Summary of this article
E-commerce market seen reaching $250 billion by 2030
Gen Z to drive 45 per cent online spending share
Q-commerce and AI reshape shopping and delivery models
India's online retail market is projected to hit the $250-billion mark by 2030, from around $90 billion at present, according to a new report by Google and Deloitte. Titled the $250 Billion Commerce Frontier, the report highlights the structural shifts in consumer behaviour, influenced by Gen Z shoppers, quick-commerce (Q-commerce), and technology-led shopping experiences.
Growing Importance of Discovery-Fuelled Shopping Patterns
The report says that the subsequent stage of growth has been characterised by the shift of the simplistic digital access to more sophisticated and tailored business experiences. Nearly 150 million new digital shoppers would emerge by 2030 while per capita online spends will likely double by then.
Generation Z to Fuel Online Spending
One of the emerging trends the report mentioned is the changing preferences of Gen Z shoppers. The report found that this generational cohort is expected to make up 45 per cent of all online spending by 2030, and is expected to consist of nearly 220 million people.
Gen Z consumers have also begun shifting to discovery-based shopping in which contents, content creators, and social networks have a role in purchase decisions. The report further said that this change has led to businesses moving to more personalised and interactive shopping experiences, aided by artificial intelligence (AI) and data analytics.
Role of Digital Creators to be More Dominant
Another significant change in consumer demand patterns has been the rise in the importance of content creators in driving online sales. According to the report, nearly 30 per cent of all retail spending will be influenced by content creators. Besides, 10 per cent of all purchases will likely be influenced by creator stores.
Interestingly, this phenomenon is more dominant among shoppers based out of smaller cities. According to the report, 60 million first-time online shoppers from smaller cities have been influenced by digital content creators who have helped them adopt digital shopping patterns. Fashion, beauty, and electronics have been the most impacted categories here.
Fast Delivery Systems Expected to Fuel Retail Growth
Fast delivery systems, termed Q-commerce by experts, have been another major factor influencing retail growth in the upcoming years. According to the report, by 2030, Q-commerce will contribute nearly $50 billion in revenues. The user base of this system is expected to reach the 70-million mark.
Although Q-commerce initially gained traction in metro cities, 30 per cent of the market is expected to come from smaller cities. In addition, there is a shift in product mix, with non-food categories like beauty, fashion, and electronics accounting for 45 per cent of total spends in Q-commerce.
Use of AI to be More Widespread
Another significant development driving online retail market growth is the adoption of AI solutions in the sector. According to the report, AI can help improve the profitability of online retail businesses by 30-35 per cent through improved operational efficiencies and personalised consumer engagement.
AI tools are also rapidly being used to recommend products, manage inventory and streamline logistics. The report said that the technologies have reduced delays between product discovery and purchase, and thus, shopping has become faster and efficient.
Growing Demand for Immersive Technologies
The report also highlights the growing adoption of immersive technologies, such as augmented reality (AR) in online retail. The report said that one-third of online shoppers prefer virtual trials prior to their purchase decisions. Around half of these shoppers tend to spend more money while browsing using this technology.
Nearly 72 per cent of consumers are also willing to pay higher prices for immersive technology-driven shopping experiences. As a result, online and offline retail have become more interconnected as physical stores have become experience centres, the report further said.
