Shoppers from tier-I and tier-II cities drive India's e-commerce growth

India’s Retail and E-commerce Trends, a report prepared by e-commerce tech firm Unicommerce along with Wazir Advisors, assesses the growth of India’s retail ande-commerce industry in FY22 and how consumer buying patterns have changed in the last two years. The report underlines that over this period India’s e-commerce growth was driven by consumers from tier-II and tier-III cities. Furthermore, growth was powered by the direct-to-consumer (D2C) segment.

Key highlights

• $836bn Estimated size of India’s retail sector in 2021-22 (FY22)
• 81.5% Contribution from traditional retail
• 12% Organised brick-and-mortar, and 6.5% online sales channels 
• $225bn Potential size of the online retail market in India, which is expected to grow at 32% a year over the next few years
• $70bn Potential size of the D2C segment in the next few years, reflecting a robust CAGR of nearly 45%
• 69.4% Overall e-commerce order-volume growth YoY in FY22, compared with 49.4% in FY21

Vibrant sectors

• 143% Order-volume growth of beauty & personal care, the highest among all sectors in the fiscal year gone by (FY22)
• 62.4% Order-volume growth in health & pharmaceuticals over the last two years
• 61.7% Order-volume growth in FMCG & agriculture over the last two years
• 59.7% Order-volume growth in fashion & accessories, and 34.7% in electronics & home appliances, which were the biggest categories
• D2C and digital-first brands continue to rise, with consistent order growth of brand websites
• 80.4% Faster growth of D2C brands on websites; marketplace growth was 59.6%

Return orders decline

• 14.8% Share of returns in overall order volume in FY22, compared with 16.10% in the previous year
• 18.8% Returns on cash-on-delivery orders in FY22, down from 22.1% in FY21
• 10.4% Share of returns of prepaid orders remained constant YoY