E-commerce, fintech surged in smaller cities post-COVID: Economic Survey

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The e-commerce sector “witnessed a renewed push and a sharp increase in penetration in the aftermath of the pandemic,” the Economic Survey 2022-23 said. The growth was also fuelled by “growing internet penetration, rise in smartphone adoption, innovation in mobile technologies, and increased adoption of digital payments,” the Survey noted. The sector is projected to grow at 18% annually, according to a Worldpay FIS report cited in the Survey.

Micro, Small and Medium Enterprises (MSMEs) fared particularly well, the Survey said. Those “that adopted digital solutions fared far better than offline MSMEs, assisting them in accessing a large marketplace without incurring huge costs,” according to a study by the Indian Institute of Foreign Trade cited by the Survey.

Faster growth in smaller cities

Citing a report by Unicommerce and Wazir Advisors, the Survey noted that urban e-commerce trends were speeding up differently depending on city size. “The shoppers from tier-II and tier-III cities accounted for over 61.3 per cent of the overall market share in FY22, increasing from 53.8 per cent in FY21. The order volume from tier-II and tier-III cities grew at almost double the pace of tier-I cities, with 92.2 per cent and 85.2 per cent YoY growth, respectively, in FY22,” the report said. “In contrast, tier-I cities indicated a comparatively slower order volume growth rate of 47.2 per cent.”

The Government e-Marketplace (GeM) achieved an annual order volume of ₹1 lakh crore, the report said. “The recent initiative of the launch of Open Network for Digital Commerce (ONDC) is also playing a significant role in democratising digital payments, enabling interoperability, and bringing down transaction costs,” the Survey said.

Emerging categories like “fashion, grocery, general merchandise” will capture two-thirds of the e-commerce market by 2027, according to a Bain & Company report that the Survey cited.