MUMBAI: India’s e-retail market is projected to triple to $170–$190 billion in gross merchandise value (GMV) by 2030, owing to an expanding shopper base and newer business models, according to a report by Bain & Company and Flipkart.
The report highlighted India’s position as the world’s second-largest e-retail shopper base, with over 270 million online shoppers in 2024. The market, currently valued at $60 billion, has slowed to 10–12 per cent growth in 2024 from over 20 per cent in previous years due to stress in consumption and discretionary spending owing to macroeconomic headwinds.
However, the sector is expected to accelerate, exceeding 18 per cent annual growth by 2030 as India’s per capita gross domestic product (GDP) crosses $3,500–$4,000, an inflection point seen in e-commerce markets globally, stated the report.
Categories with high purchase frequency, including grocery, lifestyle and general merchandise, are expected to contribute around 70 per cent of the incremental e-retail growth by 2030, with penetration levels rising two to four times.
Quick commerce (Q-commerce), which has grown to around 10 per cent of overall e-retail GMV and 70–75 per cent of e-grocery GMV, is forecast to expand at over 40 per cent annually until 2030, according to the report. The model, which has scaled profitability through larger basket sizes and lower logistics costs, is expanding beyond grocery into new categories and cities.
“We have seen a 40 per cent increase in average order values, 3–4 percentage points improvement in gross margins and 30 per cent lower logistics cost per shipment in mature catchments over the last two years. To sustain profitable growth, players must adapt their business models and supply chains as they expand selection, geographies and manage competition,” said Manan Bhasin, partner and leading member of the Consumer Products and Retail practice, Bain & Company.
The report also noted that the growth of e-retail in smaller cities has intensified. Since 2020, about 60 per cent of new online customers and 45 per cent of orders have originated from Tier-III and smaller cities. Seller participation is also widening, with 60 per cent of merchants onboarded since 2021 coming from Tier-II or smaller cities.
Trend-first commerce, particularly in fashion, is gaining traction, with online penetration in the segment expected to surpass 50 per cent by 2028, driving its value to $8–$10 billion. This model is also expanding into beauty, electronics and luggage.
Hyper-value commerce, catering to lower-middle-income consumers, has seen its share of e-retail GMV grow from 5 per cent in 2021 to 12–15 per cent in 2024, with strong adoption in smaller cities.
The report notes that Generation Z shoppers, who make up about 40 per cent of India’s e-retail consumers, rely on social media for brand discovery, spend three times more on emerging fashion brands, make faster purchase decisions, and prefer unified payments interface (UPI) for digital payments.
“The rise of quick commerce, trend-first commerce and hyper-value commerce is transforming the landscape, creating exciting opportunities for brands and retailers who can cater to the diverse needs of Indian consumers. The democratisation of the shopping landscape with widening access to national brands and assortment in Tier-III and smaller cities and remote, underserved areas is a key driver of growth,” said Arpan Sheth, partner, Bain & Company.
Source: Business Standard
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