D2C brands drive e-merchant growth

Internet-first or direct-to-consumer (D2C) brands are driving the growth of the online retail space in India with a robust compound annual growth rate of 45% and have the potential to reach $70 billion over the course of coming years, according to a joint report. by Unicommerce, an integrated software-as-a-service platform for post-purchase experience management, and retail consultancy Wazir Advisors.

India’s online retail market is expected to grow by 32% with a potential to hit $225 billion, it said in the first edition of India’s Retail and E-commerce Trends Report. for year 22.

D2C brands saw faster growth on their own websites at 80.4%, and healthy growth of 59.6% on e-commerce sites.

Sales growth in online marketplaces was driven by beauty and personal care, followed by the rapidly growing consumer goods, healthcare and pharmaceutical segments. While Beauty & Personal Care saw order volume growth of over 143% in FY22, FMCG & Agriculture grew 61.7%, and Health & Personal pharmaceuticals by 62.4% over the past two years. Fashion and accessories saw order volume growth of 59.7%, while electronics and appliances grew 34.7%, during the period.

Indian small towns were driving the expansion of online retail, the report adds. Over the past two years, e-commerce growth has been driven by consumers in Tier II and Tier III cities, with the young and ambitious shoppers across all segments transforming the e-commerce landscape in India, a- he declared.

Buyers from Tier II and III cities accounted for 61.3% of the market share in FY22, compared to 53.8% in FY21. Tier II and III city order volumes increased by 92.2% and 85.2%, respectively, over the prior year. In contrast, Tier I cities grew more slowly at 47.2%. “Over the past two years, the Indian retail sector has seen a remarkable evolution with wider adoption of technology, a willingness to try new platforms and a shift in brand mindset,” said said Kapil Makhija, Managing Director of Unicommerce.

The report paints a holistic picture of consumer shopping behavior over the past two years, which should help retail brands analyze business performance and plan their future strategies accordingly, he said.

“We have seen retail rebound from the severe impact of the pandemic. Overall retail sales are back to pre-covid levels with strong growth in the e-commerce industry. It will be interesting to see how the industry adapts to the increased number of shoppers in Tier II and Tier III cities and how it impacts traditional and organized retail,” said Pakhi Saxena , Practice Leader, Retail and Consumer Packaged Goods, Wazir Advisors.

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