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India’s E-Retail Market Estimated to Cross USD 160 Billion by 2028: Report

The e-retail market in India is poised for substantial growth, with a report by Bain & Company in collaboration with Flipkart projecting a surge past the USD 160 billion mark by 2028. The report highlights key factors contributing to this growth, including affordable data, improved logistics, fintech infrastructure and a robust digital consumer ecosystem.

Current Landscape

As of 2023, the e-retail market in India is expected to be in the range of USD 57-USD 60 billion, with an annual shopper base of approximately 240 million. This represents a significant annual addition of USD 8-12 billion since 2020. Despite this growth, online spending in India currently constitutes only 5-6% of total retail spending, indicating substantial headroom for expansion compared to the US (23-24%) and China (35%).

Long Term Fundamentals

Bain’s Innovation & Design Capability Area Parter and Global Leader, Arpan Sheth, affirms that the long-term fundamentals of India’s e-retail industry remain intact. Factors such as affordable data, improved logistics and a strong digital consumer ecosystem are expected to drive sustained growth.

Projection for 2028

The report anticipates a rebound in the market, with growth levels reaching 23-25%, propelling the e-retail industry beyond the USD 160 billion mark by 2028. This optimistic outlook is based on the expected increase in online spending as GDP per capita rises, especially beyond USD 4,000.

Offline Dominance and Per Capita Income

Despite the impressive growth, the majority (94-95%) of retail spending in India remains offline, with general trade accounting for 87% of the overall retail spend. The report suggests that as GDP per capita continues to rise (currently around USD 2,600), online spending is expected to increase, particularly on discretionary products.

Seller Ecosystem Expansion

The seller ecosystem in India is rapidly expanding, with twice as many sellers added in 2022 compared to the previous year. Notably, around two-thirds of these new sellers are from Tier 2 and smaller cities. Over half of the total seller base is concentrated in seven cities: Delhi NCR, Surat, Jaipur, Mumbai, Bengaluru, Hyderabad and Kolkata.

Emerging Business Models

The e-retail industry in India is witnessing the emergence of new business models to cater to evolving consumer needs. These include quick-commerce (Q-commerce) platforms, hyper-value commerce, inspiration-led commerce (live commerce) and fast fashion. Q-commerce, in particularly, has been significant growth, doubling its orders and accounting for 40-50% of India’s e-grocery spend over the past year.

Important Questions Related to Exams

Q1. What is the projected size of India’s e-retail market by 2028?

Sol. The e-retail market in India is expected to surpass USD 160 billion by 2028.

Q2. How much is the annual shopper base in the Indian e-retail market as of 2023?

Sol. The e-retail market in 2023 boasts an annual shopper base of around 240 million.

Q3. What percentage of total retail spending in India is currently attributed to online spending?

Sol. Online spending constitutes only 5-6% of total retail spending in India.

Q4. What are the key factors contributing to the growth rate for the e-retail market by 2028?

Sol. Affordable data, improved logistics, fintech infrastructure and a robust digital consumer ecosystem are driving the growth.

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