Experts Predict India’s Internet Economy to Hit $1 Trillion by 2030
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.
The year 2023 marked a crucial turning point for India’s e-commerce sector, with notable changes in consumer trends, technology, and regulations. In Govern 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 fuelling its ongoing expansion.
During the session, Siju Narayan, chief experience officer at RexEmptor Consult LLP, highlighted that quick commerce’s rapid expansion could face challenges when extending across wide product categories. However, this disruptive model is poised for transformation through increased co-opetition, strategic partnerships between players, kirana stores, and larger marketplaces.
“Ultimately, quick commerce cannot be viewed in isolation from the entire retail industry’s landscape,” said Narayan. He said that India’s preeminent position in retail is underpinned by three key factors: rising customer purchasing power, the advancement of consumer-enabling technology, and a robust financial infrastructure. In this equation, the government’s role is pivotal in nurturing an environment conducive to the retail sector’s sustained growth and innovation.
“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 top priority for them,” said Narayan.
Madhumita Mohanty, retail consultant and educator, was of the view that e-commerce growth in India is 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. She added, “Quick commerce has shaken up the e-commerce sector as a disruptor model promising faster delivery. As e-commerce evolves, players must cater to the changing needs of consumers across India’s cities and towns.”
Srinath Sridharan, business advisor, member – governance council, Fintech Association for Consumer Empowerment was of the view in the growing Indian e-commerce, the enthusiasm for consumption warrants a measured approach.
“While capital fosters innovation, the absence of robust and proven consumer protection poses inherent risks,” said Sridharan.
He said that brand loyalties will be tested when consumers explore diverse options, a shift reflecting evolving preferences to be seen as “unloyal”. He said maintaining a responsible and sustainable consumption economy with the next two decades in mind, demands a balance between growth and safeguarding interests.
Shriram Subramanian, founder and managing director 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 FY2023.
“E-commerce players are benefiting from huge tailwinds,” said Subramanian. “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.”
K Giri, director general of Empower India said the customers buy from places which ensure safety, convenience and reliable delivery. He said that players in India like Amazon, Flipkart and eBay have been able to imbibe a sense of trust with consumers. This will increase GMV traction for the online shopping space. “If you count the sellers of Jio, Tatas, Flipkart, Amazon and eBay, I believe 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. For instance, Amazon utilizes advanced 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 to 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 is 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.
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