The e-tail market in India has been slowing down since the pandemic, growing at 22 percent to reach a market size of $60 billion in FY23, as per a Redseer report.

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Despite losing momentum, e-tail is at 2.5x of pre-COVID levels, with a better performance than overall retail consumption, which has been tepid in the recent quarters due to inflation concerns.

While consumption is seeing a broader slowdown, India’s e-commerce story is maturing, with more customers shopping online more frequently across a range of categories.

“The growth pattern in FY23 (and likely going forward as well) is different wherein the regular shoppers i.e. the monthly user base is now larger than ever before,” the report said.

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Monthly transacting users (MTU) of nearly 65 million formed 31 percent of the annual e-tail shopper base in FY23, up from 23 percent in pre-pandemic era.

The maturing user base — 210 million annual shoppers — is driving monetisation. Ad revenue went up by 1.2x to reach $1.2 billion for Indian e-tailers in FY23. Growing at 37 percent annually, ad monetisation can drive strong growth going forward as well, according to the report.

In terms of categories, although mobile phones were the dominant category in FY19, fashion is now the single largest category with a 27 percent share, while beauty and personal care (BPC), grocery, and home categories too are clocking a pacy growth.

“Strategic partnerships of e-commerce platforms with global and Indian brands along with a change in shopper mix and an increasing share of women shoppers has resulted in an explosion of fashion sales,” said Mrigank Gutgutia, Partner, Redseer.

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The Flipkart group has dominated the e-commerce landscape with the market share staying steady at 48 percent in FY23.

Highlighting that the Walmart-owned company grew 1.6x faster than the rest of the industry in the first quarter of FY23, the report said, “(Flipkart) has resiliently withstood competition from other incumbents owing to a large selection, varied affordability constructs and strong understanding of needs of the vast e-tailing shopper base in India including those from Tier 2+ cities.”

The report said that over the last three years, new users who were willing to try e-commerce throughout the country have increased and non-metro users account for a large share of the total user base in FY23.

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