The sector, which reached $65-66 billion in GMV in 2025, has seen a sharp rebound alongside broader consumption recovery. The market grew at 19-21-per cent CAGR, with significantly faster growth in the second half of the year and sustained momentum in the first quarter (Q1) of 2026.
India’s e-retail market is likely to sustain an over 20 per cent CAGR and more than double to $170-180 billion in GMV by 2030, as per a report by Bain & Company and Flipkart.
Gen Z has emerged as a sizable cohort, now accounting for 40-45 per cent of e-retail shoppers in India.
Tier II plus cities have become a key cohort as well.
Two trends this year are quick commerce and conversational commerce.
Growth accelerated in the second half of last year and has sustained momentum into early 2026, supported by improving macro conditions, policy tailwinds and rising discretionary spending.
The country’s e-retail market more than doubled over the past five years, accompanied by shoppers doubling to reach 290-300 million. Gen Z, tier II plus cities and middle-income households led incremental shopper growth.
E-retail in India has significant headroom, accounting for roughly 1.6 per cent of gross domestic product (GDP) in 2025 compared to 4-4.5 per cent in Indonesia and 13-14 per cent in China.
Gen Z has emerged as a sizable cohort, now accounting for 40-45 per cent of e-retail shoppers in India. Simultaneously, tier II plus cities have become a key cohort, contributing approximately half of incremental e-retail orders in 2025. The seller base also tripled over the past five years, with a sizable share emerging from tier II plus cities.
The evolution of e-retail in India is underpinned by improvements in the customer value proposition across access (i.e., reach and speed), affordability, assortment and discovery, the report added. Leading platforms are increasingly anchoring on value, mirroring global trends.
Growth will partially be driven by continued gains in shopper penetration. India’s e-retail shopper penetration is approximately 30 per cent of Internet users, which trails mature markets like China (92 per cent) and the United States (74 per cent). There is significant headroom in shopper penetration, even at current Internet penetration levels.
E-retail shopper growth will be complemented by an increase in spend per shopper as affluence increases. India’s GDP per capita is expected to surpass $4,000 by 2030, which has been a key inflection point for discretionary spending in other markets, the report noted.
Brands are increasingly considering e-retail advertising as a core component of their advertising strategies, with e-retail advertisements accounting for roughly 25 per cent of digital advertising spend in 2025.
The report highlighted two trends in e-retail this year: quick commerce (Q-commerce, i.e., delivery in less than 30 minutes) and conversational commerce, i.e., assisted shopping powered by artificial intelligence (AI).
India has emerged at the forefront of Q-commerce globally, scaling to $10–$11 billion GMV, supported by structural factors such as high population density, low manpower and real estate costs, and low online grocery penetration.
Q-commerce in India has doubled annually over the past two years and is projected to reach $65-70 billion by 2030. Overall, Q-commerce is projected to contribute 45-50 per cent of incremental e-retail GMV over the next five years.
Generative AI adoption is accelerating rapidly, with large language models (LLMs) reaching 50 million monthly active users faster than earlier digital innovations.
Generative AI in the form of conversational commerce has the potential to evolve retail journeys beyond ‘search and browse’ to ‘describe and get’. While conversational commerce is rarely used for end-to-end shopping today, there are early adoption use cases in research and product comparison.
Overall, conversational commerce is nascent, and e-retailers and LLMs are experimenting along two parallel paths. E-retailer-led agents are enabling discovery and aiding conversion, while LLM-led shopping agents are shaping discovery and consideration, the report said.
Fibre2Fashion News Desk (DS)
