E-retail in India is poised for remarkable growth, as indicated by a recent report from Bain & Company in collaboration with Flipkart. The forecast suggests that by 2028, the e-retail market is anticipated to surge beyond the USD 160 billion (over INR 13 lakh crore) mark. In the intermediate term, specifically in 2023, the e-retail sector is projected to range between USD 57 billion and USD 60 billion (INR 4.75 lakh crore to 5 lakh crore). This growth is underpinned by a substantial annual shopper base of around 240 million, showcasing an annual addition of USD 8-12 billion since the year 2020.
“Long-term fundamentals of India’s e-retail industry, including affordable data, improved logistics and fintech infrastructure and strong digital consumer ecosystems remain intact,” Bain’s Innovation & Design Capability Area, Partner and Global Leader, Arpan Sheth said in a statement.
“The market is expected to rebound to 23-25 per cent growth levels, surging beyond USD 160 billion by 2028,” the statement said.
The e-retail market is set for expansion in the upcoming years. Presently, online spending constitutes only 5-6 percent of the total retail spending in India, in stark contrast to the United States, where it accounts for 23-24 percent, and China, where it stands at 35 percent. This stark difference indicates significant potential for growth in the Indian e-retail sector.
As outlined in the report, the predominant share of India’s retail expenditure, ranging from 94 to 95 percent, remains offline. Within this context, general trade constitutes a substantial 87 percent of the overall retail spending.
“As GDP per capita continues to increase, especially beyond USD 4,000, it is expected to drive a sharp rise in online spending, as spend per shopper on discretionary products increases,” the report said.
Currently, the per capita income in the country stands at approximately USD 2,600.
The report estimates that over 60 per cent internet users are not shopping online. “The seller ecosystem in India is also expanding rapidly, with twice as many sellers added in 2022 compared to the previous year. Around two-thirds of these new sellers came from Tier 2 and smaller cities,” the report said.
The report indicated that over 50% of the entire seller base originates from seven cities, namely Delhi-NCR, Surat, Jaipur, Mumbai, Bengaluru, Hyderabad, and Kolkata.
In India, the e-retail sector is experiencing the rise of novel business models aimed at addressing consumer needs. These encompass quick-commerce (Q-commerce) platforms, hyper-value commerce, inspiration-led commerce (live commerce), and fast fashion.
“Over the past year, Q-commerce orders have doubled, accounting for 40-50 per cent of India’s e-grocery spend,” Bain & Company, Partner and leading member of the Consumer Products & Retail practice, Shyam Unnikrishnan said.
The hyper-value sector’s share of overall e-retail grew five times between 2020 and 2022 in India, the report said.
