The latest HCES 2023-24 fact sheet was released following the 2022-23 microdata and provides a treasure trove of insights into changes in consumption over the past year. But HCES does more than just provide up-to-date information on your spending habits. It gives a ring-side view of how India shops, eats and lives.
An interesting subplot within the larger dataset is the rise of e-commerce. Data reveals key questions: How deeply has e-commerce penetrated India? Is e-commerce the new face of shopping or just a fad?
Although HCES was not designed to map this explicitly, its data provides valuable insights into how online shopping is, or is not, reshaping consumption. . To find out, we took a closer look at the available 2022-2023 numbers.
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First things first. According to the study, 62% of households in rural India are connected to the internet, and 77% in urban areas in India, both of which are higher than previous estimates of internet penetration.
Only 2% of survey respondents in rural areas ordered or paid for food online, compared to 15.34% in urban areas.
For non-food items, 11.30% of respondents in rural areas shop online, compared to 37.33% in urban areas.
For supplies and services, digital engagement was 17% for rural respondents and 46% for urban respondents.
The attached table details the proportion of online purchases by item for rural and urban respondents.
Categories such as clothing (32.52%) and footwear (21.55%) saw strong online adoption in urban areas, highlighting the popularity of online platforms for discretionary spending, according to a report by Parle India Foundation. , convenience and choice are driving consumption.
Online purchases of services (43.70%) show strong growth in digital adoption, especially in payments for utilities, entertainment, and travel.
According to HCES data, rural households spend almost half of their monthly consumption expenditures on food, while urban households spend 39.7% on food, but The department is similarly limited.
Traditional retail stores account for the majority of purchases of essential items, and online purchases of groceries (8.35%), vegetables (3.60%), and milk (3.89%) are quite low even in urban India.
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The adoption of online purchasing in rural areas remains modest, with notable exceptions such as fuel (3.80%) and services (16.20%).
The synergy between the Centre’s Ujjwala and Jandaan schemes may have increased online payments for fuel in villages, while increased internet access and digital literacy has made online ticket booking, top-up and billing more accessible. Services such as payments were promoted.
In general, the proliferation of digital payment platforms seems to be facilitating online transactions for various services across India.
The data shows that e-commerce is acting as a complement to traditional retail, rather than a replacement.
On average, Indian households report a total monthly spend of ₹11,730, but only 4.6% of that was spent online in the past 30 days.
Divided into rural and urban areas, online purchases account for only 1.87% of total consumption in rural India and 6.51% in urban areas.
In categories such as clothing, footwear, and services, urban households are embracing e-commerce as a regular part of their purchasing habits.
However, essential goods such as groceries and fresh produce show gradual rather than wholesale changes, indicating that kirana stores and wet markets remain influential.
So, to answer the question posed at the beginning of this editorial, e-commerce is not a fad, nor does it herald a new retail industry without brick-and-mortar space.
After services, clothing drives online purchases in rural India, indicating a growing aspirational demographic and untapped retail potential.
However, the online share of clothing purchases remains at just 9.12% despite 62% internet access and facilities such as doorstep delivery, cash on delivery, and easy returns.
Further research is needed to determine whether this share was achieved at the expense of brick-and-mortar stores or reflects additional demand, i.e., an expansion of the market pie.
And finally, the potential for e-commerce to expand into rural food and groceries, as fresh produce remains tied to local supply chains and cultural preferences, and traditional market relationships hold sway. seems to be low.
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While we await unit-level data from HCES for 2023-24 to further understand India’s consumption, this data from the previous year is expected to inform the national debate on the threat that e-commerce expansion poses to India. We provide a first set of empirical readings of. Kirana store.
This data should move the conversation from biased opinions to an informed analysis of the country’s retail trends in the age of Internet business.
The authors are respectively former Director-General of the Ministry of Statistics and Program Implementation and Visiting Fellow of Parle India Foundation.
