How India Shops Online 2023

How India shops online 2023

The 2023 report on how India shops online provides a comprehensive analysis of the e-retail landscape in India.

E-Retail Disruption and Pandemic Impact

E-retail has significantly disrupted global retail, with online-first retailers now constituting up to two-thirds of the sales of the top ten global retailers. The COVID-19 pandemic accelerated e-retail adoption worldwide, with a notable acceleration in India.

Growth Fundamentals in India

The Indian e-retail market is expected to reach $57-$60 billion in 2023, with an annual growth of 17%-20% from 2022. This growth is slightly slower than the historic rate due to inflationary pressures. The market still has considerable potential for expansion, with online spending constituting only 5%-6% of total retail in India. Key growth drivers include increased access to digital and physical infrastructure, improved affordability, and the emergence of digital ecosystems. It’s anticipated that increased GDP per capita will further propel e-retail growth, with 60-70 million households expected to join the upper income brackets by 2028.

Diverse Consumer Base and Seller Ecosystem

: India’s e-retail shopper base is becoming increasingly diverse, with a significant portion residing in Tier 2+ cities and belonging to younger generations and lower-income groups. The seller base is also expanding, with new entrants focusing on lifestyle, home, and electronics categories, resonating especially with younger consumers.

Emerging Business Models

New e-retail models are emerging, including quick-commerce (Q-commerce), hyper-value commerce, inspiration-led commerce (live commerce), and fast fashion. Each model caters to different consumer needs and preferences and is at varying stages of maturity and adoption in India.

Focus on Profitability and Monetization

The e-retail industry is increasingly focusing on profitability, with retailers adopting various monetization strategies such as advertising, seller services, fintech, externalization of services, and loyalty programs. In India, advertising-led monetization is particularly prominent, showing significant growth potential.

Role of Generative AI

Generative AI is poised to transform the e-retail experience in India, impacting discovery, seller enablement, targeted marketing, customer support, and business efficiency. E-retailers, including major players like Flipkart, are experimenting with AI to enhance the online shopping experience and make it more akin to offline shopping.

Source: Bain / Summary: AI generated