Redseer sees 22-24 per cent growth, with quick commerce, value commerce and Gen Z driving the next phase of e-commerce expansion
India’s online retail market is on track for its strongest annual growth in five years, with the sector projected to cross $90 billion in 2026 as quick commerce, value-led shopping and rising Gen Z participation reshape consumer demand, according to a September 2026 report by Redseer Strategy Consultants.
The market grew around 25 per cent year-on-year in the first half of 2026, marking its strongest H1 performance in four years and nearly twice the pace recorded during H1 2023-25. Redseer expects growth to remain at 21-25 per cent in the second half, taking full-year online retail growth to 22-24 per cent.
Festive Season Set For Strong Growth
The report projects the 2026 festive season to grow by around 25 per cent, making it the strongest festive period in roughly five years. The 30-35-day festive window, which typically runs up to Diwali, is expected to benefit from sustained momentum in quick and value commerce as well as stronger demand across everyday categories.
Redseer expects the festive online retail market to see gross merchandise value of around $15-16 billion, with online shoppers during the festive period projected to reach 180-185 million.
The report said quick commerce and value commerce are likely to continue outperforming traditional e-commerce models during the festive period. Value commerce is expected to retain its share despite a high base in the previous year, helped by deals on low-average-selling-price products and new shopper acquisition in Tier 2+ markets.
Quick Commerce Moves Beyond Grocery
Quick commerce has become a significant incremental growth engine for online retail rather than simply shifting spending from traditional online grocery platforms.
The segment’s market size doubled for the third consecutive year to around $9 billion in H1 2026, while its average monthly transacting user base reached more than 60 million. Redseer said incremental users and spending are increasingly coming from offline retail rather than being reshuffled within online grocery.
The report also highlighted the creation of new consumption occasions through quick commerce, including demand for energy drinks, packaged coconut water, dark chocolate and premium impulse snacks.
Tier 2+ Cities Become Growth Leaders
Growth is also broadening beyond India’s largest cities. Redseer said Tier 2+ markets have moved from being laggards to growth leaders, with value commerce recording more than 30 per cent growth in lifestyle categories during H1 2026, driven by new shopper acquisition in smaller cities.
The report attributed the acceleration to greater availability of affordable and regional products, vernacular advertising and local influencer-led campaigns. E-commerce is also bringing newer categories such as face serums, advanced skincare and digital-first brands within reach of consumers in Tier 2+ locations.
Gen Z Moves To The Core Of ECommerce
Gen Z is emerging as another structural driver of online retail growth. Redseer said the cohort’s contribution to online retail has tripled since 2022, with lifestyle categories at the forefront of adoption. The report defines Gen Z shoppers as those aged 14-29.
The consultancy said Gen Z has consequently moved into the core growth strategy of leading e-commerce platforms, signalling a shift from short-term customer acquisition to a more structural role for younger consumers in the market.
Grocery Set To Overtake Mobiles
At the category level, grocery is expected to overtake mobiles in 2026 to become the second-largest category purchased online, behind fashion. Redseer projects grocery to account for around 19 per cent of online retail in 2026, compared with around 16 per cent for mobiles.
Overall, Redseer expects online retail to reach more than $90 billion in calendar 2026, representing 22-24 per cent year-on-year growth — the fastest annual growth rate in five years.
The report said the growth trajectory reflects a broader shift in India’s online retail market, with quick commerce, value commerce and Gen Z moving from short-term growth boosts to structural drivers of the sector.
