Shopify - Adoption or relevance in Indian market
Shopify: Adoption or Relevance in the Indian Market?
In recent years, Shopify has seen significant growth in India, especially in the direct-to-consumer (D2C) market. Shopify, a Canadian e-commerce platform, has enabled small and medium-sized businesses (SMBs) to easily launch and scale their online stores. As we dive into this, we'll explore how Shopify has fared in India, its relevance in the current market, and what lies ahead for the platform in the face of growing competition.
Shopify’s Growth in India
Since the outbreak of the pandemic, India's e-commerce landscape has been undergoing a transformation. Shopify, with its user-friendly tools and affordable pricing, has helped numerous businesses shift to online operations. By 2020, Shopify India had become profitable, with a 66% increase in sales and a 5.4% profit margin. Over 31,000 active users have joined the Shopify ecosystem, with clothing brands and beauty and fitness items leading the way in terms of sales.
In its early years, Shopify focused on building a network of third-party app developers and designers to support businesses using their platform. This model was particularly attractive for India’s growing number of D2C brands, many of which needed easy-to-use platforms to set up and grow their online presence.
According to Sandeep Komaravelly, the National Manager of Shopify India, the company’s primary focus in the coming years is to enroll new companies and expand subscription income. As of FY21, Shopify India’s revenue primarily came from these subscriptions.
What’s Next for Shopify in India?
The e-commerce landscape is now evolving. While Shopify has already captured a substantial chunk of the D2C market, India’s retail ecosystem remains vast and largely unorganized. Small and medium enterprises (SMEs), especially local shops and neighborhood stores (e.g., Kirana shops), have begun recognizing the importance of going digital. The pandemic accelerated this shift, and many of these small businesses are now exploring platforms like Shopify to reach customers online.
However, competition is intensifying. Startups such as Shopsy by Flipkart and Meesho, backed by SoftBank, have emerged, offering low-cost solutions for small businesses to sell products online. These platforms leverage established networks and resources to help small businesses expand, making them an attractive alternative for new sellers.
For Shopify, this presents both an opportunity and a challenge. While Shopify offers more premium solutions suited for businesses looking to scale, its pricing may not be as competitive for newer or smaller businesses when compared to these emerging platforms.
Shopify’s Competitive Advantage & Opportunities
Despite the rising competition, Shopify has made significant strides in attracting larger D2C brands. Established companies like Himalaya Wellness and Lakmé, owned by Hindustan Unilever, have chosen Shopify to power their e-commerce stores. These brands benefit from Shopify's robust infrastructure and ease of use.
Additionally, many businesses like Clovia, Wildcraft, and Bewakoof.com have opted to customize their e-commerce platforms with Shopify’s toolkit, creating a more tailored solution. This D2C trend is expected to continue, and large FMCG companies are likely to invest heavily in digital brand acquisitions in the coming years.
By 2024, Marico, a well-known FMCG company, is expected to grow its digital brand acquisitions into a $400-500 crore business unit. Shopify is poised to play a key role in this shift.
Conclusion: The Future of Shopify in India
Shopify's relevance in India remains strong, thanks to its easy-to-use platform that supports a wide range of businesses, from small local stores to established D2C brands. Over the last two years, the D2C ecosystem in India has evolved rapidly, becoming one of the most vibrant in the world. Shopify India has undoubtedly benefited from this trend, with more businesses choosing its platform to build their e-commerce presence.
However, the competition is fierce. Capital-rich FMCG giants and emerging platforms like Shopsy and Meesho pose significant challenges for Shopify. These players are well-funded and have a strong foothold in India’s retail sector. Despite this, Shopify's ability to cater to larger D2C businesses and provide a reliable platform for growth gives it a competitive edge.
The next few years will be critical for Shopify’s growth in India. The company will need to adapt to the changing market, continue improving its offerings, and address the evolving needs of both small businesses and large enterprises.
As India’s retail and consumer industry continues to grow and evolve, Shopify’s role in shaping the D2C landscape will be significant, but it will also face increasing competition from both local and international players.
For more insights on the Indian e-commerce ecosystem, stay tuned to Dhannay!