India's booming fashion e-commerce, a wardrobe revolution

Indian fashion industry is undergoing a digital makeover, with e-commerce emerging as the new runway. This dynamic market is projected to reach a staggering $18.76 billion by 2030, at a Compound Annual Growth Rate (CAGR) of 34 per cent. Many factors have worked in tandem that has led to this sartorial shift.
Many studies have indicated the growth story of Indian fashion e-commerce market. According to Coherent Market Insights, the market size stood at $14 billion in 2023. Similarly, a report by GlobeNewswire highlighted CAGR of 34 per cent. This explosive growth can be attributed to the increasing internet penetration rate in India. With affordable smartphones and high-speed internet becoming commonplace, online fashion shopping is gaining immense traction.
What’s fuelling the fashion frenzy
Growing Internet and smartphone penetration is one major reason. India's internet user base has reached a staggering 854 million users in 2023. This, coupled with the widespread adoption of affordable smartphones, has created a digital-savvy population eager to explore online shopping avenues. Moreover, India boasts a young population comfortable with online transactions, making them prime targets for e-commerce fashion platforms.
India's growing economy has led to a rise in disposable incomes, particularly among the young and middle-class demographics. This increased spending power fuels the demand for a wider variety of fashion products. Also, online shopping offers unmatched convenience, allowing consumers to browse and purchase from the comfort of their homes. E-commerce platforms provide access to a vast selection of brands and products, often exceeding the physical limitations of traditional stores. And what has worked really well is that e-commerce platforms frequently offer discounts, deals, and loyalty programs, making fashion products more accessible and enticing for budget-conscious consumers.
Challenges on the runway
Despite the optimistic outlook, the Indian fashion e-commerce market faces certain challenges.
Logistics and delivery concerns: Ensuring efficient and cost-effective delivery across India's vast and diverse geography can be a hurdle. Additionally, concerns around product returns and exchanges can deter some consumers.
Cash on Delivery (COD) reliance: A significant portion of Indian consumers still prefer COD options, which can lead to higher operational costs and order cancellations.
Counterfeit products: The presence of counterfeit products online can erode consumer trust and negatively impact legitimate brands.
Limited infrastructure: Uneven internet connectivity, particularly in Tier II, III cities, can hinder the full potential of online fashion shopping.
Changing buying behavior
The Indian fashion e-commerce consumer is evolving rapidly. Here's a data-driven snapshot…
Millennials and Gen Z dominate online fashion shopping, accounting for a significant portion of the customer base. While women traditionally make up a larger share of online fashion shoppers, men's fashion e-commerce is witnessing significant growth. Tier-II and -III cities are experiencing a boom in online fashion shopping, indicating expanding reach beyond metros. While a segment of consumers seeks premium and luxury brands online, a significant portion remains value-conscious, seeking deals and discounts. Social media platforms significantly influence online fashion buying behavior, with trends and recommendations driving purchases.
Meanwhile, the online fashion landscape is witnessing exciting trends:
Rise of domestic brands: Indian fashion e-commerce platforms are showcasing a growing number of homegrown brands, catering to local tastes and preferences.
Sustainable fashion: Consumers are becoming increasingly environmentally conscious, leading to a rise in demand for sustainable and ethical fashion options online.
Personalized shopping: E-commerce platforms are leveraging data analytics and AI to offer personalized recommendations and improve user experience.
Live streaming and video commerce: Interactive formats like live streaming fashion shows and video reviews are gaining popularity, influencing buying decisions.
Omnichannel retailing: The lines between online and offline retail are blurring. Brands are integrating online and offline experiences to offer a seamless shopping journey.
The Indian fashion e-commerce market caters to various segments. The luxury is still nascent but it is witnessing growth, driven by increased brand presence and secure payment gateways. The premium fashion segment holds a significant market share, with established brands and designer labels attracting a loyal customer base. However, it’s the mass market segment is the largest, driven by affordability and a wider variety of products. Value fashion brands and private labels offered by e-commerce platforms are performing exceptionally well. Data suggests that the premium segment is expected to witness the fastest growth rate in the coming years. This can be attributed to the rising disposable incomes of upwardly mobile consumers.