Despite near-term consumption challenges and slowed growth in 2024, India’s e-retail market is poised to hit $170–$190 billion by 2030. Discover how tier-2 expansion, Gen Z’s influence, and category growth are driving this long-term resurgence.
India’s e-retail market reached an impressive $60 billion in 2024, yet its growth rate has recently slowed to around 10–12%, down from the historical rate of over 20%. Despite these near-term challenges driven by macroeconomic headwinds such as inflation and stagnating real wages, the long-term prospects remain robust. Industry experts predict that by 2030, the market could scale to an astounding $170–$190 billion, growing at over 18% annually.
Short-Term Headwinds Impacting Growth
Recent data indicates that consumption growth in India has dipped from roughly 11% pre-Covid to around 8% post-Covid (2022–24). Urban markets, in particular, have borne the brunt of inflationary pressures and slower wage growth. This slowdown has led to muted performance across several consumer-facing sectors, forcing companies to re-evaluate their strategies and operational models.
Long-Term Growth Drivers
Despite the current challenges, the underlying market fundamentals of India’s e-retail sector remain strong. With nearly 280 million online shoppers recorded last year, India has solidified its position as the world’s second-largest e-retail market, trailing only China. The Flipkart–Bain report highlights that the long-term potential is significant—projecting the market to expand to $170–$190 billion by 2030. This optimistic forecast is underpinned by continued improvements in logistics, technology, and digital payment systems.
Shifting Consumer Demographics
A key element fueling the long-term outlook is the evolving consumer base. Gen Z now accounts for nearly 40% of e-retail shoppers. This digitally native generation is not only active on multiple platforms but is also more experimental in its purchasing behavior. Their willingness to try new brands and engage with innovative shopping experiences is expected to drive further growth. Gen Z’s multi-platform shopping and preference for quality, value-driven products are crucial for the sustained expansion of the market.
Expansion into Tier-2 and Tier-3 Cities
One of the most promising growth areas is the expansion into tier-2 and tier-3 cities. Over the past few years, these regions have emerged as untapped markets. More than 60% of new customers and sellers on e-retail platforms have come from these smaller cities. The shift in focus from traditional urban centers to emerging markets is set to broaden the customer base and diversify revenue streams. Enhanced delivery options and localized marketing strategies are already yielding positive results in these areas.
Category Drivers and Technology Investments
Product categories that experience frequent purchases—such as groceries, lifestyle items, and general merchandise—are expected to contribute about 70% of incremental growth by 2030. Currently, these categories make up around 55% of the gross merchandise value (GMV) in e-retail. Innovations in logistics and supply chain management, coupled with robust cash-on-delivery systems and targeted digital advertising, have significantly enhanced customer experience and loyalty. Major players like Amazon and Flipkart are investing heavily in technology to streamline operations, while new entrants like Meesho are leveraging localized strategies to capture regional demand.
While the e-retail market in India is currently facing short-term challenges due to consumption slowdowns and macroeconomic pressures, the long-term outlook is exceptionally bright. The expansion into tier-2 and tier-3 cities, coupled with a dynamic Gen Z consumer base and continual technological advancements, positions India’s e-retail sector for substantial growth. Retailers and investors should view the current slowdown as a temporary setback, with the market’s resilient fundamentals set to drive explosive growth in the coming years.
With strong growth prospects and an evolving consumer landscape, India’s e-retail market is gearing up for a major resurgence—making it one of the most compelling spaces to watch over the next decade.
