From phones, clothes for work, festivals, and sleepwear to footwear, furniture, jewellery, crockery, medicines, and fruits and vegetables, what is it that you don’t buy online? Unable to make a “list”? Thanks to the e-commerce industry.

India currently has the third-largest shopper base globally, with 180–190 million online shoppers in 2021, a new study has found, according to which the country is well poised to surpass the US to have the second-largest shopper base in the next one to two years.

According to the report by Bain and Company in collaboration with Flipkart, at present, three out of five (60 percent) online shoppers belong to tier-2 or smaller cities, one in three to low-to-middle income segments, and one in three shoppers is Gen Z (younger than age 25).

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India’s e-retail industry is booming as the pandemic has induced hypergrowth and a 12-month acceleration in market penetration. The online shopper base is estimated to increase by 2.5 times to 400–450 million by 2027, the study has found. Most of these shoppers are already in the digital funnel—450–500 million used social media, while only 180–190 million shopped online in 2021.

Similarly, the domestic online seller base grew 35 percent annually last year over the previous year, with approximately 40 percent of new sellers coming from tier-2 or smaller cities, a new study has found.

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This market is likely to increase to $150–170 billion by 2027, which means a 25–30 percent annual growth and a doubling of market penetration to 9–10 percent over the next five years, as per the report.

Before 2015, e-retail was restricted to upper-income households from the metro and tier-1 cities, with mobile phones and fashion accounting for more than 75 percent of gross merchandise value (GMV), led by horizontal platforms.

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But following the pandemic, in 2021 alone, between 40 and 50 million new shoppers were added to the Indian e-retail market, which is approximately 30–35 growth over the online shopper base in 2020. These new shoppers largely belong to tier-3 or smaller cities and include Gen Z—which will become a critical cohort in the future, the report claims.

It added that these shoppers primarily purchase fashion as the first category online, and they typically start buying at entry price points.

Meanwhile, the existing shopper base is simultaneously maturing. “The percentage of daily and monthly active users has risen to more than 25 percent in 2021, from 18 percent to 20 percent in 2019. Consumers now spend 20 percent more time per month on a retail platform, vs last year,” the report said.

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