P: ISSN No. 2321-290X RNI No.  UPBIL/2013/55327 VOL.- X , ISSUE- VIII April  - 2023
E: ISSN No. 2349-980X Shrinkhla Ek Shodhparak Vaicharik Patrika
Impact of Covid 19 Pandemic on Indian E-commerce Market
Paper Id :  16906   Submission Date :  2023-04-02   Acceptance Date :  2023-04-16   Publication Date :  2023-04-18
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Prachi
Research Scholar
Department Of Economics
Ewing Christian College, University Of Allahabad
Uttar Pradesh,India
Vivek Kumar Nigam
Associate Professor
Department Of Economics
Ewing Christian College, University Of Allahabad
Fatehpur, Uttar Pradesh, India
Abstract
During the year 2020, the world economy was dominated by the Covid 19/Coronavirus pandemic.By decreasing production, distribution, and consumption, It has curtailed economic activity in most of the sector and in most countries. Global trends and Customers' shopping habits were significantly changed by the Coronavirus. Covid 19 pandemic changes the shopping, entertainment and workplace behaviour of people and associated business, which accelerated ongoing transition from physical to online market.The E-commerce industry has grown during Covid 19 pandemic. During the COVID-19 pandemic, people are likely to switch to online purchase as a result of social isolation and complete lockdown.Before the COVID-19 pandemic, reasons driving the E-commerce market's growth included strong and consistent growth of internet users, rising awareness of online purchasing, increased online product launches, low prices due to bulk purchases, and so on.The number of internet connections in India increased significantly to 784.59 million in July 2021, because of 'Digital India' programme.Urban areas accounted for 61% of all internet connections, with 97 percent of them being wireless.During the covid epidemic, Indian E-commerce volume increased by 34% in the last quarter of2020, according to a report by the Indian Brand Equity Foundation (IBEF).From $30 billion in2017, India's internet commerce business is predicted to grow to $200 billion by 2026.According to the estimate, by 2034, India's E-commerce business will have surpassed that of the United States to become the world's second-largest.
Keywords Covid Pandemic, E-commerce, India E-commerce Share.
Introduction
Electronic commerce, commonly written as E-commerce is the trading (buying and selling) of products and services using internet networking such as online platforms. E-commerce helped businesses to establish a wider market presence by providing cheaper and more efficient distribution channels for their products or services. Nearly every product and service is available through E-commerce transactions, including books, music, clothing, electronics travel tickets, and financial services such as stock investing and online banking. As such, It is considered a very complicated technology. There are four types of business transactions: Business to Business (B2B), Business to Customer (B2C), Customer to Customer (C2C), Customer to Business (C2B).E-commerce is defined as a commercial transaction that takes place through the internet. E-commerce websites include Amazon, Flipkart, Shopify, Myntra, eBay, Quikr, and Olx, among others. E-commerce is one of the world's most rapidly developing sectors. According to one estimate, it is expected to be a $27 trillion business by the end of this decade, with annual growth of about 23 percent. After China and the United States of America, India is the world's third largest E commerce economy. According to the Telecom Regulatory Authority of India (TRAI), by the end of 2021, 82 crore people will have access to the internet, with 40 percent of that use could be for online shopping.Due to the rapid expansion of COVID-19, there has been a growth in E-commerce companies in India in recent years. In the fourth quarter of 2020, India's E-commerce order volume expanded by 36%. Despite reduced consumer spending, a slowing economy, and the uncertainty produced by the covid -19 pandemic, E-commerce is expected to increase rapidly in 2021. By 2030, India's E-commerce business is anticipated to be worth $350 billion.By following diagram , showing covid impact on india's GDP and during covid inflation rate measured by RBI.
Objective of study
1. To understand the trends of E-commerce during covid pandemic. 2. To analyse the pattern of consumer preference in E-commerce websites.
Review of Literature

(Hasanat, 2020) aimed to determine how the coronavirus (Covid-19) affected Malaysian internet commerce. For a better outcome, this search has been cleared and a basic search has been conducted. The findings indicated that there is no import or export of the commodity because the majority of goods are produced in China and the majority of industries are closed.

(Nakhate, 2020) aimed to determine how the coronavirus affected e-commerce. Since China produces the majority of the kits, dependability is exceptional. The coronavirus's effects on all shipping procedures slowed down national and state e-commerce growth. The influence of the Corona virus on Indian online commerce is the subject of this research article. According to the analysis, this pandemic ailment substantially hinders internet enterprises.

(Elsayed, 2020) planned to look into how the COVID-19 outbreak affected the sectoral indexes of the Egyptian Stock Exchange between March 1 and May 10, 2020. represents the total number of Corona virus cases. Information technology, media, and communications services, industrial goods and services, and automobiles each have a coefficient of determination of 0.393, while basic resources have a coefficient of determination of 0.327 and health care and medications have a coefficient of determination of 0.327.

(Ayittey, 2020) According to estimates, if urgent worldwide measures are not taken to stop the Wuhan 2019 Covid-19 in the shortest amount of time, China might lose up to $62 billion21 in the first quarter of the year, while the rest of the world could lose more than $280 billion. 15 This result is consistent with the World Bank's estimate that even a milder flu pandemic, like the 2009 H1N1 virus, could still cause 0.5% of the world's GDP, or around $300 billion, to be lost.

(Aneesh Reddy, 2020) Aneesh Reddy highlighted that as a result of the COVID-19 pandemic, our manner of working, shopping, and interacting with others has completely changed. People only venture outside to purchase necessities from stores, and even then, they are hesitant to do so because they are constantly concerned about contracting an infection. Reddy stated that trifecta expects Indian EE-commerce will reach US$200 billion by 2026 as a result of a less expensive 4G network and continuously rising customer wealth. But the pre-covid19 was the foundation for these forecasts. However, once COVID-19 hit India, the e-commerce sector's surge in demand over the previous few months has been so significant that it may reach $200 billion far sooner than expected.

(Bansal.S, 2020) According to Shuchi Bansal, the COVID-19 lockout would cause a significant shift in the supply chain and increase internet usage of e-commerce portals. In order to avoid congested stores and markets, it has been predicted that demand for groceries and other FMCG products sold by online retailers may drastically change. It can be concluded from an analysis of consumer purchasing patterns from the time COVID-19 initially affected India until the country was placed under lockdown that people are now more concerned with their health and hygiene, which results in less store visits and more online shopping by consumers.

Main Text


Shift toward E-commerce

Despite the Covid-19 crisis and the economic slowdown, India's E-commerce industry has been on the rise since the lockdown, with a 17 percent increase in order volume as of June 2020 compared to the pre-lockdown period.

Year 2019 vs 2020

Factors

Users % Growth from previous years

Population

1.37 billion +1.0%

Mobile phone connection

1.07 billion -1.4%

Internet users

687.6 million +23%

Active social media users

490.0 million +48%

Market size of E-commerce in India

The Indian online grocery market is estimated to reach US $18.2 billion in 2024 from US $1.9 billion in 2019, expanding at a compound annual growth rate (CAGR) of 57%. India's E- commerce orders volume increased by 36% in the last quarter of 2020, with the personal care, beauty and wellness (PCB&W) segment being the largest beneficiary. India's consumer digital economy is expected to become a US $800 billion market by 2030, growing from US $537.5 billion in 2020, driven by strong adoption of online services such as E-commerce and EdTech in the country. According to Grant Thornton, E-commerce in India is expected to be worth US $188 billion by 2025. With a turnover of $50 billion in 2020, India became the eighth largest market for E-commerce. According to NASSCOM, despite COVID-19 challenges/disruptions, India's E-commerce market continues to grow at 5%, with expected sales of US $56.6 billion in 2021. Due to rising smartphone demand, launch of 5G network and increasing demands for online health services, the Indian E-commerce market is expected to grow to US $200 billion by 2026 from US $38.5 billion in 2017. Online retail sales in India are expected to grow 31% to reach US $32.70 billion in 2018, led by Flipkart, Amazon India and Paytm Mall. After China and the US, India had the third largest online shopper base of 140 million in 2020. Indian consumers are increasingly adopting 5G smartphones even before the roll out of the next-gen mobile broadband technology in the country. Smartphone shipments reached 150 million units and 5G smartphone shipments crossed 4 million in 2020, driven by high consumer demand post-lockdown. According to a report published by IAMAI and Kantar Research, India internet users are expected to reach 900 million by 2025 from ~622 million internet users in 2020, increasing at a CAGR of 45% until 2025. In October 2021, the E-commerce sales reached US$ 4.6 billion, supported by the festival season in India.


E-commerce and covid 19

Coronavirus impacts the whole E-commerce of the world; it has changed the nature of business as well as the consumer behaviour. On 24 March 2020, the Government of India under Prime Minister Mr. Narendra Modi ordered a nationwide lockdown. Which hinders the production and retail selling of goods and services. According to research most people avoid physical shopping due to covid spreading and not to get in physical contact because of social distancing. However, The E-commerce market came in forefront to replace the physical market during covid. Overall sales of E-commerce increased because of this virus, people avoiding going out, keeping social distance and buying from home. Over 74% of people use E-commerce for their day to day groceries and regular services due to work from home. Moreover, the medium also increased in this time like people using Facebook, Instagram, Whatsapp for B2C purpose.


Main reasons for increased online purchases during the coronavirus (COVID-19) pandemic in India

Distribution of various types of products in Indian retail market

Major online retail indian market platforms distribution are

Advantage and Disadvantage of E-commerce during covid pandemic The COVID-19 pandemic has completely altered the way business is done now, and the E- commerce industry has taken over the physical market. The following are the primary benefits of E-commerce during covid 19 pandemic.

Advantage of Online selling During the pandemic of COVID-19

1. Because of E-commerce, many businesses have been saved

Online purchasing was the saving grace for many businesses, allowing them to stay open during one of the worst economic periods in modern history. Many businesses would have had to close their doors due to insolvency if online purchasing had not been available.

2. Customer confidence is maintained while infection is kept to a minimum E- commerce has allowed customers to buy with confidence and convenience from the safety and comfort of their own homes, rather than going out, maintaining social distance, and risking infection.

3. Increased product availability

During this recent time of raw material and component shortages, buying directly from manufacturers through local or international E-commerce stores has granted customers and online businesses access to previously unreachable markets.

Drawbacks of Online Selling During the pandemic of COVID-19

1. Postal services have been disrupted.

As the COVID-19 pandemic unfolded, postal services all across the world were pushed to their limits. As a result, shipment has been hindered or delayed, shipping charges have increased, and shipping options have been reduced. Shipping has been completely suspended on occasion. For example, due to COVID-19-related service delays, USPS suspended international postal deliveries for several locations in December 2021.

2.  A rise in E-commerce fraud

For the E-commerce industry, fraud has always been a problem. Despite the fact that things have only gotten worse during the pandemic. Fraud has increased in all industries, including E-commerce, and the E-commerce business has encountered numerous challenges in combating fraudulent and malicious actions.

3. A decrease in customer loyalty

As a result of the pandemic, an increasing number of new E-commerce stores are springing up in all categories, resulting in increased rivalry. Customers are now spoiled for choice, making it more difficult than ever to earn their loyalty and trust.

Government initiatives

Since 2014, the Government of India has announced various initiatives, namely Digital India, Make in India, Start-up India, Skill India and Innovation Fund. The timely and effective implementation of such programs will likely support growth of E-commerce in the country. Some of the major initiatives taken by the Government to promote E-commerce in India are as follows:

1. As of November 2, 2021, the Government e-Marketplace (GeM) portal served 7.96 million orders worth Rs. 152,315 crore (US$ 20.40 billion) to 55,433 buyers from 3.06 million registered sellers and service providers.

2. National Retail Policy: The government has identified five areas in its proposed national retail policy—ease of doing business, rationalisation of the licence process, digitisation of retail, focus on reforms and an open network for digital commerce—stating that offline retail and E-commerce need to be administered in an integral manner.

3. The Consumer Protection (E-commerce) Rules 2020 notified by the Consumer Affairs Ministry in July directed E-commerce companies to display the country of origin alongside the product listings. In addition, the companies will also have to reveal parameters that go behind determining product listings on their platforms.

4. Under the Digital India movement, the Government launched various initiatives like Umang, Start-up India Portal, Bharat Interface for Money (BHIM) etc. to boost digitisation.

5. In October 2020, Minister of Commerce and Industry, Mr. Piyush Goyal invited start- ups to register at public procurement portal, GeM, and offer goods and services to government organisations and PSUs.

6. In October 2020, amending the equalisation levy rules of 2016, the government mandated foreign companies operating E-commerce platforms in India to have permanent account numbers (PAN). It imposed a 2% tax in the FY21 budget on the sale of goods or delivery of services through a non-resident E-commerce operator.

7. In order to increase the participation of foreign players in E-commerce, the Indian Government hiked the limit of FDI in the E-commerce marketplace model to up to 100% (in B2B models).

8. Heavy investment made by the Government in rolling out fiber networks for 5G will help boost E-commerce in India.

Conclusion
The E-commerce Industry directly impacted micro small and medium enterprises in India by providing means of finance, technology and training and has had a favourable cascading effect on other industries as well. The Indian E-commerce industry is growing upward and is expected to surpass the US economy to become the second largest E-commerce market in the world by 2034. the growth in from exchequers, provide better product and services to customers in the long-term. In the long term covid-19 pandemic alerts the Government to be prepared for the future pandemic by shifting toward the digital economy.
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