Bain–Flipkart report flags rise of quick commerce and AI-led shopping as next growth drivers
India’s online retail market has crossed the USD 65 billion mark in 2025, signalling a strong post-pandemic recovery and setting the stage for sustained high growth, according to a joint report by Bain & Company and Flipkart.
The report, How India Shops Online 2026, estimates e-retail gross merchandise value (GMV) at USD 65–66 billion last year, reflecting a 19–21 per cent annual growth. The sector is now projected to expand at over 20 per cent annually, reaching USD 170–180 billion by 2030 and capturing nearly one in ten retail dollars.
Consumption revival fuels momentum
The growth acceleration was driven by improving macroeconomic conditions, including GST rate cuts, income tax relief, easing inflation and lower interest rates, which lifted private consumption growth to 10.5 per cent in 2025.
The second half of the year saw particularly strong momentum, with growth rates of 22–24 per cent, extending into early 2026 as discretionary spending picked up.
Shopper base doubles, Gen Z leads demand
India’s e-retail shopper base has doubled over the past five years to nearly 300 million users, supported by rapid expansion in seller ecosystems and deeper penetration into smaller cities.
Gen Z has emerged as a key growth driver, accounting for 40–45 per cent of shoppers and contributing half of incremental orders in 2025. This cohort is shaping new consumption patterns, driven by influencer-led discovery, video-based shopping and increased use of instant credit.
Tier 2 and smaller cities contributed around half of incremental orders, underlining the growing geographical spread of digital commerce.
Quick commerce reshapes the market
Quick commerce (q-commerce) has emerged as a major disruptor, accounting for 16–17 per cent of total e-commerce GMV in 2025—well ahead of global peers.
The segment, which has doubled annually over the past two years to reach USD 10–11 billion, is projected to scale up sharply to USD 65–70 billion by 2030. It is expected to contribute nearly half of incremental e-retail growth over the next five years.
Primarily driven by grocery and essentials, q-commerce is increasingly expanding into discretionary categories, supported by faster delivery models and micro-fulfilment centres across more than 200 cities.
Conversational commerce gains traction
The report also highlights the emergence of conversational commerce powered by generative AI as a transformative trend.
India has become the world’s second-largest market for ChatGPT, with a user base exceeding 160 million and growing rapidly. This shift is enabling a transition from traditional “search and browse” shopping to more intuitive “describe and get” experiences.
Industry players believe AI-driven vernacular interfaces will play a crucial role in onboarding the next wave of digital consumers, particularly in non-metro markets.
Low penetration signals long-term opportunity
Despite rapid growth, e-retail penetration in India remains low at around 1.6 per cent of GDP, significantly behind markets such as China and Indonesia.
With only about 30 per cent of internet users currently shopping online, a large untapped consumer base remains. Rising incomes and increasing digital adoption are expected to further accelerate spending, particularly as India approaches key income thresholds that historically boost discretionary consumption.
Structural growth intact
The report underscores that while offline retail will continue to dominate India’s broader USD 1.6 trillion retail market by 2030, online commerce is poised for sustained expansion.
With strong tailwinds from consumption growth, technology innovation and evolving consumer behaviour, India’s e-retail sector is expected to remain one of the fastest-growing globally, driven by both scale and structural transformation.
