According to a report titled “Future of Retail” by Deloitte, online retail is expected to grow at a much faster pace than offline retail in India until 2030. The report predicts that the e-commerce market will expand 2.5 times faster than the offline retail market, reflecting the increasing preference of Indian consumers for online shopping.
By 2030, the overall offline retail market is projected to reach a total value of US $1,605 billion, making it the larger market compared to the online market. However, the online market is expected to grow significantly, reaching US $325 billion and surpassing the organized retail market, which is estimated to reach US $230 billion by 2030.
Several factors have contributed to the substantial growth of the online market over the past five years. These factors include the convenience of ordering and returns, the presence of a robust logistics infrastructure covering a wide range of locations, a digitally savvy consumer base of 220 million online shoppers, and substantial investments totaling US $23 billion from private equity and venture capital firms.
The retail landscape in India is undergoing a transformation due to the rapid expansion of e-commerce in Tier-2 and Tier-3 cities. These cities accounted for over 60 percent of total orders in 2022, surpassing Tier-1 markets. Tier-3 cities experienced the highest growth rate in order volume at 65 percent, followed by Tier-2 cities at 50 percent, while Tier-1 cities saw a growth rate of 10 percent.
Within the online channel, social commerce is expected to be the largest contributor, accounting for US $55 billion out of the US $325 billion market. Quick commerce is projected to reach US $40 billion, followed by direct-to-customer (D2C) at US $20 billion. In the offline market, traditional channels are expected to dominate, representing US $1,375 billion out of the total US $1,605 billion, with organized retail channels contributing US $230 billion.
The e-commerce sector in India has garnered significant interest from private companies and the government. Amazon’s CEO, Andy Jassy, recently announced plans to invest US $26 billion in India by 2030 during a meeting with Prime Minister Narendra Modi. Furthermore, the Department for Promotion of Industry and Internal Trade (DPIIT) established the Open Network for Digital Commerce (ONDC) last year to promote open e-commerce development in the country.