India’s Internet user base is expected to touch 900 million by 2025, up from 622 million now, which will lead to multifold growth in online shopping, as per a joint report by MMA India and media agency GroupM released on Tuesday.

India is likely to have 500 million shoppers by 2030, as per the report.

Titled ‘Modern Marketers Guide to Connected Consumer Journeys’ playbook, the report said with affordable data prices, consumers are increasingly adopting the digital. The online retail market is set to expand three fold over the next four to five years, primarily driven by under-penetrated categories like grocery, education, and health.

Of the total online retail market of $50-60 billion, 60% comprises products and the rest comes from services. Travel, transport and tourism and consumer appliances and electronics contribute 50-60% to the business and these categories have the highest e-commerce penetration. Categories like grocery, education, health and home & living contribute only $9-13 billion to the overall online retail pie.

Tushar Vyas, president, growth and transformation, GroupM South Asia, said that consumers now have multiple sources for discovery and information research and it consists of highly connected non-linear moments. “The growth in internet users, reduction in data prices and changing consumer behaviour are the key growth drivers for the evolution of e-commerce in India. We understand the changing online retail market and how it is set to grow 3X in the next 4-5 years mainly driven by underpenetrated categories like grocery, education, health,” he added.

The report said online retail is shifting from electronics to grocery. It added that 73% customers have bought products from online shopping platforms in the past 12 months. The deciding factors include product quality (63%), price and product information, return and cancellation policy, and product warranty (55%).

The biggest retail trend is the increasing popularity of the direct-to-consumer (DTC) model. Working through middlemen can block access to end consumers. Brands with a DTC model can leverage direct relationships through loyalty programmes, special discounting and promotions and unique and category-specific shopping experiences.

In the last three months, Amazon, Flipkart and Myntra emerged as the top three online shopping destinations. Groceries, fashion and health, beauty and personal care were the most searched product categories. The findings also highlighted that urban internet users are relying on online platforms for product research, with 62% urban users researching products online before making any purchase either online or offline. About 50% of offline shopping across categories involves online product research.

The report said conversational commerce, voice search, video streaming and augmented reality (AR) and virtual reality (VR) will also help brands drive their e-commerce strategies.

Though voice is at a nascent stage, Indians are leapfrogging on voice adoption, with the market expected to grow by 40% by 2022. Not just on Google Assistant, voice is rapidly growing as a preferred medium of input across Search and YouTube.

Online video spends have seen the highest growth rate of 46% in 2020 compared to other media channels. Online content consumption grew 35% post covid-19 pandemic, with a total growth of 13% in time spent on over-the-top (OTT) y-o-y from January 2020 to 2021.

Vernacular internet users find voice a more natural way of interacting with technology which helps reduce friction. Hindi on voice assistants is the 2nd biggest language globally after English.

Moneka Khurana, board member and country head at MMA said, “Consistent digital exposure, combined with the presence of available omnichannel touchpoints, has resulted in the development of a new consumer purchasing process.”