Online Retail market to reach 160 billion dollars in India by 2028
Presently, online spending constitutes only five to six percent of total retail expenses in India, which is very different from the U.S., where it constitutes 23-24%, and China, where it is 35%. The e-retail market in India is projected to surpass $160 billion (over ₹13 lakh crore) by 2028. Expected to achieve approximately $57-60 billion in 2023, the e-retail market is ready for significant expansion, with an annual consumer base of approximately 240 million. This represents an incremental upsurge of $8-12 billion yearly since 2020. This massive gap compared to major economies indicates significant potential for growth in the Indian e-retail sector.
The online retail landscape has experienced a notable change over the past three years, marked by the significant doubling of e-retail spending per consumer. The year 2022 saw a significant wave, with the addition of double vendors as compared to the previous year. Two-thirds came from the emerging urban cities, and three-fourths operate in the lifestyle, home, and electronics categories. In India, more than half of the seller base comes from seven cities mainly, Delhi NCR (20 to 22%), Surat (11 to 13%), Jaipur(6 to 8%), Mumbai (4 to 6%), Bengaluru (2 to 4%), Hyderabad (1 to 3%), Kolkata(1 to 3%), creating seller hubs. Government programs like the Open Network for Digital Commerce (ONDC) will contribute to the continued expansion of e-retail in India. Presently, 7 out of 10 online shoppers live in Tier 2 cities, and a third of online shoppers are from low-income or low-middle-income fellows, adding that quick commerce orders doubled over the last year, and now account for 40%–50% of India’s e-grocery spend.
In complement to continuous enhancements in basic business economics, online retailers are concentrating on monetization by employing five primary strategies: advertising, seller services, fintech, externalization of services like logistics and cloud, and subscription-oriented loyalty programs. Global e-retailers use numerous monetization levers, but advertisement is the main lever in India. E-commerce advertisement spending quadrupled, yet there’s still huge growth potential.