Beauty & Personal Care Continue to Drive India's E-Commerce Growth

E-commerce sales volume grew 69.4 percent in FY22 compared to 44 percent in FY21.
Beauty & Personal Care Continue to Drive India’s E-Commerce Growth

Ecommerce sales volume grew 69.4 percent in FY22 compared to 44 percent in FY21, according to a report by Unicommerce in collaboration with Wazir Advisors. The beauty and personal care category continued to drive this growth, with a 143 percent increase in volumes year-on-year.

“Many digital-first brands have emerged over the last two years in the beauty and personal care segment, which provides tough competition to traditional players,” the report said. “Interest from investors and the rising number of ‘House of Brands’ further support growth in the segment.”

Meanwhile, gross merchandise value (GMV) grew by 73.6 percent, outpacing order volume growth. This showed that consumers were more confident about spending on discretionary items in FY22 than in FY21 when the GMV growth was just 37.2 percent and volume growth was 44 percent.

The faster GMV growth has resulted in a 2.5 percent increase in average order value, the report said.

The beauty and personal care category was followed by footwear, eyewear, fashion, and accessories as people started stepping out more often, it said. Footwear, fashion, and accessories have traditionally been the biggest contributor to overall e-commerce order volumes over the years.

Other segments that were non-existent prior to the pandemic but have grown significantly in the last two years are FMCG & agriculture, and health & pharmaceuticals, the report said. The FMCG & agriculture segment reported 61.7 percent order volume growth, while order volumes for health & pharmaceuticals grew by 62.4 percent.

The pandemic accelerated the shift online and many traditional brands have built e-commerce capabilities, the report added.

Despite clocking strong year-to-year growth in FY22, e-commerce is seeing consumption growth moderating across categories thanks to rising inflation, especially in segments considered to be discretionary.

D2C vs Marketplaces

Brands across segments are building a strong online presence and focussing on selling directly to consumers. Sales on brands’ websites grew by 80 percent in FY22 compared to 59 percent growth on marketplaces like Amazon and Flipkart.

“Companies have realized that it’s important to invest in strong brand website operations to develop a connection with consumers,” the report said. “Brands focus on the delivery of an elevated shopping experience for consumers using the brand website. Shoppers are now aware of the potential deals on various channels and prefer to shop accordingly.”

The report said a key reason behind the rise of direct-to-consumer (D2C) brands is the rising acceptance of supply chain and logistics platforms, which ensure a seamless post-purchase experience.

“Brand websites ensure strong growth for the health & pharmaceuticals segment (84.8 percent) as well as fashion (89.5 percent),” it said. “Consumers prefer marketplaces for the footwear segment, as it offers wider shopping options. Having said that, marketplaces are yet to make significant inroads into the eyewear space, which explains the significant growth rate.”

In India, SoftBank-backed Lenskart continues to dominate the eyewear segment online. It was recently valued at $4.5 billion after raising $200 million in a funding round led by Alpha Wave Global.

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