India’s E-Retail Boom: Surpassing the US with $60 Billion GMV
India’s e-commerce sector has experienced a meteoric rise over the past decade. According to a joint report by Flipkart and Bain & Company, the Indian e-retail market reached $60 billion in GMV, making it the second-largest online shopper base in the world, surpassing the US.
The country’s vast population, increasing internet penetration, and rising smartphone usage have driven this growth. India now boasts over 220 million online shoppers, making it a significant player in the global e-commerce landscape.
However, despite this impressive market size, the industry’s growth rate slowed to 10-12% in 2024, compared to the historical average of 20%. This marks a considerable decline, raising concerns about the sustainability of the sector’s expansion.
Why Did India’s E-Commerce Growth Halve in 2024?
1. Higher Inflation Reduces Consumer Spending
Inflation has been a major factor dampening India’s e-commerce growth. Rising prices of essential goods and services have reduced consumers’ discretionary spending capacity.
Food and fuel prices have surged, leaving consumers with less disposable income for online purchases.
The Consumer Price Index (CPI) remained elevated, making non-essential purchases less frequent.
As a result, categories like fashion, electronics, and luxury items have witnessed slower sales.
2. Stagnation of Real Wages
While India’s e-retail market grew in size, real wage growth stagnated in 2024. This resulted in a reduced purchasing power for the middle class, which forms the backbone of e-commerce.
With limited income growth, consumers have been prioritizing essential over discretionary spending.
The lack of wage hikes post-COVID has also contributed to the sluggish demand for online products.
3. Post-Pandemic Normalization
The pandemic-era boom in online shopping has gradually normalized.
During COVID-19, e-commerce witnessed exponential growth due to lockdowns and restrictions.
However, with physical retail making a comeback, consumer preferences have shifted back to offline shopping in some categories, slowing down online growth.
Three Key Disruptions Shaping the Future of India’s E-Retail
Despite the slowdown, three major trends are set to reshape India’s e-retail landscape and drive future growth:
1. Quick Commerce: The Race for Speed
Quick commerce, or instant delivery models, has become a game-changer in Indian e-retail.
Platforms like Zepto, Blinkit, and Swiggy Instamart are offering 10-30 minute deliveries, catering to time-sensitive customers.
This segment has seen a 50-60% growth in urban areas, driven by rising demand for groceries, snacks, and daily essentials.
The convenience and speed of quick commerce are reshaping consumer expectations, making faster deliveries a competitive advantage.
2. Trend-First Commerce: The Fashion Revolution
Fashion e-commerce in India is undergoing a trend-first transformation, especially among Gen Z and millennials.
Platforms like Myntra, Ajio, and Nykaa are focusing on micro-trends and influencer-driven shopping, where styles change rapidly.
Social commerce and live shopping events are gaining traction, offering consumers real-time access to the latest fashion trends.
This model boosts impulse purchases, driving growth in the fashion and lifestyle segments.
3. Hyper-Value Commerce: Affordable Pricing Gains Traction
With consumers becoming more price-conscious, hyper-value commerce is gaining popularity.
Platforms like Meesho and Flipkart’s Shopsy are offering ultra-affordable products, catering to budget-conscious consumers.
Discounted pricing, free delivery, and bulk offers are attracting customers in tier-2 and tier-3 cities, where price sensitivity is higher.
This trend is expected to drive volume-based growth, helping e-retailers expand their rural footprint.
What Lies Ahead for India’s E-Retail Market?
While the growth rate of India’s e-retail sector has slowed in 2024, the market’s potential remains significant. Industry experts predict that the sector could reach $150 billion by 2030, driven by the expansion of quick commerce, deeper penetration into rural areas, and the rise of D2C (direct-to-consumer) brands.
To sustain growth, e-commerce companies will need to:
Prioritize affordability by offering hyper-value deals.
Enhance delivery speed through efficient quick commerce networks.
Leverage AI and data analytics to personalize shopping experiences.
Expand their presence in tier-2 and tier-3 markets to capture untapped potential.
India’s e-retail market has achieved a remarkable milestone by surpassing the US with a $60 billion GMV, but the halving of growth in 2024 indicates signs of saturation and economic pressures. The future of India’s e-commerce will be defined by its ability to adapt to emerging trends like quick commerce, trend-first commerce, and hyper-value commerce. As inflation eases and real wages stabilize, the sector is poised for long-term sustainable growth, with new-age shopping trends driving consumer demand.
Saathee Global
