Etail’s turning into 4-way race with Reliance and Tata forays – The Economic Times

lipped from: https://economictimes.indiatimes.com/industry/services/retail/etails-turning-into-4-way-race-with-reliance-and-tata-forays/articleshow/90299542.cms

Synopsis

“The Amazon-Flipkart duopoly is fast becoming a four-way competition as Reliance Digital and Tata join the fray,” said the report, ‘The State of Online Retail in India’. “We estimate that Flipkart, Reliance, Amazon, and Tata (FRAT) collectively own more than 80% of India’s online retail market, and each is manoeuvring to gain market share.”

The Amazon-Flipkart duopoly in India‘s online retail space will end soon with Tata and Reliance joining them at the top, research and advisory firm Forrester has said in a report shared with ET.

“The Amazon-Flipkart duopoly is fast becoming a four-way competition as Reliance Digital and Tata join the fray,” said the report, ‘The State of Online Retail in India’. “We estimate that Flipkart, Reliance, Amazon, and Tata (FRAT) collectively own more than 80% of India’s online retail market, and each is manoeuvring to gain market share.”

While Tata Group is working on a super app to take its ecommerce play to the next level and has acquired platforms like BigBasket and 1mg, Reliance is building its ecommerce platform called Jiomart and has made several investements, including quick commerce platform, Dunzo in January this year.

ET reported on March 16 that Tata is seeking clearance from National Payments Corporation of India (NPCI) to start operating on the UPI as a third-party payments service provider offering digital payments services. ET had also reported on March 11 that Tata Digital, the tech arm of the conglomerate, is seeking more funds from parent company Tata Sons for expansion.

The Forrester report said India’s overall retail growth slowed for the first time after several years of double-digit increases in FY21when GDP shrunk 7.3% amid the pandemic and lockdowns. But online retail grew 5%, adding $1.6 billion in sales. It expects the Indian online market to get back on a faster growth track with the market expanding 20% every year to reach $85 billion by 2025.

Forrester estimates the 2021 online retail market size to be $41 billion, growing $7 billion year on year, and that it will reach $50 billion in 2022 and $60 billion in 2023.

MARKET OPPORTUNITY

Forrester’s Ecommerce Readiness Index 2020 categorises India as a “large and developing opportunity for online retail”. Only the US and Chinese markets have “larger opportunities”. This readiness, it said, is evident from the more than $8 billion that local and international organisations invested in online retail in 2020 and 2021. The number of online buyers in India shot up from 71.5 million in 2016 to 179.5 million in 2020, and Forrester forecasts this number to rise to 291.5 million by 2025. This growth will be largely driven from smaller towns and rural areas, it said.

As of September 2021, rural India had 336 million internet subscribers, 11.3% rise over 2020. The overall online buyer population is set to grow at a CAGR of 10.1% in 2020-25; smaller towns will account for most of this. “The pandemic has made people comfortable with online shopping,” said Ashutosh Sharma, VP and research director at Forrester. “More importantly, this has resulted in a consumer behavioural change.”

POST-PANDEMIC ECOMMERCE

Before Covid, smartphones, computer hardware and software, and consumer electronics categories were the growth engine for ecommerce. But the pandemic turned the tide with groceries and personal care seeing more growth.

Forrester predicts the online smartphone penetration to taper off due to longer lifecycle, chip shortage, and logistics costs increasing the price of products.

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