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India boasts approximately 200 million e-commerce users as of 2022, ranking third globally and trailing only the US and China. Interestingly, about 60% of these online shoppers are from tier 3 or smaller cities. In the years to come, the total number of online shoppers is projected to surge, potentially overtaking the US with an estimated 400-450 million users by 2027.

Since 2005, the Indian middle class has more than doubled, growing from 14% to 31% in 2021, and is projected to double again to 63% by 2047. As middle class numbers rise, so will their purchasing power. This trend, along with the changes in consumer behavior due to the COVID pandemic and broader Internet access, have resulted in a significant growth in e-commerce. On top of that, online sellers have been diversifying their business models as they aim to broaden their audience. The range of these models includes social-led commerce, quick commerce with short delivery times, live video commerce, and others. For example, social-led commerce is projected to grow about 50% annually from 2021 to 2025, and live video commerce is expected to reach 600 million users in India by 2025.

Shopping habits in India reflect a comprehensive approach to purchasing. According to a report by the Indian Institute of Management, Ahmedabad (IIMA), Indian consumers conduct a lot of research about a product, reading reviews, watching videos, checking ratings, and browsing multiple websites before making a purchase. It is reported that 90% of users have found new products on YouTube while 64% of shoppers have made purchases based on an online review or on the recommendation of an influencer.

Generation Z has made a significant entry into the world of online shopping and is expected to become a substantial driving force of e-commerce in the future. Another influential factor contributing to the surge in online activity is the improvement of return and refund policies, as well as of payment methods. Incentives such as easy instalments, deferred payments, vouchers, and percentage discounts on using particular payment methods are shaping the purchase decisions of customers. Furthermore, purchases on credit have also become increasingly popular.

The steady rise in the use of credit cards in India is due, in part, to the demonetisation decisions taken by the Indian government in 2016, which has led to an increase in shops accepting card payments. Besides card payments, digital wallets, cash on delivery, and bank transfers are other popular payment methods.
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The busiest shopping months in India are October, November, and December due to major festivals such as Diwali, Vijayadashami, Navratri, Dhanteras, and Christmas. These months offer numerous deals and discounts for shoppers. Additionally, Amazon’s Great Indian Festival Sale and Flipkart’s Big Billion Days sale in September also offer many shopping opportunities with discounts.

Regarding regulations, the Indian government has approved foreign companies to operate online marketplaces in the country. However, it has also implemented various policies to protect Indian businesses. For example, sales by companies that are owned or controlled by a marketplace are prohibited, meaning that marketplaces cannot have retail operations on their own.

India’s most popular e-commerce platforms include:
·       Amazon.in (295.8M Indian visits/month)
·       Flipkart (167.4M Indian visits/month)
·       Myntra (32.9M Indian visits/month)
·       Snapdeal (15.1M Indian visits/month)
·       Shopclues (5.9M Indian visits/month)

Opened in June 2013, amazon.in now has 60 fulfilment centers across 15 states in India. In 2018, amazon.in launched its Amazon Easy program, enabling local neighborhood stores called kirana to act as delivery points or assist customers who are not familiar or comfortable with doing online shopping on their own.

Flipkart, the second-largest online marketplace in India, was launched in 2007. It owns a fashion marketplace, Myntra, and is itself owned by Walmart. Flipkart initially focused on book sales but later expanded to sell a wide range of merchandise.

To be able to do business in India, foreign companies are required to establish an Indian entity with goods and services tax (GST) registration or to partner with an Indian distributor or importer.

In December 2022, in an attempt to 'democratise' shopping, the Indian government supported the launch of the Open Network for Digital Commerce (ONDC) initiative. This initiative promotes open networks for all aspects of the exchange of goods and services over digital networks. It will enable small businesses to reach customers across India without intermediaries. This initiative is also seen as a challenge to big companies like Amazon and Walmart. While the big companies control everything from vendor registration and delivery to customer experience, ONDC will provide a platform where buyers and sellers can perform transactions regardless of the apps or services they are using. For example, a customer can find and order a product from a vendor registered on another platform, this product will then be shipped by any alternative platform that has the fastest speed and lowest rate. To add to that, such initiative can also stimulate brick-and-mortar shops to sell online.

With the increase in shopping, counterfeit activity is also on the rise. A 2023 report released by the Authentication Solution Providers’ Association (ASPA) and CRISIL shows that counterfeiting activities are impacting the growth of major industries in India. The most impacted segments are the fast-moving consumer goods (FMCG), apparel, and agrochemical sectors, which are estimated to comprise 30% of counterfeit items on the market. These are followed by the pharmaceutical, automotive, electronics, and consumer durables sectors, which are estimated to account for 20-25% of counterfeit items on the market. Almost 89% of consumers acknowledge the presence of fake products and are often tempted to buy counterfeits because of price, desire to buy luxury brands and societal pressure. At the same time, about 27% of consumers were unaware that a product was counterfeit when they bought it, making it even more important to raise awareness about the counterfeit issue and identification methods to combat fake products.