Indian e-commerce will soon outpace ‘modern trade’, Flipkart CEO says

Bengaluru: The pandemic is fundamentally changing how India shops—accelerating the shift to online retail and altering buying patterns in several categories, according to Flipkart Group CEO Kalyan Krishnamurthy. In fact, in the next few years, India’s e-commerce economy will be bigger than what is termed as modern trade today, he said.

“Most of the consumers we have looked at are looking for value across income levels,” said Krishnamurthy, while delivering the keynote address at a virtual event organised by the Delhi chapter of TiE Global, a non-profit organisation devoted to entrepreneurs. “There has been a massive spike in categories focused on at-home economy, including what we consume in the kitchen, and what we consume through the day.”

Festive sales of Flipkart and direct rival Amazon grew in a pandemic year, lifting the country’s e-commerce industry out of a lockdown-induced slump in the first half of the year.

“Close to 100% of pincodes in India have seen e-commerce adoption… More than 60% of transactions and orders in India come from what we call as Tier II cities and smaller towns,” Krishnamurthy said. “We still believe that we are scratching the surface when it comes to e-commerce penetration and adoption in India.”

Krishnamurthy, a veteran of Tiger Global who oversaw Walmart’s acquisition of Flipkart in 2018, believes that India’s e-commerce economy will be bigger than the so-called modern trade in the country in a few years’ time. The sector is expected to grow at a compound annual growth rate of around 29-30% to about $100 billion gross merchandise value by 2025, Krishnamurthy said, citing numbers from a report by Bain & Company.

The growth in consumption in India will be led by the middle-income segment, which is expected to contribute to 75% of the consumption in the country by 2030. Making commerce affordable for Indian users will be an important enabler for this growth, he said.

“At Flipkart, we have led many affordability constructs, including trading programs, exchange programs, upgrade programs, and fintech options,” he said. “Indian small businesses and kiranas will also disproportionately benefit and Flipkart is very committed in this journey.”

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