COVID 19 might have had a disastrous effect on global economy (even though large conglomerates like Apple just seem to grow and grow), ecommerce has been one of the few businesses that has been able to sustain. Not just sustain, ecommerce has seen an increase in growth, both in India as well as globally. A new report titled ‘E-commerce Trends Report 2020’ tells us exactly how much this growth has been post COVID-19 lockdow, and claims that the market in India grew by a massive 17% during this pandemic.
The report highlighted how much of an impact the changing scenario of the world has had on ecommerce, how it has pushed companies to take a more direct-to-consumer approach by creating their own online channels, and how the return rate for products has taken a major dip. The ecommerce business had already been on a rise before COVID ever happened, especially in India where the volume saw a growth of ~20% while the GMV witnessed a surge of ~23% with an average order size of ~INR1100 before the pandemic. However, coronavirus just added fuel to this fire and caused the numbers to go through the roof.
Growing volume of orders through ecommerce:
As of June 2020, overall e-commerce has not just recovered but witnessed an order-volume growth of 17%. Out of this, the beauty and wellness sector was one to show unprecedented order volume growth of ~130% followed by FMCG & agriculture and health & pharma with a growth of 55% and 38% respectively.
Moreover, the covid era has also forced online platforms to adapt their infrastructure to focus on cities beyond the metropolitan cities. Tier II and beyond cities now make up for 66% of India’s e-commerce, while Tier III and beyond cities witnessed a 53% growth, making it the fastest-growing region.
However, the top 3 states, by e-commerce volumes, are Delhi NCR, Maharashtra, and Karnataka, and they constitute 65% of overall consumer demand.
Brands taking a more direct to consumer approach:
Coronavirus has also caused companies to reevaluate their supply channels, and create their own online portals for direct to consumer delivery of their offerings. The report suggests that there’s been a considerable growth of 65% of brands developing their own website, which led to an increase in self-shipped orders. Moreover, the number of consumers making purchases directly from companies’ website is increasing at much faster pace than marketplaces, with these channels witnessing an 88% order volume growth as compared to 32% order volume growth on marketplaces.
That being said, there’s actually been a decline in the percentage of total orders that were shipped directly through companies’ website as compared to Feb 2020. Back then the percentage of self-shipped orders constituted 35% of the total number. Now, this number has declined to 30%. This is mostly because the sales through marketplaces have grown tremendously, and is not a testament to failing self shipping centers.
Return rate sees a dip
Compared to pre-COVID, customers are returning way less products than they used to, with return rate taking a dip of 10%-30%, depending on the segment. The reduced return can be attributed to the new safety norms, increasing demand for essential products, which are generally non-returnable.
The total return percentage saw a decline of 13% as compared to the year before, constituting ~17% of the overall order volume as compared to ~20% in 2019.
The focus has been on returns from COD orders, especially since they constitute large part overall returns. Companies have spent large amounts of money to reduce COD returns, which has garnered some good results. The return percentage on COD orders has reduced from 27% in 2019 to 20% in 2020 and for prepaid orders, and the total return has decreased from 12% in 2019 to 11% in 2020.
Interestingly, Tier II and beyond cities have seen a significant reduction of ~23% in overall returns, mostly due to attempts made by companies to rally last-mile delivery and customer centric return policies.