Boston Consulting Group (BCG) and Matrix Partners India have revealed that the Indian consumer tech space has seen substantial growth in the last five years, with 4,351 consumer tech deals and $54 billion in deal flows. Additionally, the sector has experienced significant value creation with over $250 billion in valuation and more than 40 unicorns as of December 2022.
The COVID-19 pandemic has played a crucial role in accelerating digital penetration by 12-24 months across different sectors, boosting e-commerce adoption and reaching a total of 350-400 million online shoppers by 2025, as per the report. The Indian economy is projected to grow by $3.5 trillion in the next 5-10 years, which is equivalent to the amount added since its Independence 75 years ago.
This growth is expected to result in a significant increase in per-capita income and discretionary spending that has not been seen before, presenting a unique opportunity for entrepreneurs to tap into a rapidly growing market and contribute to the country’s economic growth while addressing real-world problems.
According to the report, there is a growing relevance of omni-channel with 6-8 times growth in digitally-influenced retail spending, reaching $207 million in 2021. There has also been a 1.8x increase in time spent online by consumers on social media and photo/video apps in the last three years, leading to the emergence of discovery-led shopping and social commerce, which has become important for e-commerce.
Shifting Consumer Behavior & Business Opportunities
According to Boston Consulting Group, marketplaces have surpassed search engines as the new go-to search sites for select user categories, such as electronics, fashion, mobile, food and FMCG, beauty, and personal care, with 35-40% of consumers choosing marketplaces for searches.
The report also highlights that new online shoppers are different from existing ones, with a higher representation of older women, lower income groups, and consumers from smaller towns. This presents both opportunities and challenges for entrepreneurs and leaders to innovate on business models that cater to the needs of the new consumer. Parul Bajaj, Managing Director and Partner at Boston Consulting Group, emphasized this shift and added that it is crucial for businesses to adapt to these changes and serve the new consumers to stay competitive in the market.