National, 16 May 2024: India’s internet economy is estimated to reach USD 1 trillion by 2030, primarily due to e-commerce, which is expected to be worth USD 325 billion and rank third globally. The year 2023 marked a crucial turning point for India’s e-commerce sector, with notable changes in consumer trends, technology, and regulations. InGovern Research Services, a leading corporate governance advisory firm, hosted a virtual roundtable to deliberate on the notable developments in India’s e-commerce sector in 2023, with a particular focus on the essential role of customer trust in fueling its ongoing expansion.

During the session, Mr. Siju Narayan, Chief Experience Officer, RexEmptor Consult LLP highlighted, “Quick commerce’s rapid expansion could face challenges when extending across wide product categories. However, this disruptive model is poised for transformation through increased co-opetition, strategic partnerships between players, kirana stores, and larger marketplaces. Ultimately, quick commerce cannot be viewed in isolation from the entire retail industry’s landscape. India’s preeminent position in retail is underpinned by three key factors: rising customer purchasing power, the advancement of consumer-enabling technology, and a robust financial infrastructure. In this equation, the government’s role is pivotal in nurturing an environment conducive to the retail sector’s sustained growth and innovation. The government has done a fabulous job of digitally priming up the entire country by establishing the necessary digital and financial infrastructure. The consumer protection aspect is also top priority for them. Now, they should seriously consider conferring industry status to retail such that the current momentum is supported and boosted.”

Ms. Madhumita Mohanty, Retail Consultant & Educator, said, “E-commerce growth in India is driven by mobile phone and internet penetration, increasing aspirations combined with increased disposable incomes, urbanization and UPI adoption. A critical growth driver is the increasing demand from Tier 2 and Tier 3 cities, where consumers lack access to diverse brands and products locally. E-commerce bridges this gap, enabling them to fulfil their wants.” She added “Quick commerce has shaken up the e-commerce sector as a disruptor model promising faster deliveries. As e-commerce evolves, players must cater to the changing needs of consumers across India’s cities and towns.”

Mr. Srinath Sridharan, Business Advisor, Member – Governance Council, Fintech Association for Consumer Empowerment, said, “In the growing Indian e-commerce, our enthusiasm for consumption warrants a measured approach. While capital fosters innovation, the absence of robust and proven consumer protection poses inherent risks. Brand loyalties will be tested when consumers explore diverse options, a shift reflecting evolving preferences to be seen as “unloyal”. Maintaining a responsible and sustainable consumption economy with the next two decades in mind, demands a balance between growth and safeguarding interests, lest we face significant later repercussions for our current indulgences.”

Mr. Shriram Subramanian, Founder and MD of InGovern Research Services, said, “Today InGovern hosted a webinar to discuss the significant developments in India’s e-commerce landscape over the past year and the pivotal role of customer trust in the ongoing expansion of this sector.” He added, “As India becomes a $5 trillion economy, e-commerce will continue to annually grow at about 25% per annum from $60 billion in FY2023. E-commerce players are benefiting from huge tailwinds. They are responsibly enabling small and medium enterprises to sell not just in India but globally through their global selling programs. They continue to invest in tools and processes to enhance customer trust.”

Mr. K Giri, Director General Empower India said, “The customers buy from places which ensure safety, convenience and reliable delivery. Players in India like Amazon, Flipkart and e_bay have been able to imbibe a sense of trust with consumers. This will increase GMV traction for the online shopping space. If you count the sellers of Jio, Tatas, Flipkart, Amazon and eBay, I believe there could be a crore of small sellers out there who can thrive in their business. We must create an enabling mechanism for these sellers to grow.”

Experts underscored the pivotal role of consumer trust in the success of online businesses, stressing the importance of transparency, data security, user-friendly interfaces, efficient logistics, and responsive customer support in fostering trust within the e-commerce sector. They highlighted how leading e-commerce players prioritize clear communication of policies and product details, invest in stringent data security measures, ensure intuitive user experiences, maintain efficient logistics, and offer responsive customer support channels to enhance customer satisfaction and loyalty. For instance, Amazon utilizes advanced AI/ML to combat fake reviews, eliminating 200 million suspected fake reviews from its platform in 2022. In 2023, Amazon invested $1.2 billion and employed more than 15,000 people to combat fraud and protect customers. Small sellers can emulate these strategies by prioritizing transparency, investing in basic data security measures, optimizing their platforms for user-friendliness, partnering with reliable shipping providers, and providing responsive customer support to build trust and credibility with their customers.

While the top e-commerce companies continue to focus on transparency, and providing a greater shopping experience, there is a parallel need for flexible government policies to foster growth, support sellers, and uphold customer interests. These regulatory frameworks will be instrumental in steering the e-commerce sector towards sustainable growth, maintaining a conducive environment for all stakeholders.