Indian e-retail to touch $140 bn by FY26: Bain, Flipkart

Indian e-retail to touch $140 bn by FY26: Bain, Flipkart
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18 Aug, 2021

The fiscal year ending March 2021 saw the Indian e-retail market grow 25%, despite a two-month nationwide lockdown and prolonged disruptions in retail markets, according to a report by consultancy firm Bain and homegrown ecommerce major Flipkart.  

The growth in the e-retail market came at a time when the retail market shrunk by 5%, while the country’s GDP saw a contraction of 7.3%.  

The Indian retail market, worth $810 billion, is the fourth largest in the world. India is also home to the third largest shopping base of 140 million, behind China and USA. However, the potential on tap is huge, considering that the internet user base in the country is in the range of 625-675 million people.  

Read: How brands can accelerate their omnichannel strategies 

Bain said that the e-retail market in India is expected to grow to $120-$140 billion by 2026, at a compound annual growth rate of between 25-30% over the next five years. The rise of e-commerce is expected to be driven by smaller towns, with four out of five new online shoppers coming from previously untapped regions.  

“In addition to small towns, women and older shoppers have gained prominence in the online shopper base over the last year, and this trend is expected to continue,” the report – How India Shops Online 2021 – said.

 The report also revealed that one in three individuals shopped at least once online in the top eight metro cities in the 2021 financial year. The Indian e-retail penetration by the end of fiscal stood at 4.6%.  

However, the growth hasn’t been linear for all sectors as several industries saw disparate growth and recovery patterns. While mobiles, electronics and appliances saw a sharp one-time spurt during the first wave, the categories did not see a substantial increase in the second wave between April-May 2021. The more common categories of FMCG goods such as groceries, household and personal care however saw major strides and are likely to notice accelerated growth over the next few months, the report said. 

Thirdly, discretionary sectors such as fashion and travel products, which saw a decline in growth during the pandemic, are expected to rebound to pre-pandemic levels and follow long-term growth trajectories.