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The e-retail market in India (both offline and online channels) is expected to cross $160 billion in value by 2028, riding on factors like improved physical and digital access, enhanced affordability and convenience and emergence of digital ecosystems, a report showed on Wednesday.

The market has experienced strong growth post-pandemic, with an estimated value of $57–$60 billion in 2023. This represents an annual addition of $8–$12 billion since 2020, according to the report released by Bain & Company in collaboration with Flipkart.

The e-retail market is poised to grow in the coming years, with online spending currently only 5-6 per cent of total retail spending in India in comparison with 23-24 per cent in the US and more than 35 per cent in China, indicating massive headroom for growth.

Even as the online channel grows, the offline channel will continue to be crucial.

Majority of India’s retail spend (94-95 per cent) continues to be offline, with general trade accounting for 87 per cent of the overall retail spend.

On one side, scale retailers are growing offline presence; on the other, online-first insurgents are adopting omni-channel strategies to grow scale.

“Long-term fundamentals of India’s e-retail industry, including affordable data, improved logistics and fintech infrastructure and strong digital consumer ecosystems remain intact”, said Arpan Sheth, Partner and Global Leader of Bain’s Innovation & Design Capability Area.

In India, around 240 million shoppers are expected to participate in e-retail in 2023, with significant headroom to grow given more than 60 per cent internet users are not shopping online vs. only around 20 per cent in the US and China.

"Q-commerce platforms are revolutionising the way consumers shop for their everyday needs. Over the past year, Q-commerce orders have doubled, accounting for 40-50 per cent of India's e-grocery spend”, said Shyam Unnikrishnan, Partner and leading member of the Consumer Products & Retail practice, Bain & Company.

The seller ecosystem in India is also expanding rapidly, with twice as many sellers added in 2022 compared to the previous year.

Around two-third of these new sellers came from Tier 2+ cities and around three-fourth operate in lifestyle, home, and electronics categories, the findings showed.

"Despite the rapid growth, the headroom to grow is still tremendous. Retail media spends are only 15-20 per cent of digital ad expenditure in India, compared to 25-30 per cent in the US and 55-60 per cent in China," said Sankalp Mehrotra, Vice President of Monetization, Flipkart.