While ecommerce may still be a small pie of the retail ecosystem, the rapidly growing sales on online platforms have pointed towards the breaking of a big behavioural barrier. The recent ecommerce penetration in the offline retail sector has been highlighted by the trend of sales in the first half of the current year. Many reports have highlighted that high-value electronics items have been witnessing much higher sales on ecommerce as compared to the brick and mortar shops.
Notably, data suggest that the territory of ‘touch and feel retail’ is slowly getting breached by the changing consumer buying motives. As consumers have shifted to online modes due to convenience and accessibility, the online sales of air conditioners (ACs) have witnessed over 60 per cent growth in value as compared to around 30 per cent in offline retail in H1 2024. The same trend was witnessed in other items as the online sales of washing machines grew by around 15 per cent YoY while the same growth in the offline segment remained flat
The trend has been clear. Buyers are becoming more comfortable in making their purchases on online platforms even for the items that have the ‘touch and feel’ perspective to them where the consumers want to get assured of the product quality among other things before finalising their purchase.
The Pricing Factor
One of the key reasons for the shift towards ecommerce for making purchases has been attributed to the discounts and the price differences across these two channels. Consumers also experience a wider range of products online.
“A significant shift in consumer purchasing behaviour is the growing preference for convenience and accessibility. Although the in-store experience remains vital for purchasing feature-rich products, the trend of researching offline and buying online is driven by price differences and the wider range of products and brands available online compared to physical stores,” stated Soumya Chatterjee, Director, Customer Success - India, GfK, an NIQ company.
While price difference does play a crucial role in influencing the purchase decision, certain deals and discounts have played a key role in propelling the growth engine of the ecommerce ecosystem.
“This trend is further supported by the widespread availability of deals and discounts, which are major motivators for consumer purchases. However, it's also noteworthy that 32 per cent of respondents plan to shop both online and offline equally, indicating that while online shopping is dominant, a substantial segment still values the in-store experience,” stated Swagat Sarangi, Co-founder, Smytten.
Talking about selling price comparison, one such area where offline retail is getting tough competition from the ecommerce giants is the pricing of the products. Consumers experience better deals on online portals. The data from GfK India regarding the average selling price comparison for H1 2024 provides more clarity. Gaming laptops have been more affordable online as the GfK offline sales tracking of 100 per cent came against the GfK Online sensor of 90 per cent. The same goes with frost-free refrigerators as the online sensor came in at 91 per cent against offline sales tracking of 100 per cent.
The Metro-mania
While internet penetration has provided a significant boost to online sales, the urban areas have witnessed even more growth when it comes to making online purchases. The pandemic has also provided a major direction to where the ecosystem is headed.
“The pandemic significantly altered shopping behaviours, accelerating the shift to online platforms as physical stores were temporarily closed. Ecommerce experienced substantial growth and quick commerce has become increasingly popular, particularly in metro areas where convenience is a priority,” mentioned Vikas Bagaria, Founder, Pee Safe.
Ecommerce shoppers often look for discounts and are willing to wait for deliveries, and those seeking a tactile experience prefer to shop in physical stores. A major section of buyers in urban centres have a slight tilt towards ecommerce.
“The surge in quick commerce is fueled by a dense and busy urban population, increasing purchasing power, convenience-driven assortments, and affordable labour. Urban centres have a higher concentration of affluent consumers willing to pay a premium for convenience,” Chatterjee pointed out.
While the tilt towards the purchase of high-value electronics may be visible, there is still a very long journey to go before any conclusions can be made regarding the real market dominator. Customers have been at the front of such developments as they are the ones who are reaping the benefits of such competition.