Tier 2 and 3 cities power D2C surge, drive two-thirds of new orders in FY26

India’s smaller cities are now driving growth for direct-to-consumer brands. Nearly 66% of all new D2C orders in FY26 came from Tier 2 and Tier 3 markets, which shows a decisive shift away from metro-led demand, according to a latest analysis by Unicommerce.

What this really means is that the D2C playbook is being rewritten. Brands that once focused on urban clusters are now seeing stronger traction in a more distributed, pan-India customer base. Buyers from these markets also contributed 60% of the incremental gross merchandise value (GMV) during the year, signalling not just volume growth but meaningful value expansion.

Overall, the D2C segment maintained a steady growth trajectory. Order volumes rose 33% year-on-year, while GMV increased 32% in FY26 compared to FY25. In fact, nearly 90% of transactions in recent quarters came from first-time buyers. The analysis is based on over 400 million order items processed across brand websites through Unicommerce’s Uniware platform between April 2024 and February 2026, covering insights from more than 6,000 digitally native brands. 

“The findings highlight a clear shift in India’s online shopping landscape, with demand rapidly expanding beyond metros into a more geographically distributed base,” the report said.

Delivery efficiency improves as scale expands

As order volumes deepen across non-metro markets, brands are also getting better at execution. Data from Shipway, Unicommerce’s logistics platform, shows that return-to-origin rates dropped sharply from nearly 39% during the festive period in November 2025 to around 21% by February 2026.

While higher RTO rates during festive months are typically driven by increased order volumes, first-time buyers and a higher share of cash-on-delivery transactions, the subsequent decline points to structural improvements. “The post-festive decline in RTO rates points to sustained delivery improvement, driven by stronger order verification and more efficient delivery execution,” the report noted.

Technology is also reshaping how brands engage with customers. From discovery to post-purchase interactions, AI-led recommendations and chat-based tools are enabling more personalised experiences. This is becoming critical as competition intensifies and customer expectations rise.

India’s D2C market, currently estimated at $10–12 billion, is projected to grow fivefold to $60 billion by 2030. As the market matures, the focus is shifting from rapid acquisition to operational efficiency and customer retention.

“The ecosystem is now entering a more mature phase where brands will be defined by how efficiently they operate, retain customers, and deliver consistently high-quality experiences,” the report said, adding that technology will play a central role in enabling agile and flexible operations.

Growth is no longer concentrated in metros for D2C. It is unfolding across India’s smaller cities, and those who adapt quickly are likely to stay ahead.