts

Shriram Subramanian said as India becomes a $5 trillion economy, e-commerce will continue to annually grow at about 25 per cent per annum from $60 billion in FY2023

India's internet economy is estimated to reach $1 trillion by 2030, primarily due to e-commerce, which is expected to be worth $325 billion and rank third globally, according to industry experts.

Last year marked a crucial turning point for India’s e-commerce sector, with notable changes in consumer trends, technology, and regulations. InGovern Research Services, a leading corporate governance advisory firm, hosted a virtual roundtable to deliberate on the notable developments in India's e-commerce sector in 2023, with a particular focus on the essential role of customer trust in fueling its ongoing expansion.

“Ultimately, quick commerce cannot be viewed in isolation from the entire retail industry's landscape,” Siju Narayan, Chief Experience Officer, RexEmptor Consult LLP, said during the session.

 

“The government has done a fabulous job of digitally priming up the entire country by establishing the necessary digital and financial infrastructure. The consumer protection aspect is also a top priority for them,” he said.

Madhumita Mohanty, retail consultant and educator, said the e-commerce growth in India was driven by mobile phone and internet penetration and increasing aspirations. This is combined with increased disposable incomes, urbanisation and UPI adoption.

“A critical growth driver is the increasing demand from Tier-II and Tier-III cities, where consumers lack access to diverse brands and products locally. E-commerce bridges this gap, enabling them to fulfil their wants,” said Mohanty.

Shriram Subramanian, Founder and MD of InGovern Research Services, said as India becomes a $5 trillion economy, e-commerce will continue to annually grow at about 25 per cent per annum from $60 billion in FY23. 

“E-commerce players are benefiting from huge tailwinds. They are responsibly enabling small and medium enterprises to sell in India and globally through their global selling programs. They continue to invest in tools and processes to enhance customer trust,” said Subramanian. 

Quick commerce has shaken up the e-commerce sector as a disruptor model promising faster deliveries. As e-commerce evolves, players must cater to the changing needs of consumers across India's cities and towns, said Mohanty.

Srinath Sridharan, Business Advisor, Member – Governance Council, Fintech Association for Consumer Empowerment noted that in the growing Indian e-commerce, the enthusiasm for consumption warranted a measured approach. 

“While capital fosters innovation, the absence of robust and proven consumer protection poses inherent risks,” said Sridharan.

He said maintaining a responsible and sustainable consumption economy with the next two decades in mind, demands a balance between growth and safeguarding interests.

K Giri, Director General Empower India, said the customers bought from places that ensured safety, convenience, and reliable delivery.

Players in India like Amazon, Flipkart and eBay have been able to imbibe a sense of trust with consumers, he said, adding that this will increase GMV traction for the online shopping space.

“If you count the sellers of Jio, Tatas, Flipkart, Amazon and eBay, there could be a crore of small sellers out there who can thrive in their business. We must create an enabling mechanism for these sellers to grow,” said Giri.

Experts underscored the pivotal role of consumer trust in the success of online businesses. They highlighted the importance of transparency, data security, user-friendly interfaces, efficient logistics, and responsive customer support in fostering trust within the e-commerce sector. Amazon utilises advanced artificial intelligence (AI) and machine learning to combat fake reviews, eliminating 200 million suspected fake reviews from its platform in 2022. In 2023, Amazon invested $1.2 billion and employed over 15,000 people to combat fraud and protect customers. 

Experts said that small sellers can emulate these strategies by prioritising transparency and investing in basic data security measures. They can also optimise their platforms for user-friendliness, partnering with reliable shipping providers, and providing responsive customer support. This would help them build trust and credibility with their customers.

While the top e-commerce companies continue to focus on transparency, and providing a greater shopping experience, experts said there was a parallel need for flexible government policies to foster growth, support sellers, and uphold customer interests. These regulatory frameworks will be instrumental in steering the e-commerce sector towards sustainable growth, maintaining a conducive environment for all stakeholders, they said.