Internet Technology

Push for the economy: Internet-led business is driving the growth path for India

today24 August, 2021 15

Background

In a recent statement SAP has painted a hopeful picture about the Indian businesses by pointing out that internet-led businesses in India will push the economy towards growth. In an effort to partner this growth, the company is looking at expanding its presence in new segments of internet-led business. The company has further noted that even though the sector has been extremely volatile because of the pandemic, there has also been a fast-paced adoption of digital.

The stark difference in attitude today is that till a few years back companies were asking questions like what is the way forward to go digital and the ROIs etc. But today, they all want to know how fast or how seamlessly can they drive through the digital revolution. How to adopt digital more holistically through a business transformation lens rather than a typical lift and shift or a technology lens those are the questions, SAP informed.

The executive pointed out that there has also been a rapid adoption of cloud technologies, and the German enterprise software major, which has traditionally been an on-premise solutions provider, has also embraced this shift as customers are demanding that.

Talking about its micro, small and medium enterprises (MSME) vertical, SAP officials mentioned that the segment has been doing well and is an important segment for the company. MSME is one of the key pillars of the company’s India strategy and it’s very close to the heart of their leadership team because that’s one area where they can actually make a dent and help the Indian economy, the statement of the company revealed.

Reporting growth
In a similar vein, recently Bain & Co in a report has also mentioned that the Indian e-retail market saw a 25 per cent growth in FY21 despite the extensive 2-month national lockdown. Even through the pandemic has wreaked havoc and brought a big pause to offline retail, online shopping clearly emerged as the winner as people, forced to remain indoors, took to ordering daily necessities online.

According to the Bain & Co report multiple prolonged disruptions within the e-commerce universe in regional pockets were also witnessed all over the year. The report titled ‘How India Shops Online 2021’ also noted that during the same period, India’s $810-billion retail market shrunk by 5 per cent, along with a 7.3 per cent contraction in GDP. The pandemic led to a 12-month acceleration in e-retail penetration in India, taking its share to 4.6 per cent by end of FY21. This acceleration was even higher in the top eight metro cities, where online shopping is more common: one in three people shopped online at least once last year in the top eight metro cities, the report highlighted.

While India has the third-largest online shopper base of 140 million, the market is still massively untapped and there is immediate potential to reach India’s large internet user base of approximately 625–675 million people. The e-retail market is expected to grow to $120–140 billion by FY26, increasing at approximately 25–30 per cent per annum over the next 5 years, the report said.

Among the categories which saw growth in online sales, the report said select categories, like mobiles, electronics, appliances, saw a massive one-time spurt that then cooled off due to longer replacement cycles and recovery of offline retail. These categories did not see as substantial a jump during the second wave over April–May 2021. However, frequent-use categories, like groceries, household, personal care, saw rapid growth and are likely to continue seeing accelerated growth post-pandemic.

On the behaviour of shoppers, the report said an e-retail visitor spends fewer than 10 minutes per visit on a platform. Brands and sellers have to cut through the clutter and have limited time to tell their story and make an impression in the minds of the consumers. Besides, one in 10 platform users adopt voice search, and one in three new e-retail users visit through a vernacular platform interface. These features will increasingly become mainstream going ahead.

Small-town India continues to accelerate growth in India’s e-retail market, with Tier-2 and smaller towns’ gross merchandise value (GMV) growing 2.5–3 times that of metro and Tier-1 cities in 2020. With such positive numbers and consumers moving towards online, the brands have to push forward their growth story with ‘internet-business’.

Written by: ICS

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