India's online retail market expected to touch $160B by 2028: Report

14 December 2023, Mumbai

The growth in India’s online shopping post pandemic is anticipated to significantly propel the country's e-commerce market, contributing an annual growth of $8 billion to $12 billion from 2020 to 2028.

Multiple data-points

A Bain & Co report "How India Shops Online 2023," predicts India's online retail market will grow from $60 billion in 2023 to an impressive $160 billion by 2028.

It forecasts a growth rate of 17-20 per cent in online retail market in 2023 compared to the previous year, falling short of the initially projected 25-30 per cent growth due to concerns about high inflation impacting consumer demand. This comprehensive analysis, conducted in collaboration with Flipkart, sheds light on the evolving dynamics of India's e-commerce landscape.

To harness the burgeoning potential of India's online retail sector, major players such as Amazon, Flipkart backed by Walmart, and Reliance Retail's Ajio are stepping up investments. Amazon, for instance, has announced a substantial investment of $15 billion in the market by 2030.

Granularity

The report emphasizes that India's online shopper base has surged from 120 million between 2019 and 2022, with consumer spending on e-retail doubling over the same period. This growth phenomenon is particularly pronounced in smaller cities, as almost one-third of India's online shoppers hail from Tier II and III cities.

Additionally, a significant portion of online shoppers—approximately one-third—belongs to low-income or low-middle-income groups.

Changing landscape

As e-commerce in India evolves over the next decade, the landscape is expected to be shaped by the expanding base of new shoppers, driving increased spending on fashion. Consumers will likely explore new categories and products, according to Abhishek Raj, Head of Consumer Products at Bain India.

The flourishing e-commerce market is not only benefiting consumers but also expanding the seller base in India. In 2022, the number of sellers added to the market was twice that of 2021, covering a diverse range of categories from small electronics to mobile cases and T-shirts.

The increasing number of monthly transactions reflects brands diversifying into new product categories, as noted by Sankalph Mehrotra, Vice President at Flipkart.

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