India's e-retail market estimated to cross $160 billion by 2028

India’s e-retail market estimated to cross $160 billion by 2028

More than half of the total seller base hails from 7 cities — Delhi NCR, Surat, Jaipur, Mumbai, Bengaluru, Hyderabad, and Kolkata.

ByPTI

Published Dec 14, 2023 | 1:23 PM ⚊UpdatedDec 14, 2023 | 1:23 PM

India's e-retail market. (iStock)

E-retail in India is expected to surge past $160 billion (over ₹13 lakh crore) mark by 2028, a report released by Bain & Company in collaboration with Flipkart said on Wednesday.

The e-retail market is expected to be around $57-$60 billion (₹4.75-5 lakh crore) in 2023, with an annual shopper base of around 240 million, representing an annual addition of $8-12 billion since 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 percent growth levels, surging beyond $160 billion by 2028,” the statement said.

The e-retail market is poised to grow in the coming years, with online spending currently only 5-6 percent of total retail spending in India compared to the US where it is 23-24 percent and 35 percent in China, indicating massive headroom for growth.

According to the report, the majority of India’s retail spending (94-95 percent) continues to be offline, with general trade accounting for 87 percent of the overall retail spending.

“As GDP per capita continues to increase, especially beyond $4,000, it is expected to drive a sharp rise in online spending, as spend per shopper on discretionary products increases,” the report said.

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$2,600 per capita income

At present, per capita income is around $2,600 in the country.

The report estimates that over 60 percent of 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.

More than half of the total seller base hails from 7 cities, namely Delhi NCR, Surat, Jaipur, Mumbai, Bengaluru, Hyderabad, and Kolkata, the report said.

The e-retail industry in India is witnessing the emergence of new business models to cater to consumer needs which include 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 percent 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.

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