According to a report by Bain and Company India has the third-largest online shopper base globally, with 180-190 million shoppers in 2021 which is climbing rapidly and is likely to overtake the US in the next 1-2 years. India’s online shopper base is estimated to increase to 400-450 million by 2027. Over the next five years, the e-retail market is estimated to grow to $150-170 billion, with a growth of 25-30 per cent annually.

The report added that India’s robust fundamentals, massive headroom for growth in terms of smartphone penetration (36 per cent in India vs 63 per cent in China and 76 per cent in the US) and affluence ($2,000 per capita in India vs $12,000 in China and $69,000 in the US), are likely to boost the growth further.

Most of the shoppers are already in the digital funnel with 450-500 million using social media, while only 180-190 million shopped online in 2021. In 2021, 40-50 million new shoppers were added mostly from Tier 3 or smaller cities. The addition of Gen Z shoppers also marked a change. They will also become a critical cohort in the future, the report added. Gen Z shoppers mostly purchase fashion as the first category online. Multiple shopper cohorts – based on geography, income and age – are shopping online. Three of five shoppers belong to Tier 2 or smaller cities, while one of five belongs to low-to-middle income segments. Also, one in three shoppers is Gen Z.

Alternative business models are also being explored by retailers to reach a wider audience and bridge the gaps in traditional commerce. Some of these models include social-led commerce, video/live commerce, direct-to-consumer commerce, and quick commerce. Technology-led disruptions have tremendously enhanced the online shopper experience from discovery to purchase. Made-for-Bharat innovations such as voice- and vernacular-based search have continued to gain traction, with 5x growth in voice-search users and 3x growth in vernacular-search users over the past year,” the report said.

For instance, shoppers from Tier-2 or smaller cities frequently use vernacular platform interfaces, low middle-income shoppers prefer free delivery over fast delivery, and shoppers belonging to the Gen Z age group (less than 25 years) use social media and image search to discover products online.

About the author: IE&M Team
IE&M Team
Indian Economy & Market is an Indian media and information platform producing data-backed news and analysis on all the vital elements at the intersection of the economy, stock markets, mutual fund, insurance, commodities, currency, technology, startups and business.

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