India's e-com sees 26.2% YoY order growth in FY 2023

Driven by the increasing number of young consumers, the fashion and accessories segment witnessed a YoY order volume growth of 19.5 per cent along with a rise in its GMV by 15.3 per cent during FY 2023, according to a report titled India E-commerce Index 2023 by Unicommerce, an e-commerce enablement SaaS platform.

As brands continued to adopt a mixed approach to serve their customers across their brand websites as well as marketplaces, FY 2023 saw consumer preference move slightly towards marketplaces which witnessed a 31.2 per cent YoY order volume growth during the period. Brands continue to offer exceptional experiences via their brand websites, providing exclusivity and personalisation and saw a YoY order volume growth of 24 per cent during FY 2023.

Other segments including fashion and accessories saw higher YoY order volume growth across marketplaces during FY 2023 at 27.1 per cent during the same period.

As offices return to regular operations, there has been a notable shift of consumers shifting back to Tier I and metropolitan cities for work, resulting in Tier I cities exhibiting fast growth in order volumes relative to Tier II and Tier III cities. Tier I regions indicated the highest YoY order volume growth of 31.1 per cent during FY 2023, followed by Tier II and Tier III cities which witnessed YoY order volume growth rates of 23.3 per cent and 22.4 per cent respectively, during the same period. Consistent e-commerce growth in Tier II and Tier III cities underscores their substantial untapped potential. These cities are witnessing continued e-commerce adoption driven by increased online consumer activity and small businesses from these regions venturing into e-commerce as potential sales channels.

The market share of Tier II and Tier III cities stood at 18.6 per cent and 37.1 per cent respectively in FY 2023, reducing slightly from 19.2 per cent and 38.6 per cent respectively during FY 2022. Tier I cities however observed a slight increase in market share during the same period which stood at 44.3 per cent in FY 2023 as compared to 42.2 per cent in FY-2022.

The FY-2023 exhibited a slight rise in order returns which stood at 10.4 per cent as compared to 9.8 per cent order returns in FY-2022. The report further attributed the rise in order returns largely due to cash-on-delivery (COD). In FY 2023, the return rate for COD orders stood at 20.9 per cent, a slight uptick from the 19.3 per cent recorded in FY 2022. Conversely, returns on prepaid orders exhibited a marginal increase, rising from 5.6 per cent in FY 2022 to 5.8 per cent in FY 2023.

The notably lower return rate on prepaid orders has prompted companies to incentivise such orders, reflecting a strategic approach to minimise returns and enhance customer satisfaction. Also, COD orders continue to account for more than 60 per cent of the overall returns, while prepaid orders accounted for 39.2 per cent of the overall returns. 

Interestingly, returns on marketplace orders grew by 26.3 per cent in FY 2023, while it was 24.2 per cent in FY 2022. With greater use of technology and deeper consumer connect, D2C brands witnessed a marginal reduction in order returns which stood at 6.2 per cent in FY 2023 as compared to 6.3 per cent during FY 2022.

As the demand for omnichannel strategies rises, new-age brands have integrated this approach into their business models, while traditional enterprises are adopting cutting-edge technology to establish a cohesive framework that serves both their physical and online sales channels. The number of online orders shipped-from-store reported a 44.6 per cent growth during FY 2023 compared to the previous financial year.

Stores continue to adopt omnichannel technology to serve their customers better and enhance their shopping experience. During FY 2023, the number of stores that implemented omnichannel operations rose by 58.4 per cent as compared to the last financial year.

“The launch of India's e-commerce Index 2023 marks a pivotal moment in our industry’s evolution. The consistent growth of over 25 per cent underscores the robust maturity of the sector. E-commerce is no longer just an additional sales channel; it has seamlessly woven itself into the fabric of modern business. Companies are harnessing digital platforms not only to sell but also to promote and engage with consumers. We are transitioning into a true omnichannel era where brands and consumers seamlessly interact and transact across a multitude of online and offline touchpoints,” said Kapil Makhija, CEO of Unicommerce.

ALCHEMPro News Desk (NB)