India's e-retail aisles buzz again, market hits $66 billion

India's e-retail market surged to $65-66 billion in 2025, propelled by significant contributions from GenZ shoppers and the rapid, globally leading expansion of quick commerce, setting the stage for continued robust growth towards $180 billion by 2030.

India’s online retail market closed 2025 on a stronger footing, with electronic retail (e-retail) gross merchandise value (GMV) reaching $65-66 billion, up 19-21 per cent in value terms, according to “How India Shops Online 2026”, a report by Bain & Company in collaboration with Flipkart.

In 2025, private consumption growth rose from 8 per cent (2022-24) to 10.5 per cent, helped by goods and services tax cuts, income-tax relief, easing inflation, and lower lending rates.

Even as e-retail posted solid growth, the broader retail sector’s march towards $1.6 trillion by 2030 shows offline infrastructure will remain critical to reaching most Indian consumers.

GenZ and Tier-II+ Cities Drive Growth

“Five years ago, India’s e-retail story was about potential; today, it is a reality.

"GMV has more than doubled, the annual active shopper base is nearing 300 million, and the seller ecosystem has trebled, with growth increasingly led by Tier-II+ towns and GenZ,” said Shyam Unnikrishnan, managing partner at Bain & Company.

“As India’s gross domestic product (GDP) per capita approaches the $4,000 inflection point — where discretionary spending has historically accelerated in other emerging markets — it will provide further tailwinds.

"The next five years should unlock the next wave of growth.”

GenZ has emerged as a key cohort, accounting for 40–45 per cent of e-retail shoppers and contributing 50 per cent of incremental orders in 2025, with spend per shopper growing 2.5x faster than other cohorts in metros.

Growth is also becoming more geographically distributed, with Tier-II+ cities contributing about 50 per cent of incremental online orders in 2025, despite shopper penetration of just 25–30 per cent of internet users (versus 45–50 per cent in metro and Tier-I markets).

Despite the expansion, India’s e-retail penetration remains low at 1.6 per cent of GDP, compared with 13–14 per cent in China and 4-4.5 per cent in Indonesia, pointing to a long runway ahead.

The report projects the market will reach $170–180 billion by 2030, sustaining about 20 per cent annual growth, driven by rising shopper penetration and higher spend per user.

The Rise of Quick Commerce

India has emerged as a global leader in quick commerce (qcom), with 16–17 per cent of e-commerce GMV flowing through the channel — well ahead of most markets, including China.

The segment has doubled annually over the past two years, reaching $10–11 billion GMV in 2025.It is projected to scale to $65–70 billion by 2030, contributing 45–50 per cent of incremental e-retail GMV.

Traditional e-retail, however, is expected to retain a 60–65 per cent share.

Qcom is also accelerating online grocery adoption. E-grocery penetration has grown fivefold since its launch and now accounts for nearly 1.5 per cent of the overall grocery market.

The model serves a dual role — as a convenience channel for essentials (85–90 per cent of GMV) and a fulfilment layer for discretionary purchases.

It now operates more than 7,000 micro-fulfilment centres across 200 cities, with two-thirds of new capacity concentrated in the top 10.

"Shopping behaviour here is distinct, with high-intent missions driving faster checkout velocity and higher conversions,” said Manan Bhasin, partner at Bain & Company.

Technological Innovation in E-Retail

Balaji Thiagarajan, chief product and technology officer at Flipkart, said scaling digital commerce in India is “a precision game, not just a volume game”.

“This is why Flipkart’s conversational engine is built for Indian context — by Indians, for Indians.

"By layering generative AI, we are ensuring a vernacular conversation for a customer in Muzaffarpur feels as effortless as one in a metro,” he said.