India’s e-retail market surged to $60 billion in 2024, yet its growth rate decelerated to 10-12%, down from the over 20% annual growth observed historically, according to a report by Flipkart and Bain & Company. This slowdown is attributed to macroeconomic pressures and weakened consumer spending, particularly in urban markets.
The report highlights that consumption growth in India has dropped from 11% pre-Covid (2017–19) to 8% post-Covid (2022–24) due to rising inflation and stagnant real wages. The impact has been widespread, affecting both legacy FMCG brands and emerging sectors like food delivery, leading to muted revenue growth for many consumer-focused businesses.
Despite these short-term challenges, India’s e-retail industry remains robust, surpassing the U.S. in 2024 to become the second-largest e-retail market globally, with 280 million online shoppers. China continues to lead with 920 million shoppers, while the U.S. follows behind at 270 million. The long-term outlook for India’s e-retail industry is promising, with projections indicating growth to $170–$190 billion by 2030, at an annual over 18% growth rate.
Trends shaping India’s e-retail market
1. Evolving Competitive Landscape
While Amazon and Flipkart continue to dominate, platforms like Meesho, which cater to tier-2 and beyond markets, have spurred fresh momentum. Additionally, the rise of quick commerce players like Blinkit, Zepto, and Swiggy Instamart has expanded the overall e-commerce ecosystem.
2. Growth of High-Frequency Purchase Categories
By 2030, grocery, lifestyle, and general merchandise are expected to account for two-thirds of the e-retail market and contribute 70% of incremental growth. These categories, which currently make up 55% of e-retail Gross Merchandise Value (GMV), are set to drive future expansion.
3. Tier-2 and Beyond Markets Fuel Growth
India’s e-retail penetration has deepened into tier-2 and tier-3 cities, with 60% of new online shoppers since 2020 coming from these regions. Similarly, over 60% of new sellers onboarded since 2021 hail from smaller cities, demonstrating the expanding digital commerce footprint in non-metro areas.
Meesho’s tier-2+ focus exemplifies this trend—it recently surpassed Amazon in monthly active users (MTUs), indicating a shift in market dynamics driven by affordability and accessibility.
4. Rise of Gen Z and Hyper-Value Commerce
The Gen Z demographic (born 1997–2012) now makes up nearly 40% of e-retail shoppers, with unique shopping habits. Half of them buy from five or more platforms annually, and they spend three times more on emerging fashion brands compared to older consumers.
Meanwhile, hyper-value commerce, which focuses on ultra-low-priced products, has gained traction. It now accounts for over 12% of e-retail GMV in 2024, up from 5% in 2021. This model has particularly resonated with lower-middle-income consumers in tier-2 and smaller cities by offering affordable assortments and flexible payment options like cash-on-delivery.
The shift in consumer preferences, coupled with faster delivery options and better quality assurance through e-retail ads, is expected to further accelerate India’s e-commerce penetration. As organized retail expands its footprint, brands must optimize supply chains, invest in digital infrastructure, and tailor offerings to diverse consumer needs to stay ahead in this rapidly evolving market.