India's e-retail rush creates 28 crore online shoppers, toppling US to become second largest: Flipkart-Bain report

With 280 mn online shoppers, India pips US to become 2nd largest e-retail market globally: Flipkart-Bain report

With almost 28 crore online shoppers, India has overtaken the US to become the world’s second largest e-retail market in terms of online buyers, behind China, a 2024 report by Flipkart and Bain and Company has said.

China had 92 crore e-retail shoppers while the US had 27 crore.

Growing at a compound annual growth rate (CAGR) of 20 percent between 2019 to 2024, the e-retail market in India scaled to $60 billion last year, and is projected to reach $170–190 billion by 2030, the report said.

This comes even as growth in domestic e-retail has slowed down to 10-12 percent during the year compared to over 20 percent seen historically, due to macroeconomic factors and a consumption slump.

Regardless, nearly one in 10 retail dollars is projected to be spent on e-retail by 2030, fuelled by an uptick in discretionary spending, as India’s GDP per capita looks to cross the crucial $3,500–4,000 threshold, a key tipping point in e-retail spend globally.

Regional pockets in India with GDP per capita of over $3,500, such as Kerala, Karnataka, Gujarat, Delhi, Chandigarh, and Tamil Nadu, among others, already have a higher e-retail penetration, i.e., share of online retail is proportionally higher compared to the overall retail market.

While the e-retail market in India is largely dominated by players like Amazon and Flipkart, newer entrants like Meesho - with its tier II and beyond focus - have expanded the market. Meanwhile, emerging quick commerce challengers like Blinkit, Zepto and Swiggy Instamart have helped increase the overall e-commerce pie.

As per the report, growth in India’s e-retail market will be driven by further expansion into remote markets, rising discretionary spending, and the growing contribution of high-frequency categories. Emerging sectors like quick commerce are also expected to have a disruptive impact on the market.

India’s e-retail penetration has already expanded from tier II cities to tier III and smaller cities, with almost 60 percent of new customers since 2020 hailing from tier III towns and smaller cities. Additionally, over 60 percent of the new sellers onboarded on e-retail platforms since 2021 were from tier II and smaller cities.

“E-retail spending of shoppers in Tier-2 and smaller cities is broadly at par with that of Metro/Tier-I cities, with similar or only slightly lower average selling prices across categories,” the Flipkart-Bain report stated.

This growth is driven by faster delivery options, cash-on-delivery availability, and e-retail ads serving as indicators of quality.

As such, the long-term prospects of India’s e-retail market remain strong, despite near-term macroeconomic headwinds, the report concluded.