The e-retail landscape in India is projected to exceed the $160 billion (over ₹13 lakh crore) by 2028, according to a report released by Bain & Company in collaboration with Flipkart. Anticipated to reach approximately $57-60 billion in 2023, the e-retail market is poised for significant expansion, with an annual shopper base of approximately 240 million. This represents an incremental addition of $8-12 billion annually since 2020, the report says.

Presently, online spending constitutes only 5-6% of total retail spending in India, in stark contrast to the U.S., where it comprises 23-24%, and China, where it is 35%. This huge gap compared to major economies suggests substantial potential for growth in the Indian e-retail sector, the report highlights.

The landscape of e-retail has undergone a remarkable transformation over the past three years, marked by notable doubling of e-retail spending per customer. The year 2022 saw a significant surge, with the addition of twice as many sellers compared to the preceding year.

“E-retail spending per customer doubled over the past three years. Twice as many sellers were added in 2022 compared to 2021.Two-thirds came from Tier 2+ cities, and three-fourths operate in the lifestyle, home, and electronics categories” the report says.

In India, more than half of the seller base hails from seven cities i.e. Delhi NCR (20-22%), Surat (11-13%), Jaipur(6-8%), Mumbai (4-6%), Bengaluru (2-4%), Hyderabad (1-3%), Kolkata(1-3%), creating seller hubs, shows the data.

The report claims government programmes like the Open Network for Digital Commerce (ONDC) will contribute to the continued expansion of e-retail in India.

“Currently, 7 out of 10 online shoppers reside in Tier 2+ cities, and a third of online shoppers are from low-income or low-middle-income cohorts,” says the report, adding that ‘Q-commerce’ orders doubled over the last year, and now account for 40%–50% of India’s e-grocery spend.

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India’s e-retail market to reach $160 bn by 2028: Report