Chennai: Having reached a saturation point, growth in mobiles sales on the online platform is expected to slow down in the coming years. Meanwhile, fashion and FMCG are likely to grab increased share of the online Gross Merchandise Value.
Mobile phone has been the fastest growing category between 2015 and 2018. Mobile phones increased their online sales share from 38 per cent in 2015 to 49 per cent by 2018. Heavy discounts provided by multiple brands and increasing smartphone penetration helped the category grow its share faster in these years.
“For the longest time, India’s online retail scenario has been dominated by mobiles category, which accounts for around 50 per cent share of the market.
However, our research shows that the share of the category has started to trend down as the other categories like fashion, home and FMCG gain traction,” said Mrigank Gutgutia, Head-Consumer Internet, RedSeer.
RedSeer believes that the new FDI rules too will limit the growth of mobile phones as the rules do not allow exclusive sales of brands on the online platform. Moreover, at 50 per cent, smartphones have reached a saturation point in terms of online penetration. This was evident in 2019 when online share of mobiles slipped to 48 per cent.
By 2023, the share of smartphones will further come down to 37 per cent, as per the research of RedSeer. Other electronics too will lose their share from 18 per cent to 14 per cent. This category has already seen a slip in share from 19 per cent in 2018.
“Macro trends like slowing mobiles sales poised to kick-in soon, we will see a rebalancing of the category mix in favour of non-mobile categories. This rebalancing of the category mix should lead to more sustained growth in terms of bottom-line, as the non-mobile categories have much higher margins. This will also open up opportunities to create new large players and unicorns across the categories,” said Gutgutia.
The e-tailing industry which would have clocked a Gross Merchandise Value of $90 billion by 2023, would see a faster growth of fashion products, which provides higher margins. The share of fashion will move up from 19 per cent to 24 per cent by 2023. Increasing number of shoppers from tier III –plus cities and improved selection will support this faster growth of fashion.
FMCG, which includes beauty products, is another category that demonstrates a high propensity to faster growth. It is already the fastest growing category with increasing adoption and improvement in supply chain of perishable products. The share of this category is expected to move up from 6 per cent to 14 per cent by 2023.