India’s e-retail market has reached a major milestone, overtaking the U.S. in 2024 to become the second-largest online shopping market globally. With 280 million online shoppers, India now trails only China, which boasts a staggering 920 million digital buyers. However, despite this impressive achievement, the industry’s rapid expansion has hit a speed bump.
According to a report by Flipkart and Bain & Company, India’s e-retail market surged to $60 billion in 2024, but its annual growth rate has slowed to 10-12%, a sharp decline from the 20%+ yearly growth seen in previous years. The report attributes this slowdown to broader economic challenges, including rising inflation, stagnant wages, and weakened consumer spending, particularly in urban markets.
Why is the growth slowing?
India’s overall consumption growth has taken a hit in recent years. Between 2017 and 2019, before the pandemic, the country’s spending grew at an annual rate of 11%. Post-pandemic, from 2022 to 2024, this figure has dropped to 8%, affecting industries across the board—from everyday FMCG products to fast-growing sectors like food delivery. Many consumer brands have reported sluggish revenue growth, struggling to adapt to changing spending patterns.
Despite these short-term hurdles, India’s e-commerce sector is still expected to grow to $170–$190 billion by 2030, expanding at an annual rate of over 18%, according to the report.
E-commerce giants Amazon and Flipkart continue to dominate, but newer players are shaking things up. Meesho, a platform catering to budget-conscious shoppers in smaller towns, recently surpassed Amazon in monthly active users (MTUs), signaling a shift in shopping preferences. Meanwhile, quick commerce services like Blinkit, Zepto, and Swiggy Instamart have carved out a significant share in urban markets by offering ultra-fast deliveries.
By 2030, grocery, fashion, and general merchandise are expected to make up two-thirds of the e-retail market. These categories, which currently contribute 55% of e-commerce sales, will drive the next wave of growth.
India’s online shopping boom is no longer limited to metros. Since 2020, 60% of new online shoppers have come from tier-2 and smaller cities, and over 60% of new sellers onboarded since 2021 are also from these regions. This surge in non-metro participation is fueling demand for affordable products and innovative payment options like cash-on-delivery. Gen Z shoppers (born 1997–2012) now make up 40% of India’s online buyers. They are highly experimental—half of them purchase from five or more platforms annually, and they spend three times more on emerging fashion brands than older consumers. At the same time, hyper-value commerce—offering ultra-low-priced products—has become a major force, growing from 5% of the e-retail market in 2021 to over 12% in 2024.