Redseer projects 22-24 per cent growth, with grocery set to overtake mobiles as the second-largest online retail category
India’s online retail market is projected to cross USD 90 billion in calendar year 2026, registering 22-24 per cent year-on-year growth — its fastest annual expansion in five years, according to Redseer Strategy Consultants’ India Online Retail 2026 executive report.
The report identifies quick commerce, value commerce and the growing participation of Gen Z consumers as structural growth drivers, signalling a shift in the online retail landscape beyond short-term demand boosts.
Online Retail Records Strongest First Half In Four Years
India’s online retail market grew approximately 25 per cent year-on-year in the first half of 2026, making it the strongest H1 performance in four years. Growth was broad-based, with every major category expanding faster than in the corresponding period last year.
Redseer expects online retail growth to remain steady at 21-25 per cent in the second half of 2026. However, electronics growth is expected to moderate after a sharp H1 rebound, while price increases could weigh on mobile and electronics demand during the festive period.
Grocery Set To Overtake Mobiles
A significant shift in the category mix is expected in 2026, with grocery projected to overtake mobiles and become the second-largest category purchased online.
The report projects grocery to grow by 31-34 per cent in CY2026. Fashion is expected to grow by 17-20 per cent, while beauty and personal care is projected to expand by 16-18 per cent. Electronics growth is estimated at 2-3 per cent, and mobiles at 16-18 per cent.
The broader market is expected to grow 22-24 per cent during the year.
Quick Commerce Expands Beyond Grocery
Quick commerce has emerged as a major contributor to the online retail acceleration. The segment reached approximately USD 9 billion in the first half of 2026, nearly doubling for the third consecutive year, according to Redseer.
The average monthly transacting user base crossed 60 million by the end of H1 2026, compared with 33 million in H1 2025 and 15 million in H1 2024.
Redseer’s analysis suggests that quick commerce is increasingly generating incremental demand rather than merely shifting spending from online grocery platforms. A growing share of users and expenditure is being drawn from offline retail.
The segment is also creating new consumption occasions, particularly in categories such as energy drinks, packaged coconut water, dark chocolate and premium impulse snacks.
Value Commerce Gains Ground In Tier-2+ Markets
Value commerce platforms grew by more than 30 per cent in lifestyle categories during H1 2026, supported by significant new shopper acquisition in Tier-2+ locations.
The report attributes this growth to affordable and regional product assortments, vernacular advertising campaigns and local influencer-led activations. Leading horizontal platforms are also cross-selling lifestyle products to existing users in smaller cities.
Ecommerce is further expanding access to newer categories, including face serums, advanced skincare and digital-first brands, among Tier-2+ consumers.
Redseer notes that Tier-2+ markets have shifted from being growth laggards to growth leaders, outpacing metros in both fashion and beauty and personal care, excluding quick commerce.
Gen Z Moves To The Core Of ECommerce Growth
Gen Z consumers are becoming increasingly important to online retail. Defined in the report as shoppers aged between 14 and 29, their contribution to online retail has risen significantly since CY2022.
Their contribution to gross merchandise value has increased from approximately 20 per cent in CY2022 to 38-40 per cent in H1 2026. Their share of online retail users has also risen from around 55 per cent to approximately 80 per cent over the same period.
The report indicates that Gen Z has moved from being an emerging consumer segment to a core part of the growth strategy for leading e-commerce platforms, particularly in lifestyle categories.
Festive Online Retail Growth Projected At 25%
Redseer expects festive 2026 to deliver approximately 25 per cent growth, making it the strongest festive period in around five years.
The festive period, typically spanning 30-35 days leading up to Diwali, is projected to attract 180-185 million online shoppers. Festive gross merchandise value is estimated at USD 15-16 billion, compared with USD 12.5 billion in 2025.
Quick commerce and value commerce are expected to outperform other e-commerce models during the festive season. Quick commerce is projected to grow by 110-120 per cent, while value commerce is expected to expand by 25-30 per cent. The rest of e-commerce is forecast to grow by 16-18 per cent.
Everyday Categories To Broaden Festive Demand
The report expects festive growth to extend beyond mobiles and electronics, with everyday categories carrying forward their pre-festive momentum.
Grocery is projected to grow by 48-50 per cent during the 2026 festive period, while beauty and personal care is expected to expand by 20-22 per cent. Fashion is forecast to grow by 15-17 per cent, and home and furniture by 32-35 per cent.
Mobile and electronics are expected to account for less than half of festive online retail contribution this year, as price increases could constrain volumes. Meanwhile, grocery, beauty and personal care, home and furniture, and general merchandise are expected to gain from sustained demand.
Electronics Rebound Supported By Multiple Factors
Electronics recorded a strong rebound in H1 2026, with growth reaching 20 per cent, compared with a contraction in the previous year, according to the report.
The recovery was supported by several factors, including the impact of GST reductions on large appliances, strong air-conditioner demand amid an early and prolonged summer, and discounting linked to changes in energy-efficiency star ratings.
Demand for laptops, PCs and tablets was also brought forward as consumers anticipated brand-led price revisions following a substantial increase in DRAM and NAND prices. LPG shortages additionally contributed to a reported 200-300 per cent surge in demand for induction cooktops.
Redseer’s findings point to a structural shift in India’s online retail ecosystem, with growth increasingly being driven by new users, new consumption occasions and the expansion of ecommerce into smaller cities. Quick commerce, value-led platforms and Gen Z participation are expected to remain central to the market’s next phase of development.
