India’s online retail market concluded 2025 with a gross merchandise value of about $65–66 billion, growing 19–21% in value terms, according to “How India Shops Online 2026” by Bain & Company in collaboration with Flipkart. Growth accelerated through the year, supported by improving macroeconomic conditions and consumer sentiment and deeper penetration beyond metros.
Private consumption growth rose to 10.5% in 2025 from 8% during 2022–24, driven by GST cuts, income tax relief, easing inflation, and lower lending rates. This contributed to second-half growth of 22–24% and an estimated 23–25% growth in Q1 2026.
The broader retail sector is projected to reach $1.6 trillion by 2030, with offline infrastructure continuing to play a role in reaching the majority of consumers.
India’s online shopping market has more than doubled over the past five years, with the shopper base reaching 290–300 million in 2025. The seller ecosystem also expanded threefold over the same period, alongside deeper geographic penetration.
“Five years ago, India’s e-retail story was about potential; today, it is a reality. GMV has more than doubled, the annual active shopper base has reached nearly 300 million, and the seller ecosystem has tripled, with growth increasingly led by Tier 2+ towns and Gen Z,” said Shyam Unnikrishnan, Managing Partner at Bain & Company.
“This expansion is driven by real improvements in what e-retail offers customers; better value, wider assortment, deeper and faster access, and smarter discovery. The runway ahead is equally compelling, with two in three social and chat users yet to shop online.”
Rising Gen Z influence
Gen Z accounted for 40%–45% of e-retail shoppers and contributed 50% of incremental e-retail orders in 2025, with 2.5x faster spend per shopper growth than other cohorts in metros. According to the report, this cohort shows distinct preferences across lifestyle, beauty, and electronics, including influencer-led discovery on social media, immersive video formats, and the use of instant credit.
Growth is increasingly geographically diversified, with Tier 2+ cities contributing about 50% of incremental online orders in 2025, despite shopper penetration of 25%–30% of internet users compared with 45%–50% in metro and Tier 1 cities.
Surge in Q-commerce has expanded the e-retail pie
According to the report, India has emerged as a global leader in Q-commerce—with 16%–17% of e-commerce GMV flowing through Q-commerce, significantly ahead of most markets including China. Structural advantages: high population density, low manpower and real estate costs, and low online grocery penetration have been key enablers.
The segment has doubled annually over the past two years, reaching $10–11 billion GMV in 2025. Looking ahead, it is expected to reach $65–$70 billion by 2030 and contribute 45%–50% of incremental e-retail GMV as traditional e-retail continues to anchor the overall e-retail market with 60%–65% share by 2030. Q-commerce is accelerating online grocery adoption, with e-grocery penetration growing ~5x since its launch and now accounting for nearly 1.5% of the overall grocery market
The shift from ‘search and browse’ to ‘describe and get’ is the most significant change in how Indians will shop over the next five years.
Q-Commerce with a dual role of a convenience channel for household essentials (85%–90% of GMV) and a fulfilment channel for discretionary categories (use speed as a customer delight) now operates over 7,000 micro-fulfilment centres across 200+ cities, with two-thirds of new capacity added in the top 10 cities. Operating scale has materially improved profitability; however, customer adoption and sustainable unit economics remain unproven beyond top Metros and Tier 1 cities.
“Quick commerce plays a dual role—as a convenience channel for household essentials and a fulfillment channel for discretionary categories. Shopping behavior in quick commerce is distinct; high-intent shopping missions drive a higher incidence of search, faster checkout velocity, and conversions,” said Manan Bhasin, Partner at Bain & Company.
“Sessions last less than five minutes, half the duration of traditional e-commerce journeys. Brands have a short window to win and must strategically invest to own the front screen through targeted marketing. Winning brands also understand micro-markets to inform assortment and pricing decisions.”
Innovation across discovery, affordability, access and assortment fuels adoption
The report added that E-retail growth continues to be powered by improvements across affordability and discovery mechanisms, including exchange programmes, instant credit, vernacular search, AI-based recommendations, and faster delivery models. Leading platforms are increasingly anchoring on value and affordability, mirroring global trends where players have captured a disproportionate share of organized retail by growing over 1.5x faster than the market.
High-frequency categories such as grocery, beauty, and general merchandise contributed more than 75% of incremental e-retail GMV growth between 2020 and 2025, increasing shopping frequency and platform engagement. Festive commerce remains a major demand catalyst, with platform traffic surging significantly during sale periods and daily active users reaching ~120 million during peak events.
Conversational commerce powered by AI has potential to shape future shopping journeys
The findings identify conversational commerce powered by AI as an emerging frontier. Generative artificial intelligence (generative AI) adoption is accelerating rapidly, with large language models (LLMs) reaching 50 million monthly active users faster than earlier digital innovations. India has become the world’s second-largest market for ChatGPT, with its user base expanding ~4.5× in 2025 to more than 160 million (where GenZ accounts for one-third users) and engagement levels exceeding global averages.
Generative AI in the form of conversational commerce has the potential to evolve retail journeys beyond “search and browse” to “describe and get.” While conversational commerce is rarely used for end-to-end shopping today, there are early adoption use cases in research and product comparison.
“The shift from ‘search and browse’ to ‘describe and get’ is the most significant change in how Indians will shop over the next five years. India is already the world’s second-largest ChatGPT market,” said Balaji Thiagarajan, Chief Product and Technology Officer at Flipkart.
“That is not a coincidence; Indian consumers are highly receptive to conversational interfaces that work in their language and understand their context.”
Featured image by Michael Burrows
