According to NASSCOM data, India's e-commerce market continues to expand at a rate of 5 percent year-on-year, despite Covid-19 and other challenges that the economy has faced.
Consumer demand for goods from the FMCG sector, as well as electronics and home appliances, has been on the rise and the online channels witnessed significant growth over the past few years. No wonder, India has the world's 'third-largest’ number of online shoppers after China and the US and is the world's 'fifth-largest’ global destination in the retail space. Due to this reason the Indian e-commerce space has become attractive for both domestic and foreign investors. Online shopping experiences have stimulated the development of the retail market, and in turn also the e-retail and e-commerce markets.
Advancement in technology is both a reason and a consequence for the development of e-commerce platforms in the Indian market. Both B2B and B2C businesses have strengthened via e-commerce and e-retail. Customer migration to virtual and digital methods has gone up to 45 percent when it comes to digital purchases.
The paradigm shift to online marketplaces has been possible due to easy digital payment ecosystems, powered by UPI (Unified Payment Interface) model and BHIM (Bharat Interface for Money) mobile wallet applications. They have made online shopping faster, easier, and more convenient. Thanks to Digital India, that has caused the virtualization and digitization of marketplaces and payment methods enabling services like contactless cards, tap-&-go, and QR code scanning methods that have got the fancy of customers over the past year or two.
Artificial Intelligence (AI) makes use of customer analytics, furnishing personalized and targeted offers to customers by making use of their searched products, previous purchases, and browsing habits thereby, expanding virtual retail businesses. Customer care and grievance redressal mechanisms have been made simpler with the use of chatbots and NLP (Natural Language Processing) applications' technology that understands and interprets voice.
AI has made warehouse management easier as well as the operation of the brick-and-mortar stores. Be it logistics, or management of orders, dispatch, return, exchange, or payments, all procedures have been revolutionized by the use of AI robots. Whether it be running analytics on business campaigns, email campaigns, advertising, or social media campaigns, all are executed by artificial intelligence.
Supply chains in e-commerce are easily managed by artificial intelligence, making decisions related to vendors, buyers, market requirements, dispatch, and delivery seamless. Customer experience has been enriched and made better consistently reducing the gap between in-store experience and the virtual experience through on-screen mode.
Blockchain is another great advancement in technology that e-commerce platforms are intensively making use of. Blockchain is a technique that records transactions on databases that are encrypted and distributed over many computer networks, very similar to physical ledgers, but digitally. It is used to develop a decentralized business model for buying and selling on e-commerce platforms. It has benefits over cloud computing concerning multi-party authentication, and also concerning data anti-theft. It saves a lot of the system's overhead expenses.
The e-commerce and e-retail industries were facing many hurdles such as transparency, efficiency, security, and trust issues. Blockchain technology solves almost all of these matters, bettering payment mechanisms, security supply chains, and automation of work.
The lockdown was an inflection point for the e-commerce sector and this sector was one of the biggest beneficiaries pushing online demands to an all-time high. This structural shift was possible only because there was appropriate technology to support this shift. The online demand for personal care products, food, groceries, apparel, accessories, electronics, and many other consumer goods has risen by 26 percent because consumers switched to online sales channels due to the pandemic and restrictions on moving around and physical shopping. The Indian e-commerce sector is estimated to rise and surpass its American and Chinese counterparts by 2033-2034.
Hence, rising standard of living, urbanization, smaller, nuclear families, and most substantially, the growth of digital literacy, evolution in customer patterns and habits of shopping, lockdown impact encouraging people to shop online, consumption of internet services, and increased use of smartphones over time, amalgamated with the most important factor which is the technological advancements, have contributed to the growth of the e-commerce sector in recent times.