Over the next five years, India's online marketplaces are expected to more than triple to reach $350 billion in gross merchandise value (GMV), shows a Bain & Company and Accel report. They would create $400-$500 billion in enterprise value, contributing over 5% to India’s GDP. Over 15 million micro, small, and medium enterprises (MSMEs) would grow businesses online and create 7 million jobs by 2027, says the report titled “The Rise of Digital Bazaars in India”.

The report finds out that marketplaces have created tremendous value for individual buyers, businesses, and the economy. Arpan Sheth, partner at Bain & Company and co-author of the report, says marketplaces have contributed to India’s growth story. They offered greater access to capital, and innovative financing solutions, enabled MSMEs to transact online with an increased reach and provided jobs to over 3 million gig workers in India, he said.

India has over 300 funded marketplaces across retail, education, healthcare, travel, and financial services, among others. Of these, 20 reached over $1 billion in GMV and many players are turning profitable. The report says online marketplaces continue to be dominated by B2C e-commerce, with 40% of the total GMV expected in 2027. But the B2B e-comm marketplaces GMV is also expected to grow five times its current size to reach $55 billion. It’ll be followed by online food delivery, which could almost triple in size to reach nearly $22 billion.

Not just for buyers and sellers, marketplaces have also seen significant traction with investors in recent years, having received cumulative funding of $30 billion between 2018 and October 2022, says the report. "B2C e-commerce, B2B e-commerce, and online food delivery were among the highest-funded marketplaces sectors, together accounting for close to 60% of total funding received in the last 5 years."

The year 2021 was a landmark year in terms of funding in marketplaces that reached $16 billion, growing four times compared to 2018. Deal volumes doubled in the same period. In 2022 year-to-date, the activity has been moderate at $4.5 billion, given the tempering of 2021 highs, valuation corrections, and muted sentiments in global public markets, finds the report.

As per Anand Daniel, partner at Accel and co-author, India is one of the world’s fastest-growing and most dynamic emerging markets. "More than 1/3rd of large outcomes in our start-up ecosystem have been marketplaces and contribute to more than $100 billion in GMV."

The report says the next wave of scale marketplaces has the potential to emerge in two additional major categories— ‘Bharat-first’ models driven by participation from tier- 3+ cities, and global cross-border models addressing the export potential India has.

"Gaming, caregiver services, creative content, Web 3.0, have large-scale marketplaces in mature markets but are currently nascent in India. They represent future trends in the Indian marketplace landscape, and are a precursor for these segments to grow large in India given proof of scale in the US and China, where multiple unicorns are present in these areas."

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