Massive online marketing campaigns and promotions by e-tailers suggest that retail has entered a new era where e-Commerce and technology bellwethers like Amazon, Alibaba, Apple, Google and Microsoft have created a new ground for consumer expectations. The online retail market is on a growth trajectory due to the expansion of the internet with an increase in mobile connectivity.

Global Overview: Globally, the retail market has seen sharp progress with the advent of e-commerce, primarily due to the expansion of the internet with an increase in mobile connectivity. As per a recent study conducted by Digital e-commerce, total global e-commerce sales reached nearly USD 3.4 trillion in 2019.

India Overview: Online retail or e-tail is growing at a fast rate in India. The online consumer electronics and appliances market in India was valued at approximately INR 100Kcrore in FY2019 and the market is expected to register a CAGR of 24.5% from FY 2019 to FY 2025, as per a recent study conducted by Frost & Sullivan.

There are three models of online retailing in India:

three models of online retailing

Online retailing is primarily driven by internet proliferation in India, which is growing year-on-year. The global telecom industry body Global System for Mobile Communications (GSMA) expects that by 2025, the total number of internet users will reach 92 crore, creating an e-Commerce and m-Commerce boost. Also, due to increased penetration of electronic gadgets, digital payments in India are on the rise, which account for 80% of online transactions. Other key drivers include rising disposable income and an upsurge in the Gen Y population.

Online retailing is more convenient for consumers and sellers. Time to market, cost-savings and scale are the major advantages of online sales. Some key trends are creating a paradigm shift in the online retailing market in India, including:

(1) Technology Adoption

Technological advancements such as chatbots, video selling, picture search, shared cart, face recognition payments and image/voice search technologies have been part of the online shopping experience in India, with the country being an early adopter of global technological trends. The use of chatbots on company websites provides a more personalized shopping experience. Artificial intelligence (AI) and machine learning (ML) assist with product recommendation engines and virtual assistants. Virtual reality (VR) enables an immersive shopping experience, both in-store and online. Also, the use of blockchain technology ensures data security and lowers transaction costs.

Online players need to adopt new technologies, such as VR and AR, to improve targeted marketing to consumers. Chatbots and video selling are an effective way of promoting a product. Suppliers should employ third-party experts for 3D modeling of products.

(2) Digital Payments

Traditionally, cash payments were the most preferred form of payment in India due to a lack of trust and security concerns of online payments. However, with a sizeable young population having access to smartphones, digital payments are rising and expected to form 80% of the transactions in India by 2025. As per ASSOCHAM (The Associated Chambers of Commerce and Industry), the Indian market has been adopting digital eWallets faster than the US, the UK, and China. Transactions have also grown 10-fold since demonetization. In 2019, mobile wallet transactions in India were at about INR 1.84 Lakh crore. Improved payment infrastructure and telecom have encouraged the adoption of digital wallets in India. The ongoing COVID-19 crisis is an inflection point in payment methods in India as consumers increasingly opt for contactless payment methods. With a pandemic threat looming large in the future, the demand for contactless payment through mobile wallets is expected to increase.

Providing easy financing options for online purchases such as secure payment gateways, payment through eWallets, EMIs, and cash on delivery will encourage online purchases. Spreading awareness about the cybersecurity measures in online payments to mitigate security breaches during transactions will help improve consumers’ trust in online payment methods.

(3) Subscription Services

Subscription services are an effective way to build a loyal customer base for e-commerce firms. It adds value by having prospective buyers close to their own website. The industry’s technology trends indicate that personalized subscription services will continue to take center stage in online shopping.
Online platforms such as Flipkart and Amazon have introduced loyalty programs by providing points, which can be converted to cash on future payments. Amazon’s monthly and annual subscriptions, called Prime, enhance the customer experience with additional features such as first preference for new product launches, quick and free delivery, and many more.

Subscription services within online retailing includes a wide plethora of appliances, building a loyal customer base with the help of strategic customer outreach programs, including contests, forums, social media engagement, and insightful content on portals.

(4) Omnichannel Strategy

In the current scenario, any player in the consumer electronics industry cannot afford to have a weak online presence. With the increasing penetration of internet connectivity, consumer electronics companies should not limit themselves to just brick-and-mortar stores. Consumers are following the “research online and buy offline” trend for home appliances by comparing prices online and reading through user comments, but then physically visiting the store to purchase the product. Also, consumers follow the “research offline and buy online” trend for certain other products where high online discounts are available by looking at product details in open stores and ordering online. Companies should explore the possibility of a multi-channel strategy. New models such as “brick-and-click” can help gain customers while maintaining convenience.

Omnichannel convergence will become inevitable in the near future, helping OEMs convert customer engagements to sales. “Web-to-store” and “brick-and-click” models will become widely popular. With the rise of “research online, buy offline” and “research offline, buy online” trends, more vendors are expected to launch their exclusive web stores. Vendors will expand their online product portfolio and launch exclusive products to compete in the online space.

The Future

The future of retailing is heavily dependent on online platforms. Apart from the metros in the urban market, Tier II and Tier III cities have the maximum penetration potential for online consumer products. The total online retailing market is dominated by the consumer electronics and appliances segment. More users are expected to participate in online shopping in the coming years, especially in this segment. After-sales service is considered to be a key differentiator for online sales in India. Companies should provide easy and safe financing options for online purchases through secure payment gateways, payment through eWallets, EMIs, and cash on delivery, which will encourage online purchases. Companies must focus on targeted and personalized digital and social media marketing to acquire new and repeat customers by integrating the seller’s mobile application with the consumer’s social media profile.

For more information or to schedule a growth strategy dialogue with our analyst, please e-mail Nimisha Iyer at

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