Silver Linings for E-Commerce | FTI Consulting

Silver Linings for E-Commerce

Opportunities Amidst The Pandemic and The Associated Business Risks

Forensic & Litigation Consulting | Retail & Consumer Products

August 28, 2020

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The COVID-19 pandemic has had a significant impact on both global and local economies. The Indian economy shrank 23.9 percent year-on-year in the second quarter of 2020, the biggest contraction on record. While most Indian industries grapple with the aftereffects of the economic standstill, e-commerce and digital payment systems look towards new economies of scale in the pandemic hit economy as well as in the post pandemic economy. As one of the few sectors that continued to operate throughout lockdowns, e-commerce and digital payments have expanded and are in the process of efficiently scaling their operations into various new business segments, product categories, portfolios and regions.

Preceding the pandemic, in FY 2019, total retail digital payments in India were INR 1,638 lakh1 crore. While total payments made in India reduced during the lockdown, digital payments, as a percentage, has seen a gradual increase, especially in online delivery of essentials including food and pharmaceuticals. Over-the-top (OTT) platforms, educational technology, utility/bill payments among others.

Traditionally, Indian consumers prefer brick-and-mortar stores, where they may see the actual product before making a purchase. However, the extended countrywide lockdown and social-distancing measures have necessitated an increase in consumers’ acceptance of e-commerce.

The present crisis has created an opportunity for e-commerce companies to ‘tap’ into a wider customer base. As such, the e-commerce market is estimated to grow at a compound annual growth rate (CAGR) of 19.6 percent between 2019 and 2023, and it is predicted to reach INR 7 lakh crore by 20232.


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