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Introduction
It is a basic business strategy that in order to target every social class, retailers should be dealing online and offline. It is called a hybrid business model. Explaining its definition, a hybrid business model is a type of business model that functions with the use of multiple means of reaching clients.The balance reported a few, substantial reasons why should a business be online and offline. However, the context here is different, the reasons are not. To improve the image of a business, 24/7 availability and product presentation, professional and time savvy customer support, cheaper way of marketing, global reach, and fast responsiveness.
Simply, the online presence gives a business an edge over its competitors, professionalizing, reducing, quickly responding, and reaching more customers in less time.
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Global Economy In Times Of The Coronavirus (COVID-19) Pandemic
Last year, the Covid19 pandemic disrupted the world economy as most of the countries in the world imposed nationwide lockdowns in order to hinder the spread of coronavirus. It has been a crisis like no other, especially for businesses across the globe, shutting almost every operation. Even a few countries like Sweden that did not lock down the country, have suffered an economic disturbance. It's mainly because consumers are fearful of catching a virus while shopping. The pandemic has caused an economic shock to the world economy three times worse than the 2008 financial crisis, per World Economic Forum. The Economist reported in January 2021 that the pandemic has cost the world economy a staggering $10 trillion. Meanwhile, the Indian Gross Domestic Product (GDP) has suffered a loss of 7.3% year-on-year in the financial year 2020-2021.
The below chart shows how hard the pandemic disrupted the GDP of the most advanced economies of the world.
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| The chart shows how hard the pandemic disrupted the GDP of the most advanced economies of the world. |
The below chart shows how hard the pandemic disrupted the GDP of the emerging economies of the world.
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| The chart shows how hard the pandemic disrupted the GDP of the emerging economies of the world. |
E-Commerce Sector In Times Of The Covid-19 Pandemic
While there was a global lockdown during the first wave of the pandemic, the businesses that had access to the internet, survived the tough time. The health crisis accelerated the expansion of the e-commerce sector towards new firms and customers. In spite of the global restrictions, the concept of online buying and selling has helped the traditional brick-and-mortar retailers continue operations while providing customers a safe shopping experience, sitting at home.
The Organization for Economic Co-Operation and Development (OECD) in its economic outlook reported that the coronavirus crisis has enhanced dynamism in the e-commerce sector across countries while expanding the scope in the e-commerce. The main focus during the tough period has had essential goods and services. The overall growth in the industry across the globe is reported just because of the significant demand for personal protection-related products such as sanitizers, masks, and disposable gloves. As well as home essential goods such as groceries, home activities products (home cleaning, etc.). The demand for travel-related, sports equipment, and formal clothes was reported to be decreased.
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The Indian online glossary giant JioMart, the subsidiary company of Asia's richest Mukesh Ambani-led Reliance Industries had shaken the Indian online grocery market after just two months of its launch, receiving a record number of orders per day, note.
In the USA, the offline retailers who have had a hybrid business model (offline and online presence) reported nearly 15% growth during the first month of the pandemic, according to OECD research. However, the shift to e-commerce from brick-and-mortar was initially slow during the pandemic. For example, in the US, the share of e-commerce in total retail grew from 9.6% in 2018 to 11.8% in the first quarter of 2020. The share significantly increased during the second set of coronavirus restrictions to around 16%. There was a similar development in the UK and China. In the UK, the share of e-commerce in total retail sales increased from 17.3% in 2018 to 20.3% in the initial time of the pandemic, and 31.3% after that. In China, the share increased to 24.6% during the mid-2020 from 17% in 2018.
The estimates suggest that in most countries, the sales of e-commerce have increased significantly, while the estimates are not backed by the official data.
Indian E-Commerce Industry And The COVID-19 Pandemic
The Indian retail market is the fourth largest in the world with a market capitalization of more than $850 billion, although it is largely unorganized, per ET Retail. In India, it was sort of opposite and shocking to what happened in the US and the UK, initially. The e-commerce market saw a loss of $400 million within a week of countrywide lockdown, per CNBCTV18. Retail consumption dropped significantly in the country. However, the sales increased after a while, increasing the order volume by 36% in the last quarter of 2020, per India Brand Equity Foundation. Despite decreased consumer spending and economic slowdown, the e-commerce industry grew significantly in the year 2020. While there was growing demand, the Indian government allowed 100% Foreign Direct Investment (FDI) in Business to Business (B2B) e-commerce. India has 15.4 crore online transacting households with 13 crore already using e-grocery platforms or willing to try, creating an addressable market of a whopping Rs 21.33 lakh crore.
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| This infographic from the Indian Brand Equity Foundation shows the latest data on the e-commerce market in India |
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The Future of E-Commerce In India
As Business Standard reported the research of Worldpay FIS, The 2021 Global Payments Report, The Indian e-commerce market will be driven by mobile shopping, projecting to grow by 21% annually over the next four years.
Motilal Oswal research, reported by BS stated that the Indian e-grocery market will grow at 59% CAGR to ₹1.31 trillion by 2024.
While India was dealing with the health crisis, the big players of the industry were fighting to dominate the overall Indian retail market with Reliance Industries' retail arm acquiring India's biggest offline retailer, Future Retail, and Amazon knocking on the court doors with a view to terminating the deal. This alone shows the potential of the online retail market in India, while it is only tapped 16% of internet users, per Inc42.
Conclusion
Although the overall e-commerce industry saw a rapid growth in the year due to coronavirus social distancing norms, it struggled for a while initially while lockdowns were imposed in March 2020 across the globe. Mainly, personal protective products like sanitizers and masks, as well as home essentials were in demand during the Covid-19 pandemic. The industry has the potential to grow at a rapid pace with the internet enhancing and becoming cheap for lower and lower-middle-class families. The slow technological adoption in the world delayed the growth of the online retail market, but the pandemic helped to get it on the right growth-track with untapped, exponential potential.
