With dynamics undergoing a shift, these models will decide which way the growth chariot moves in the e-retail landscape, reveals a report
Led by a rebound in growth and the revival in the consumption cycle, the Indian electronic retail (e-retail) market is expected to embark on a growth chariot going ahead. E-retail is projected to exceed 18 per cent growth over the next six years, reaching an estimated USD 170 to 190 billion in gross merchandise value (GMV), with nearly one in 10 retail dollars spent on e-retail by 2030, driven by high-frequency categories such as grocery, lifestyle and general merchandise.
With user adoption expanding to tier-three cities and with three in five new shoppers since 2020 coming from cities designated tier-three or smaller, a report by Brain and Company, in collaboration with Flipkart, has revealed that this growth is unlocking access for consumers in remote, brand-starved areas, as evidenced by the 1.2 times higher e-retail shopper penetration in the Northeast compared to the rest of India.
The growth dynamics are evolving and the future is here. Quick commerce, trend-first commerce and hyper-first commerce are the next dominators as the evolution of these models will shape India’s e-retail future. While quick commerce has already made a significant mark, the report noted that the other two are rapidly gaining momentum.
Trend-first Commerce’s Expansion
Categorised by the frequent introduction of trendy collections at affordable prices, this model is gaining enhanced popularity in the country. With a large base of young, value-conscious consumers who actively use social media, the unique demographics of India position it for the trend-first boom.
This model alone is expected to grow fourfold, reaching approximately USD 8 to USD 10 billion by 2028, with more than half of this revenue from online sales, as highlighted by the report. As the role of trendy assortment expands in categories such as beauty, electronics and luggage, the model is expanding its reach beyond fashion.
As far as the major players in this growing segment are concerned, Offline brands such as Zudio (by Trent), H&M, and Zara have offered a trends-first proposition to Indian consumers. On the online front, the report highlighted that online platforms, such as Flipkart Spoyl, Myntra Fwd and Shein, along with emerging brands like Urbanic, Snitch and NewMe are making a mark.
Surge Of Hyper-value Commerce
Marked by an ultra-low price assortment, the hyper-value commerce model has gained traction among lower-middle-income consumers, particularly in tier-two or smaller cities in the country. As far as the contribution of hyper-value commerce to e-retail is concerned in India, the report added that it has grown from around five per cent of e-retail GMV in 2021 to more than 12 per cent in 2024.
With these platforms rapidly expanding their seller base by offering seller financing and zero-commission models, they are disrupting the landscape of India’s e-retail. The report highlighted that the model has seen a global surge, exemplified by the success of Temu in the US, which accounted for roughly half of all American e-retail app downloads within a year of being introduced.
Quick Commerce’s 40 Per Cent Growth
As more than two-thirds of all e-grocery orders and one-tenth of e-retail spending happened on quick commerce platforms in 2024, this model is changing the way India shops. Driven by expansion across categories, geographies and customer segments, quick commerce is projected to grow at over 40 per cent annually through 2030, as per the report.
India’s unique structural advantages, high population density and close access to a network of low-rent dark stores have enabled this growth. The report further highlighted that quick commerce has since attracted multiple players, which has made the consumer value proposition richer.
India’s Gen Z Boom
As purchase behaviour varies dramatically by age, region, city tier and e-retail maturity, India’s generation Z is contributing to the surge in its own style. Born between 1997 and 2012, Gen Z accounts for almost 40 per cent of e-retail shoppers. Heavily influenced by social media, 70 per cent of Gen Z shoppers discover brands online and make quicker purchase decisions, browsing fewer search listings than millennials before buying.
Boasting 1.5 times the e-retail spend share on categories such as lifestyle, beauty and electronics compared to other age groups, Gen Z showcases a very distinct shopping behaviour- social media reliance, quicker purchase decisions and preference for UPI for digital payments.
Slowdown In Private Consumption
As private consumption growth slowed from 11 per cent pre-covid (2017–19) to around eight per cent post-covid (2022–24), India’s consumption and discretionary spending have faced headwinds in recent years, as per the report. Driven by a higher degree of inflation and a stagnation of real wages, the stress in consumption is clear in e-retail growth in 2024 being 10 to 12 per cent, compared to historical growth rates of over 20 per cent.
However, the report noted that recent fiscal and monetary policy interventions are expected to drive a rebound in e-retail growth and the long-term market fundamentals remain robust. The report stated that brands and sellers can capitalise on the nuances of ‘many Indias’ by adapting their product range and assortment, developing new products aligned with evolving trends and market whitespaces and leveraging targeted e-retail advertising.
