The report says that the next wave of ecommerce growth is expected to be fuelled by two factors: increasing penetration in newer segments and deeper penetration into tier-two and tier-three cities
Shedding light on the scope of growth in the ecommerce ecosystem, a report by McKinsey and Company has revealed that out of the country’s 850 million internet users, only about 20 to 25 per cent shop online, in stark contrast to the 85 per cent or more seen in mature markets like the United States and China.
The report noted that ecommerce accounts for just 7 to 9 per cent of India’s total retail sales as of fiscal year 2023, though this is expected to rise to between 15 and 17 per cent by 2030. Quick commerce and social commerce account for more than 15 per cent of India’s ecommerce market and are projected to exceed 25 per cent by 2030, the report pointed out.
“E-commerce in India has surged over the past few years, positioning the country not just as a fast adopter but increasingly as an innovator in the space, evident by the at-scale rise of quick commerce platforms. Yet, there is considerable headroom for growth,” the report highlighted.
The report added that the next wave of ecommerce growth is expected to be fuelled by two factors: increasing penetration in newer segments and deeper penetration into tier-two and tier-three cities, where monthly incomes have been growing. Monthly incomes in tier-two cities outpaced metros and tier-one cities with an 18 per cent increase between 2023 and 2024.
The growth of cross-border ecommerce is expanding market access for Indian businesses. Governments and businesses are increasingly digitising procurement, creating new opportunities for business-to-business (B2B) ecommerce and platforms like the government e-marketplace (GeM). Initiatives like the Open Network for Digital Commerce (ONDC) are accelerating this momentum by enabling greater digital access for sellers and driving adoption across both consumer and enterprise segments, the report said.
The report highlighted that ecommerce is likely to evolve beyond industry disruption to reshape the broader retail ecosystem, with an impact on last-mile logistics, financial services, food and beverages (for example, food delivery apps enabling ten-minute delivery from quick-service restaurants) and more.
