India’s e-retail market became the world’s second-largest in 2024, surpassing the U.S. with 280 million shoppers, reveals a recent report by Flipkart and Bain and Company. Although growth is slowing, the market is expected to reach US$ 170–US$ 190 billion by 2030, fueled by rising incomes and deeper penetration in smaller cities.
Quick commerce, trend-first commerce, and hyper-value commerce are key disruptors shaping the future. Gen Z and tier-2 consumers are driving demand, with platforms like Meesho, Blinkit, and Zepto gaining traction. Retailers can capitalize by customizing assortments, leveraging targeted ads, and enhancing conversions through better ratings, faster delivery, and improved catalogues to align with evolving consumer preferences.
India’s e-retail market has achieved a significant milestone, surpassing the US in 2024 to become the world’s second-largest online shopping market. With 280 million online shoppers, India now trails only China, which leads with 920 million digital buyers. However, despite this remarkable expansion, the sector’s rapid growth has begun to decelerate.
A report by Flipkart and Bain & Company reveals that India’s e-retail market reached US$ 60 billion in 2024, yet its annual growth has slowed to 10-12%, down from the 20%+ rates seen in previous years. This slowdown is attributed to economic challenges such as rising inflation, stagnant wages, and weakened consumer spending, especially in urban areas.
India’s overall consumption growth has taken a hit as well. According to the report, between 2017 and 2019, pre-pandemic spending grew at an annual rate of 11%. However, from 2022 to 2024, this rate declined to 8%, affecting various industries, from FMCG to food delivery. Many consumer brands are facing sluggish revenue growth as they navigate shifting spending patterns.
India’s e-retail market exhibits resilience
Despite the near-term challenges, India’s e-commerce industry is still on track to reach US$ 170–US$ 190 billion by 2030, expanding at an annual rate of over 18%. This growth will be driven by rising discretionary spending as India’s per capita GDP exceeds US$ 3,500–US$ 4,000—a key threshold that historically triggers increased discretionary and e-retail spending worldwide. In India, states (like Kerala, Karnataka, Gujarat, Delhi, Chandigarh, and Tamil Nadu) with a per capita GDP above US$ 3,500 already show 1.2 times higher e-retail penetration compared to other regions.
While Amazon and Flipkart remain dominant, newer players are disrupting the market. Meesho, which targets budget-conscious shoppers in smaller towns, has surpassed Amazon in monthly active users (MTUs), highlighting changing consumer preferences. Meanwhile, quick commerce platforms like Blinkit, Zepto, and Swiggy Instamart have gained significant traction in urban markets with ultra-fast deliveries.
By 2030, grocery, fashion, and general merchandise are projected to account for two-thirds of the e-retail market, up from their current 55% share. These categories are set to see a two- to fourfold increase in e-retail penetration over this period.
The e-commerce boom is no longer confined to metro cities—since 2020, 60% of new online shoppers have come from tier-2 and smaller cities, and over 60% of newly on boarded sellers since 2021 hail from these regions. This growth is expanding access for consumers in remote, brand-deprived areas, as reflected in the Northeast’s 1.2 times higher e-retail shopper penetration compared to the rest of India. Faster delivery options, cash-on-delivery availability, and e-retail ads serving as indicators of quality, are further pushing this growth.
Gen Z shoppers (born 1997–2012) now represent 40% of India’s online buyers. They exhibit high experimentation—about half of them shop on five or more platforms annually and spend three times more on emerging fashion brands than older consumers.
Additionally, hyper-value commerce, offering ultra-low-priced products, has surged from 5% of the e-retail market in 2021 to over 12% in 2024, further shaping India’s evolving e-commerce landscape.
Three key disruptions to drive future growth
As per the report, the next phase of expansion will be driven by three major disruptions: quick commerce, trend-first commerce (particularly in fashion), and hyper-value commerce. Each of these models is at a different stage of maturity, and their collective evolution will play a pivotal role in shaping the future of India’s e-retail landscape.
Quick commerce (Q-commerce) is transforming India’s e-retail, accounting for over two-thirds of e-grocery orders and a growing share of overall e-retail spending. Unlike global trends, Indian players have scaled profitably, leveraging high population density and low-rent dark stores.
Projected to grow over 40% annually through 2030, Q-commerce is expanding beyond groceries into categories like electronics, apparel, and general merchandise. While metros dominate GMV, growth is accelerating in smaller cities. Q-commerce players have improved profitability by increasing order values, cutting supply chain costs, and monetizing through ads and platform fees. To sustain growth, they must optimize for non-metro markets, manage rising competition, and balance ultra-fast (under 15 minutes) and broader (within an hour) deliveries.
Trend-first commerce is rapidly growing in India, with trend-first fashion alone projected to reach US$ 8–US$ 10 billion by 2028, over half from online sales. This model is expanding beyond fashion into beauty, electronics, and luggage, driven by India’s young, social media-savvy, value-conscious consumers.
Globally, trend-first fashion thrives on a tech-driven approach: leveraging social media to target Gen Z, launching affordable trendy collections daily, using test-and-scale models, and enhancing user engagement. In India, both offline brands (Zudio, H&M, Zara) and online platforms (Flipkart Spoyl, Myntra Fwd, Shein, Urbanic, Snitch, NewMe) are competing for trend-savvy shoppers, fueled by a growing influencer and supplier ecosystem.
Hyper-value commerce is rapidly growing, driven by ultra-low prices. Globally, platforms like Temu have surged, reaching nearly Amazon’s US user base with GMV exceeding US$ 14–US$ 16 billion by 2024. In India, hyper-value commerce has expanded from 5% of e-retail GMV in 2021 to over 12% in 2024, gaining traction among lower-middle-income consumers, especially in smaller cities. Growth is fueled by affordable assortments and seller-friendly policies like financing and zero-commission models.
Grasping the intricacies of India’s diverse consumer landscape
India’s e-retail market, much like its overall retail landscape, is highly diverse, with purchasing behaviour varying significantly based on age, region, city tier, and e-retail maturity. The report highlights the significance of understanding the complexities of India’s diverse consumer landscape. The variations in purchase behaviour present a significant opportunity for retailers. It states that brands and sellers can capitalize on India’s diverse consumer preferences by:
- Customizing assortments to reflect regional differences in features and pricing.
- Developing trend-aligned products (e.g., Korean-inspired fashion) and addressing market gaps.
- Leveraging targeted e-retail advertising (display and search) to boost brand awareness and drive sales.
- Enhancing conversion through better ratings and reviews, faster delivery options, and improved product catalogues.
The report provides key insights for brands and sellers to adapt to evolving consumer preferences by optimizing product offerings, leveraging targeted e-retail advertising, and enhancing conversions through better ratings, faster delivery, and improved catalogues.
