PremiumGrowth for mobile phones, consumer electronics and durables is likely to stay in double-digits in the next decade, but its share will decline as other categories go digital, a report from diversified financial services Jefferies said in a report
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NEW DELHI : The share of mobile phones, consumer electronics and durables to annual e-commerce gross merchandise value or GMV could climb down from 60% in 2020 to 30% over the next decade as newer, emerging categories such as fashion and food and grocery increase their share of internet-only sales.
Growth for mobile phones, consumer electronics and durables is likely to stay in double-digits in the next decade, but its share will decline as other categories go digital, a report from diversified financial services Jefferies said in a report. The base of internet shoppers will swell too, growing three times to 550 million from the current 160 million driven to a large extent by tier-2 and beyond cities.
The consumer electronics category includes products, such as mobile phones, laptops, tablets and IT accessories. Consumer durables refer to large and small appliances such as televisions, refrigerators, air conditioners and kitchen appliances.
The category saw early adoption of e-commerce from consumers, and accounts for 60% of e-tail gross merchandise value in India in 2020, it said. However, over the next decade, more consumers could log online to buy fashion wear and order their monthly groceries on the internet.
“Despite strong growth in recent years, faster growth in other categories has reduced the share of consumer electronics and consumer durables in e-tail GMV by 10ppt, from 70% in CY17 to 60% in CY20," the report said citing industry data.
This trend is likely to continue. Jefferies estimates the share of consumer electronics and durables to reduce to 30% by 2030; this despite a double-digit growth within the category that will see it grow to $110 billion, by 2030 (calendar year).
“The online consumer electronics category has been an early driver of the e-commerce adoption in India, and back in 2017 (calendar year), together accounted for nearly 70% of the Indian e-tail GMV. The share has been trending down as other categories such as food and grocery, home furnishing, etc. are seeing strong growth rates," the report said.
To be sure, the category accounts for only 6% of the overall Indian retail market—but its contribution to online GMV is multi-fold. For instance, mobile phones formed 37% of the overall GMV in India’s e-commerce market in 2020, the largest by far among all other categories. Online penetration for mobile phones is as high as 55%. Flipkart and Amazon account for an estimated 90% online commerce for smartphones.
Overall, the consumer electronics and durables category is valued at over $60 billion (both online and offline), growing at double-digit rates in the few years pre-covid. The category, however reported a 20% dip in size $50 billion given the covid-19 related disruptions, which had an impact particularly due to the non-essential nature of the category, the report added.
Meanwhile, the size of the retail pie will expand too—growing from $38 billion in 2020, or 5% of the Indian retail market to $ 350 billion by 2030.
As the overall contribution of e-commerce to retail increases the market will also see the growth of newer categories. For instance, the share of food and grocery sales online is set to expand significantly over the next decade going from 9 to 24% of e-commerce GMV, Jefferies said citing data from Redseer.
To be sure—the share of e-grocery rests at 1-2% of the overall retail market, a sliver when compared to more dominant categories.
Lower penetration of categories such as food and grocery would result in faster growth and increased penetration, the report said. The pandemic has already seen further acceleration of food and grocery sales online as well as consolidation in the e-grocery space.
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