Indian EconomyGrouponovaEcommerceGroup BuyMSMEE-retail GrowthSellerConsumers
21/12/2023
Projections Indicate India's E-Retail Sector Surpassing USD 160 Billion by 2028, According to Report
According to a report released by Bain & Company, India's e-retail market is projected to exceed USD 160 billion (approximately Rs 13 lakh crore) by 2028. The report suggests that the market is expected to reach USD 57-USD 60 billion (around Rs 4.75 lakh crore to 5 lakh crore) in 2023, with an annual shopper base of approximately 240 million, representing an annual addition of USD 8-12 billion since 2020.
Key driving factors for the growth of India's e-retail industry include affordable data, improved logistics and fintech infrastructure, and a strong digital consumer ecosystem. Long-term fundamentals are cited as key contributors to this optimistic outlook. The report indicates that the market is expected to rebound to growth levels of 23-25% and ultimately surpass USD 160 billion by 2028.
Currently, online spending in India only accounts for 5-6% of total retail spending, which is significantly lower compared to the US where it is 23-24% and China where it is 35%. This indicates a significant potential for growth in the Indian e-retail market. The report also highlights that the majority (94-95%) of India's retail spend continues to be offline, with general trade accounting for 87% of the overall retail spend.
As per the report, the increase in GDP per capita, especially beyond USD 4000, is expected to drive a surge in online spending as the spend per shopper on discretionary products increases. At present, the per capita income in the country is around USD 2600.
The report further suggests that over 60% of internet users in India are yet to shop online, indicating untapped potential. The seller ecosystem in India is rapidly expanding, with twice as many sellers added in 2022 compared to the previous year, with a significant contribution from Tier 2 and smaller cities. More than half of the total seller base comes from cities like Delhi NCR, Surat, Ahmedabad ,Jaipur, Mumbai, Bengaluru, Hyderabad, Chennai and Kolkata.
The e-retail industry in India is witnessing the emergence of new business models to cater to consumer needs, including quick-commerce (Q-commerce) platforms, hyper-value commerce, inspiration-led commerce, live commerce, and fast fashion. Q-commerce orders have doubled over the past year, accounting for 40-50% of India's e-grocery spend.
In conclusion, India's e-retail market is expected to experience substantial growth in the coming years, driven by factors such as affordable data, improved infrastructure, and an expanding seller ecosystem. With the potential to reach USD 160 billion by 2028, the industry presents significant opportunities for both online retailers and consumers alike.
