India's e-commerce industry to exceed $160 billion by 2028: Bain-Flipkart report

India's e-commerce realm is poised for a remarkable surge, projected to surpass the $160 billion mark by 2028, as per a recent report jointly authored by Bain and Co. alongside e-commerce giant Flipkart. The growth trajectory anticipates a significant leap from an estimated $57–$60 billion in 2023, reflecting the escalating momentum in online shopping, particularly catalyzed by the aftermath of the Covid-19 pandemic.

The report, titled The How India Shops Online 2023, highlights a consistent yearly expansion of India's online retail market by $8–12 billion since 2020. Projections suggest a growth rate of 17–20% in 2023, albeit slightly slower than the 25-30% surge experienced during 2019-2022. The deceleration is attributed to inflationary pressures impacting the demand for discretionary goods.

"The Covid-19 pandemic has acted as a pivotal juncture for global e-retail adoption, witnessing a surge in online shopping across markets," the report stated. Notably, India has notably accelerated its e-retail penetration post-pandemic compared to more mature markets like the US and China.

Despite the substantial uptick in online shopping, e-commerce spending in India accounts for a mere 5-6% of the overall retail expenditure, a far cry from the 23–24% in the US and over 35% in China. This discrepancy signals a substantial room for growth in India's e-commerce landscape.

The burgeoning potential in India's online retail sector has prompted substantial investments from major players such as Amazon, Flipkart, and Reliance Retail’s Ajio. Amazon, for instance, recently announced an additional $15 billion commitment to the Indian market by 2030, raising its total investment to $26 billion.

The report further revealed intriguing trends, with smaller cities leading the charge in online shopping adoption, accounting for seven out of 10 buyers. Additionally, a burgeoning cohort of Gen Z-Alpha consumers, along with a substantial portion from low-income or low-middle-income segments, is actively engaging in online shopping.

As the market continues to burgeon, analysts foresee the growth driven by both new shopper additions and increased online spending per shopper. The growing seller ecosystem in tandem with the evolving consumer preferences further underscores the dynamic trajectory of India's e-commerce landscape.

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