E-Commerce Sector in India:

Impact and Challenges Amidst Lockdown

Nitu Saxena*

In the pre-pandemic days, e-commerce was gaining roots in the Indian market. The Covid-19 pandemic
impacted many industries adversely, but certain businesses gained momentum after initial hiccups in the
unforeseen scenario of the pandemic. E-commerce is one such industry which has expanded in the new
environment. Though certain sectors in e-commerce space have had a share of the negative impact, a
majority of e-commerce players have flourished. This conceptual paper explains the impact of lockdown
on e-commerce in the Indian context. It explores the Indian e-commerce industry pre and post lockdown.
The impact of lockdown on various sectors of e-commerce is analyzed using suitable information and
the emerging market evidence. This paper is based upon a thorough analysis of various newspaper articles,
reports and relevant literature and provides a comprehensive view of the impact of Covid-19 on the e-
commerce industry. It shows that the road which looked less traveled has gained all the limelight because
there was no other way to move forward, and thereby it has provided fresh momentum to the Indian
economy.

Introduction
The Covid-19 impact on businesses had been far worse than anyone could imagine. It brought
everything to a standstill; workers lost jobs, companies lost revenues, demand curve took a
downward trend, consumer behavior took a shift and the result was devastating to the extent
that many businesses closed due to unsustainability. E-commerce was one business area that
continued to survive and thrive amidst lockdown. Lockdown brought demands from the
consumers who never opted for online buying. Companies which were struggling to make
their mark amidst tough competition emerged as winners. They rose to the occasion to
deliver essential goods at the doorstep. The Indian consumers who were previously reluctant
started using all sorts of e-commerce sites like Amazon, Big Basket, Grofers, MedLife, NetMeds,
1mg, Flipkart etc.
The government’s decision to allow delivery of only essential products gave an initial jolt
to the e-tailers. The e-tailers were also affected by the reduced workforce due to lockdown.
Despite all the odds, lockdown brought the best of strategies from the e-commerce giants
* Associate Professor, Department of Management, Amity Global Business School, Pune, Maharashtra, India.
E-mail: nsaxena@pun.amity.edu

© 2021 IUP. All

E-Commerce Rights
Sector Reserved.
in India: Impact and Challenges Amidst Lockdown 33
and also from the small e-tailers and they made their mark during turbulent times. They
adapted, consolidated and revised their business models to cater to the increased demand.
The long-term impact could be that consumers who tried these sites out of compulsion
might now become their loyal customers. Customer loyalty and recommendations that
lockdown brought to these businesses may have an everlasting impact on their brand building
and profits in future. Some companies which were overshadowed by their larger counterparts
came into the limelight because of their better business models.

Objective
• To discuss the structure of e-commerce in India—major players, sectors, turnover,
customer base.
• To discuss business environment—customer preferences and business model in
pre-Covid era.
• To assess the impact of Covid on e-commerce: Sectoral analysis.

Structure of E-Commerce in India—Major Players, Sectors, Turnover,

Customer Base
Indian e-commerce market was doing pretty well pre Covid-19. It was aiming to be a 175-
million user industry with rapid expansion in Internet technology and user-base of the
Internet. The political environment was conducive with Start-Up India and Digital India
schemes of the Government of India. The private equity and venture capital financing received
by the sector was more than $4.32 bn. The 100% FDI policy in B2B e-commerce strengthened
the industry further.1
The favorable business environment brought to the fore many new start-ups like Paytm,
Swiggy, BYJU’s, Unacademy etc. The sectors in which e-commerce is functional in India are
online travel and ticketing, e-tailing, classifieds, digital media and financial. While online
travel was flourishing, even the financial sector was trying to match the footsteps. E-tailing
picked up with the educated and elite customers. MakeMyTrip, Yatra, Vacations Exotica have
been sought after portals since long. Amazon became ‘Apni Dukaan’ and Flipkart and Myntra,
loved readymade garment retailers for a lot of Indians. Being a Big Basketeer was a status
symbol and BookMyShow defined convenience. NoBroker and 99Acres made property search
easier and banking could be done easily sitting in the comfort of home 24*7. ‘Paytm Karo’ was
the buzz word. Life was easy, businesses were flourishing.
The major growth drivers for e-commerce in India are Internet connectivity, younger
population, easy availability of funds, evolving payment services and methods, growing
urbanization while intense competition can be cited as the major threat. The e-commerce
sector saw many mergers and acquisition like Myntra merged with Flipkart, UberEats was
taken over by Zomato, etc.
1
https://www.ibef.org/industry/ecommerce.aspx

34 The IUP Journal of Business Strategy, Vol. XVIII, No. 1, 2021

Business Environment, Customer Preferences and Business Model in Pre-
Covid Era
The drivers of e-commerce boosted the morale of the industry and led to a shift in business
models and trends. The major players in the e-tailing sector were Flipkart and Amazon. The
online retailers were moving towards marketplace model to inventory holding model. 2
Another evident trend was to develop in-house logistical competencies. Cash-on-delivery
was the preferred choice followed by online banking. One adversity was that B2C sector with
51% cap on FDI was proving to be an obstacle for foreign investors.

Services e-tailing was prospering with players like UrbanClap (now Urban Company),
GetLooks, Swiggy, Zomato, Ola and Uber. Customers opted for salon at home without any
hesitation. In a fast-paced urban life with time-constrains, customers welcomed the Urban
Clap’s services sitting in the comfort of their home. The company provided a wide range of
services from salon to yoga, carpenter to plumber, painting to cleaning etc. Swiggy and Zomato
went competitive with pricing and fought for market share in the ever-growing consumer
base. A similar scenario was evident in the case of Ola and Uber. Ola went competitive by
launching Ola auto and Ola bikes. Zoom cars etc. were other car rental services which were
quite in vogue. Riding on the ever-changing and rising consumer demands, these services
became an integral part of the lifestyle of many Indians.

Online gaming was picking up steadily. Presently, there are 400 start-ups in the gaming
sector which have attracted investments worth $350 mn from venture capital firms.3 Online
gaming was thriving due to demographics. Youngsters and teenagers were addicted to these
gaming apps.

In the online travel industry, there was intense competition amongst Yatra, MakeMyTrip
and Cleartrip. While there were many players, these three were the sought-after services.
Indian travel industry experienced the second-fastest growth around the world. The online
ticketing platforms started mushrooming and also took a physical form. In a measured sequence,
they moved from e-Travel to m-Travel. The industry also evidenced the rise of meta-search
engines which compared tariffs of different hotels and tours.

Mergers and Acquisitions in the E-Commerce Industry

E-commerce industry was trying to consolidate itself. Many businesses which were not able
to survive on their own merged with bigger ones like Myntra with Flipkart, UberEats with
Zomato, Red Bus with Ibibo etc. A foreign player like Walmart tried to make their presence
felt by taking over Flipkart. According to Grant Thorton data, Indian e-commerce industry
did $2.1 bn worth of deals in mergers and acquisition in 2017.4 The Indian e-commerce
industry clocked a total of 21 deals.
2
https://rbsa.in/archives_of_research_reports/RBSA-E-Commerce-Industry-Analysis.pdf
3
https://www.financialexpress.com/brandwagon/online-gaming-industry-in-india-is-expected-to-grow-at-a-cagr-of-
47-by-fy22-study/1971125/

E-Commerce Sector in India: Impact and Challenges Amidst Lockdown 35

 Most recently Facebook bought 9.99% stake in Reliance Jio. Jio started Jio Mart based on
this deal riding on the wings of WhatsApp. Mukesh Ambani is aiming at making Reliance a
zero-net debt company by the end of 2021 through this deal.5

Impact of Covid on E-Commerce: Sectoral Analysis

The E-Commerce sector has been growing at a fast pace in the last decade and the growth
projections for the period 2019 to 2023 is around 19.6%.6 The sector seems to be a promising
business and thus so many investments are evident in the industry. Facebook investing in
Reliance Jio and as part of the deal WhatsApp-Jio Mart which will positively impact 1.3
billion Indian consumers.7 Huge investment of 14,976 cr from the Facebook-Jio deal will be
retained for the JioMart shopping platform on WhatsApp to catapult growth.
Another e-commerce giant which has consolidated its position in the last few years is
Amazon. Amazon accounts for 50% of world’s e-commerce market. Jeff Bezos was quick to
sight e-commerce opportunities in various areas and he is now set to become the first
Trillionaire of the World by 2026.8 Amazon has diversified into most of the categories with
Amazon Prime, Amazon Fresh, Amazon Basics, Alexa, gaming, Amazon Prime Video,
e-books, etc. They are omnipresent and super competitive even in the covid lockdown times.
BigBasket and Grofers were the two e-tailers who rose to fulfil covid demand during the
lockdown times in India. When everything was inaccessible, these two continued to serve
the customers, though the delivery period increased on account of less workforce availability.
BigBasket served inflated demand with half the workforce they had. Reduction in the number
of Stock Keeping Units’ (SKUs) helped them serve the essentials. The investment made in
infrastructure and supply chain development over the last few years made their task easier to
some extent.
Lockdown brought a surge in demand for online grocery stores like BigBasket and Grofers.
So overwhelming was the demand that they could not fulfil it. Though the customers were
ready to pay higher prices, still due to lack of manpower they had to close down their portals
often on. This was the situation in the initial days of lockdown but soon things eased and
they were able to cater to maximum orders.
They followed all protocols like maintaining social distance, delivering at the gate of
society in red zones and allowing only online payment. Cashless transactions was strictly
4
https://www.businesstoday.in/current/deals/paytm-flipkart-ecommerce-industry-merger-acquisition-deals-2017/
story/276344.html
5
https://indianexpress.com/article/explained/what-the-jio-deal-means-for-reliance-facebook-6374686/
6
https://www.livemint.com/industry/retail/lockdown-impact-india-e-commerce-market-picks-pace-may-touch-rs-
7-trln-by-2023-11589530943145.html/ 15th May 2020
7
https://www.news18.com/news/tech/jio-facebook-getting-jiomart-on-whatsapp-pushes-a-big-digital-shift-for-1-3-
billion-indians-2600109.html
8
https://economictimes.indiatimes.com/news/company/corporate-trends/jeff-bezos-could-be-worlds-first-trillionaire-
by-2026-ambani-jack-ma-to-follow/worlds-first-trillionaire/slideshow/75801789.cms/ 18 May 2020

36 The IUP Journal of Business Strategy, Vol. XVIII, No. 1, 2021

adhered to. They promoted merchandise for general well-being like camphor cones, natural
immunity boosters etc.
Amazon prioritized itself to serve essentials such as household staples, packaged food,
healthcare, hygiene, personal safety and other high priority products. It is temporarily going
to stop taking orders for lower-priority products. Globally too, Amazon has seen a surge in
orders and is raising overtime pay for associates working in its warehouses, during the
coronavirus outbreak.
Unfortunately, most of these e-commerce giants never provided company identity cards
to their delivery personnel which took some time to equip the workforce with those so that
they could easily deliver during lockdown time.
Many medical online giants like Medlife, Netmeds and 1mg also operated on 50 to 60%
capacity9 and suffered due to intercity and interstate restrictions of movement of goods
during lockdown period. Some of them suffered due to shortage of supplies of certain goods
like hand sanitizers, masks and certain essential medicines. They also experienced a shortage
of attendance due to lack of hand sanitizers and masks to be provided to delivery personnel.
Offline chemists had better supplies due to prior contemplation of demand. There was a
surge in demand for immunity boosting medicines and wellness products. Unfortunately, the
companies were not equipped with catering to this demand.
Some of these companies had been waiting to make their mark and take off in a big way for
the last three years. They were facing a regulatory environment which was a hindrance to
their growth. Lockdown brought a huge surge in demand and also brought the challenges
along with it. Some business models served better than others. Like Medlife, it had its
workforce while the other companies were dependent on courier and other options. The
online pharmacy business is expected to grow up to 7 times and will be a $3.7 bn industry by
2022. If suppose the Covid vaccine was allowed to be sold online, then there could have been
a similar rush like the pre-booking of Harry Potter books on Amazon.
The online e-pharma sector experienced a 100% spur in demand during the lockdown
times.10 To serve the inflated demand, Medlife tied up with taxi cab service Uber to serve in
cities like Pune, Kolkata, Lucknow, Jaipur and Hyderabad. This ensured a smooth and speedy
delivery.11 Medlife originally had a team of 2000 personnel. 12
Tourism was the worst impacted industry during the lockdown period. Experts say that it
will take years to revive the travel and tourism sector. According to a KPMG report, the
Indian Travel Industry was set to lose 38 million jobs which accounted for a total of 70% of
9
https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/epharma-finds-going-tough-as-it-runs-at-50-
70-capacity/articleshow/75038854.cms?from=mdr
10
https://www.businesstoday.in/current/corporate/lockdown-perks-for-e-commerce-online-sellers-recover-30-order-
volume-in-a-week/story/403747.html
11
www.pharmabiz.com/NewsDetails.aspx?aid=122531&sid=2
12
https://www.expresshealthcare.in/news/medlifes-delivery-team-to-deliver-medicines-through-lockdown/417824/

E-Commerce Sector in India: Impact and Challenges Amidst Lockdown 37

the workforce.13 CII report projected a total loss of 5 lakh crores in the tourism sector.14 Travel
and tourism industry tried to seek other engagement like turning hotels into quarantine
facilities or providing space for medical staff who could not go home. Some hotels diversified
into laundry services and food delivery services. But this was a blow which hit the sector far
and wide.

Impact of Covid-19
Reports suggest that pandemics have impacted the e-commerce industry positively
(Figure 1). According to GlobalData, which is London-based data analytic company, e-
commerce in India will be a 7 tn industry by 2023.15 The growth rate is projected to be
around 19.6% between 2020 and 2023. Reduced spending due to lockdown has been marginally
compensated with online spending. The online consumer base is steadily increasing and the
lockdown has brought a chance to imbibe online buying as a consumer habit. Change in
shopping habits may be a permanent phenomenon for many consumers. Social distancing is
going to be the new normal which will repel consumers from crowded spaces like physical
markets.

Figure 1: : Global Trend Towards Purchasing Product Online

that they Would Normally Buy in Store

Global, Covid-19 and e-Commerce

Purchasing Products Online that Would Normally
Buy in-Store, Compared to the Previous Month, %of Consumers

60% More Frequently Less Frequently

50%

40%

30%

20%

10%

0%
US
Italy

Germany
Vietnam

Japan
India

China

Russia

Australia

UK

Canada

France

Note: Survey Period March-April 2020.

Source:WARC Data

13
https://scroll.in/article/959045/indias-covid-19-lockdown-may-cause-38-million-job-losses-in-the-travel-and-tour-
ism-industry
14
https://theprint.in/opinion/india-tourism-sector-life-support-liquidity-covid-crisis-makemytrip/410590/
15
https://www.livemint.com/industry/retail/lockdown-impact-india-e-commerce-market-picks-pace-may-touch-rs-
7-trln-by-2023-11589530943145.html

38 The IUP Journal of Business Strategy, Vol. XVIII, No. 1, 2021

 E-commerce industry will reach its pinnacle sooner than expected. Both supply and
demand are affected in a fashion that suggests strong growth. The change will require supply
chains to reorient themselves to match the increasing demand.
One more impact that was evident during lockdown was that working hours changed into
shopping hours. Customers were shopping for essentials during office hours. 57% of shopping
was done from 10 am to 7 pm.16 The bills saw an increase in size by 75%. DTH and OTT
platforms witnessed a surge in demand. Digital transactions increased in quantity but not in
quality. The overall volume of transactions decreased considerably. UPI ids which were not very
popular before lockdown were used by merchants. They sent their UPI ids across to customers.
Another major impact was in the area of Internet and mobile data consumption. Many
Indians had to update their data plan. With children attending online classes or playing
video games and parents working from home, data requirement increased and so broadband
companies like YOU Broadband, Jio were doing well.
During lockdown, many sellers who were never selling their produce online resorted to
selling and promoting online. Products like Alphonso and Dushehri mangoes, bread and
bakery products, namkeens and sweets all came online. These companies developed their
business models. They sold to one or two societies in bulk and this way they never had to find
customers. Since there was no market where they could go and sell their products, they
created their markets online.17 Maharashtra State Agriculture Marketing Board (MSAMB)
was instrumental in providing an online platform for these mango farmers.
In the lockdown times, gender shopping trends revealed that more males were shopping
compared to females. As the lockdown relaxed, the demand for laptops, office furniture got a
boost18. Certain businesses found it easier to sell low-priced items online as compared to
premium products. Shoes were one such category which found more buyers for low priced
items. Daily wear clothes and readymade garment sales also showed a positive turn as people
wanted to have all necessities with them when the restrictions are eased. They were uncertain
of the future turn of events and were apprehensive of adverse conditions.
Another trend evident was to turn to eco-friendly means. Home gardening, cleaning aids
were also searched on the Internet. E-commerce players provided options for these categories
as well.
Some e-commerce sectors took a major blow like booking movie tickets online. With all
the multiplexes closed for around 90 days or more and social distancing being a major concern,
online movie ticket booking was drastically affected. The loss of multiplexes resulted in OTT
platforms like Netflix, Amazon Prime Video and Disney-Hotstar gaining viewership.
16
https://economictimes.indiatimes.com/industry/miscellaneous/under-lockdown-india-changes-shopping-habits/
articleshow/75129680.cms
17
https://www.financialexpress.com/market/commodities/covid-19-effect-maharashtras-mango-farmers-go-online-to-
tap-consumers/1928623/
18
https://www.newindianexpress.com/business/2020/may/05/lockdown-relaxation-working-non-essential-orders-up-
on-ecommerce-platforms-2139540.html

E-Commerce Sector in India: Impact and Challenges Amidst Lockdown 39

Conclusion
This lockdown during the pandemic made many people self-reliant. People who had
apprehensions about making online purchases shed those and resorted to e-commerce.
E-pharma picked up at a good pace. E-retail developed new models. Supply chains were
re-strategized. Logistical capacities met new challenges. Technology came to the aid of many.
Improvements in technology were also explored. E-commerce will continue to thrive, though
there can be a negative impact in a few areas such as luxury and premium goods. Customers
will move cautiously in these categories. The brand culture may take a backseat for some
time. In health and nutrition, beauty and wellness, technology and convenience, the brand
significance will rise. Ayurveda and ancient sciences might be explored through e-commerce
as the lockdown restrictions ease out. The trend is pro-technology and e-commerce.
Companies cannot keep away from digital marketing and e-commerce in times to come.
The study shows that the road which looked less travelled gained all the limelight because
there was no way to move forward. And the road, despite being dusty and full of hurdles, still
provided momentum to the ailing economy. It also provided a ray of hope to deal with the
pandemic situation. It felt the safest way to survive lockdown times. E-commerce is here to
stay with grit and determination. It has brought about new business models. It is the sole
reason for the existence of many start-ups. It is a growth sector which has rejuvenated with
the Covid-19 pandemic.

Reference # 33J-2021-03-03-01

40 The IUP Journal of Business Strategy, Vol. XVIII, No. 1, 2021

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