E-retail in India to surge past $160 billion mark by 2028: Bain & Company report

E-retail in India is expected to surge past the $160 billion (over Rs 13 lakh crore) mark by 2028, a report released by Bain & Company in collaboration with Flipkart said on Wednesday.

The E-retail market is expected to be around $57–USD 60 billion (Rs 4.75 lakh crore to 5 lakh crore) in 2023, with an annual shopper base of around $240 million representing an annual addition of $8–12 billion since 2020.

"Long-term fundamentals of India’s e-retail industry, including affordable data, improved logistics and fintech infrastructure and strong digital consumer ecosystems remain intact,” Bain's Innovation & Design Capability Area, Partner and Global Leader, Arpan Sheth said in a statement.

“The market is expected to rebound to 23–25 per cent growth levels, surging beyond USD 160 billion by 2028," the statement said.

The e-retail market is poised to grow in the coming years, with online spending currently only 5–6% of total retail spending in India compared to the US where it is 23–24% and 35% in China, indicating massive headroom for growth.

According to the report, the majority of India's retail spending (94–95%) continues to be offline, with general trade accounting for 87% of the overall retail spend.

"As GDP per capita continues to increase, especially beyond USD 4,000, it is expected to drive a sharp rise in online spending, as spend per shopper on discretionary products increases,” the report said.

At present per capita income is around USD 2,600 in the country.

The report estimates that over 60% of internet users are not shopping online. "The seller ecosystem in India is also expanding rapidly, with twice as many sellers added in 2022 compared to the previous year. Around two-thirds of these new sellers came from Tier 2 and smaller cities," the report said.

More than half of the total seller base hails from 7 cities, namely Delhi NCR, Surat, Jaipur, Mumbai, Bengaluru, Hyderabad, and Kolkata, the report said.

The e-retail industry in India is witnessing the emergence of new business models to cater to consumer needs which include quick-commerce (Q-commerce) platforms, hyper-value commerce, inspiration-led commerce (live commerce), and fast fashion.

"Over the past year, Q-commerce orders have doubled, accounting for 40–50% of India's e-grocery spend,” Bain & Company, Partner and leading member of the Consumer Products & Retail practice, Shyam Unnikrishnan said.

The hyper-value sector's share of overall e-retail grew five times between 2020 and 2022 in India, the report said.

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