Unicommerce report reveals strong growth in India's E-commerce landscape for FY-2023

 The report signals the maturation of India's e-commerce landscape, revealing a notable 26.2% year-on-year growth in order volume for the FY-2023, supported by a 23.5% rise in the Gross Merchandise Volume (GMV) compared to the previous fiscal year.

The report sheds light on the growing consumer preference for online shopping, underlining the swift adoption of omnichannel strategies by brands to meet rising demand across both digital and physical channels.

Electronic peripherals & home appliances, eyewear & accessories dominate FY-2023

The electronic products and peripherals segment in e-commerce experienced robust growth, with a remarkable 46.8% year-on-year increase in order volume and a 20.6% growth in GMV during FY-2023. This growth can be attributed to the emergence of new brands offering cost-effective products within this segment.

The eyewear and accessories category also witnessed significant expansion, with a substantial 44.6% year-on-year surge in order volume during FY-2023. The segment's GMV saw an impressive 52.8% annual rise compared to the previous financial year. The beauty and personal care sector displayed a respectable 26.6% year-on-year increase in order volume and an 18.9% growth in GMV during FY-2023. Driven by a burgeoning number of young consumers, the fashion and accessories domain observed a 19.5% year-on-year order volume growth, accompanied by a 15.3% increase in GMV during the same period.

Emerging E-commerce categories: Home decor and health & pharma show strong growth

The home decor segment demonstrated robust growth, with a notable 27.2% year-on-year increase in order volume during FY-2023. Brands offering high-quality products led to a remarkable 46.5% annual rise in GMV compared to FY-2022, contributing to a 15% surge in the average order value during the period.

The health and pharmaceutical segment, a significant player in the e-commerce arena, recorded a 22.1% year-on-year increase in order volume during FY-2023. Catering to diverse consumer needs, the segment's GMV experienced a substantial 38.5% rise, resulting in a 13% growth in average order value during the same period.

Marketplace growth surpasses brand websites in FY-2023

In FY-2023, marketplaces witnessed a faster growth rate of 31.2% in order volume, as brands continued to employ a hybrid approach, catering to customers through both brand websites and marketplaces. Brands offering exceptional experiences on their websites, focusing on exclusivity and personalization, experienced a 24% year-on-year increase in order volume during FY-2023.

The beauty and personal care segment exhibited a remarkable 80.1% year-on-year order volume growth across marketplaces during FY-2023, while brand websites within the same segment saw a 20.5% rise. Electronics products and peripherals, as well as home appliances, experienced a higher year-on-year order volume growth across brand websites (55.4%) compared to marketplaces (36.7%) during FY-2023. Other segments such as home decor, fashion & accessories, and FMCG also saw substantial year-on-year order volume growth across marketplaces, experiencing 39.1%, 27.1%, and 23.6% growth, respectively, during the same period.

Tier I cities lead growth; tier II and tier III cities show promise

The return to regular office operations prompted a shift in consumer behavior, with consumers returning to Tier I and metropolitan cities for work. As a result, Tier I cities exhibited the highest year-on-year order volume growth of 31.1% during FY-2023, followed by Tier II and Tier III cities with growth rates of 23.3% and 22.4%, respectively, during the same period. The consistent growth in e-commerce within Tier II and Tier III cities underscores their untapped potential, driven by increased online consumer engagement and the entry of small businesses into e-commerce.

In terms of market share, Tier II and Tier III cities accounted for 18.6% and 37.1%, respectively, in FY-2023, slightly lower than the figures of 19.2% and 38.6% in FY-2022. On the other hand, Tier I cities observed a marginal increase in market share, growing from 42.2% in FY-2022 to 44.3% in FY-2023.

Addressing order returns to enhance customer experience

The FY-2023 witnessed a slight uptick in order returns, reaching 10.4% compared to 9.8% in FY-2022. Cash-on-Delivery (COD) orders played a significant role in this increase, with a return rate of 20.9% in FY-2023, up from 19.3% in FY-2022. In contrast, returns on prepaid orders saw a marginal rise from 5.6% in FY-2022 to 5.8% in FY-2023. Brands have strategically incentivized prepaid orders to minimize returns and improve customer satisfaction. Notably, COD orders accounted for over 60% of overall returns, while prepaid orders constituted 39.2%.

Returns on marketplace orders exhibited a growth of 26.3% in FY-2023, compared to 24.2% in FY-2022. Direct-to-Consumer (D2C) brands witnessed a marginal reduction in order returns, decreasing from 6.3% in FY-2022 to 6.2% in FY-2023, attributed to increased technological integration and enhanced consumer engagement.

Omnichannel: A pivotal brand strategy

With the growing demand for omnichannel strategies, modern brands are incorporating this approach into their business models. Traditional enterprises are also embracing advanced technology to establish a seamless framework that caters to both physical and online sales channels. Online orders shipped from physical stores saw an impressive growth of 44.6% during FY-2023 compared to the previous fiscal year.

Stores are increasingly adopting omnichannel technology to enhance customer experience. The number of stores implementing omnichannel operations grew by 58.4% during FY-2023, showcasing a significant increase from the previous financial year.

The e-commerce landscape in India continues to evolve, with emerging trends and consumer behaviors shaping the strategies of businesses across the country. As the industry matures, brands are diversifying their approaches to meet the dynamic demands of a growing digital marketplace.