How India Shops Online 2023

An insight into the e-retail landscape and

the emerging trends shaping the market
Authors

Arpan Sheth is a partner in Bain & Company’s Mumbai office. He leads the firm’s Global Innovation
and Design practice, as well as the Asia-Pacific Technology, Vector, and Advanced Analytics practices.
Additionally, he leads the India Private Equity and Alternative Investor practice.

Shyam Unnikrishnan is a partner in Bain & Company’s Bengaluru office. He leads the firm’s Asia-
Pacific Innovation and Design practice, and is a leader in Bain India’s Consumer Products, Retail,
Strategy, and Digital practices.

Manan Bhasin is a partner in Bain & Company’s Mumbai office and a leader in Bain India’s Consumer
Products, Retail, Strategy, and Digital practices.

Abhishek Raj is an associate partner in Bain & Company’s Mumbai office and a leader in Bain India’s
Consumer Products, Retail, Strategy, and Digital practices.

Key Contacts
Arpan Sheth (arpan.sheth@bain.com)

Shyam Unnikrishnan (shyam.unnikrishnan@bain.com)

Manan Bhasin (manan.bhasin@bain.com)

Abhishek Raj (abhishek.raj@bain.com)

For marketing queries: Sitara Achreja (sitara.achreja@bain.com)

Acknowledgments
The authors thank Sankalp Mehrotra (Vice President, Monetization), Sarah Gideon (Vice President,
Corporate Affairs), Saptarshi Basu (Director, Analytics), Kanika Tiwari (Associate Director, Growth &
Partnerships, Monetization), Sonia Parveen (Senior Manager, Corporate Affairs), Siddhant Singh
(Senior Manager, Product Marketing, Ads), Mayank Thakur (Manager, Analytics), and other members
of the Flipkart Analytics team; and Punit Parekh, Amandeep Gupta, Anubhav Garg, and Shubham
Bansal from Bain & Company for their contributions to the insights in this report; and Bain & Company
global partners for their expertise and input. The team would like to thank all the companies,
executives, employees, and experts who shared their perspectives to develop this report, including
Flipkart, for sharing valuable e-commerce insights.

Copyright © 2023 Bain & Company, Inc. All rights reserved.

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How India Shops Online 2023

Executive Summary

E-retail has been a disruptive force in global retail. Online-first retailers now make up to two-thirds
of the sales generated by the ten largest global retailers—a three-fold increase over the last decade.
This trend underscores the importance of the online channel in modern retail, demonstrating a
notable shift in consumer preferences.

The Covid-19 pandemic has been an inflection point for e-retail adoption globally. The surge in online
shopping induced by the pandemic has largely persisted across markets, albeit to varying degrees.
In mature markets like the US and China, the annual uptick in e-retail penetration is only slightly lower
or comparable to pre-pandemic levels. However, India has witnessed an acceleration in e-retail
penetration following the pandemic.

This year, we will examine five major themes that are shaping e-retail in India: long-term growth
fundamentals, shopper micro-segments, emerging business models, focus on profitability, and the
growing role of cutting-edge artificial intelligence.

Solid foundations: India’s long-term growth fundamentals are robust

India’s e-retail market is estimated to scale to $57–$60 billion in 2023, adding $8–$12 billion annually
since 2020. The market is estimated to grow by 17%–20% from 2022 to 2023, which is slower than
the 25%–30% historic growth rate. The short-term dip was driven by inflationary pressures. This
pinched the consumer wallet and eroded consumer sentiment, thereby deferring or reducing
discretionary spending.

Despite slower than typical growth, online adoption grew steadily over the last year. However, there
is still massive headroom for growth. Overall, online spending is only 5%–6% of total retail in India
vs. 23%–24% in US and 35%+ in China. Three out of four trigger points for e-retail growth have
played out in India: increased physical and digital access through cheaper data and logistics reach;
enhanced affordability and convenience through lower logistics costs; and the emergence of digital
ecosystems.

The fourth trigger point, affluence, is yet to be fully realized. Growth in GDP per capita will be critical
to unlock e-retail growth over the next decade. Typically, when GDP per capita crosses the threshold
of approximately $4,000, it drives a sharp increase in online spending per shopper and discretionary
spending. In India, an estimated 60–70 million households will join the upper-middle- and upper-
income cohorts, which in turn are likely to account for at least 85% of e-retail spending by 2028.
Government initiatives such as the Open Network for Digital Commerce will further propel the
growth of e-retail in India.

Thus, India’s e-retail market is expected to bounce back to 23%–25% growth levels and reach over
$160 billion by 2028.

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An evolving landscape: Diverse consumer micro-segments served via a

growing seller base

India’s annual transacting e-retail shopper base is estimated to scale to 230–250 million people in
2023. Over 100 million of these shoppers were added over the last three years.

Diverse consumer micro-segments have become more salient. Now, 7 out of 10 online shoppers
reside in Tier 2+ cities, and a third of online shoppers are part of Gen Z (born in or after 1997). About
a third of online shoppers come from low-income or low-middle-income cohorts.

Simultaneously, there is a growing base of mature shoppers. Over 100 million shoppers participated
in e-retail in 2019. Shoppers that were onboarded in 2019 have doubled their engagement, frequency
of purchases, and spending on digital platforms over the past three years.

In the coming decade, e-retail growth will be driven by adding new shoppers and by growing online
spending per shopper. E-retail platforms are investing as much in retention (the core thesis behind
digital ecosystems) as they are in new shopper acquisition (via value selection and voice/vernacular
offerings).

India will need multiple models to build, scale, and serve the needs of this diverse shopper base,
which has varying price sensitivities, service and speed expectations, and language requirements.
For example, voice and vernacular offerings are popular among new shoppers from smaller cities.
About 25%–30% of first-time shoppers used these offerings in 2022, and about 60%–70% of voice/
vernacular users hailed from Tier 3+ cities.

The seller ecosystem is also exploding to cater to these consumers. Twice as many sellers were
added in 2022 compared to 2021. Two-thirds came from Tier 2+ cities, and three-fourths operate in
the lifestyle, home, and electronics categories. Insurgent online-first brands have emerged as a
fast-growing seller cohort, with more than threefold revenue growth from 2020 to 2022. These
brands resonate especially with Gen Z consumers.

Waves of change: New business models are emerging to serve consumer

needs

This dynamic landscape created an opportunity for e-retailers and startups to test and scale new
and innovative business models. Four e-retail models—quick-commerce (Q-commerce), hyper-value
commerce, inspiration-led commerce (live commerce), and fast fashion—are emerging, and are at
different levels of maturity.

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Q-commerce platforms offer hyper-convenience and rapid delivery (typically under 30

minutes). Globally, a series of quick-commerce upstarts emerged, raising substantial capital
over 2020–22. The majority of these players have struggled to scale profitably. The story in India
has been somewhat different. Q-commerce orders doubled over the last year, and now account
for 40%–50% of India’s e-grocery spend. Leading Indian players have improved unit economics
through a combination of scale, average order value growth, higher order density, and value-
added fees. However, this is currently largely a metro/Tier 1 phenomenon. The top 10 cities
account for approximately 80% of orders. Scaling beyond top metro/Tier 1 cities is possible
but unproven.

Hyper-value platforms deliver value to consumers, primarily by offering an unbranded assortment

at ultra-low price points. Globally, the best example of a hyper-value platform is Temu, a
cross-border marketplace launched by Chinese e-retailer Pinduoduo. Temu had over 200 million
app downloads in 2023. In India, hyper-value platforms have seen accelerated growth. Their
share of overall e-retail grew five-fold between 2020–22. These platforms appeal most to shoppers
from Tier 2+ cities (which account for 70%–80% of shoppers) and low- or low-middle-income
households.

Inspiration-led commerce (live commerce) has grown rapidly in markets like Southeast Asia,
where it accounted for approximately 15% of gross merchandise value (GMV) in 2022. Globally,
both e-retailers and short video players are looking to capitalize on this trend. The most notable
player in this field is TikTok Shop, which quickly scaled to 4% of Southeast Asia’s e-retail GMV in
2022. TikTok benefited from a unique growth flywheel created by its customer and creator
franchise, differentiated discovery (powered by a best-in-class recommendation engine), and
value-led proposition. In India, however, the model remains nascent.

Fast fashion is another rapidly growing global phenomenon, accounting for over 1 in 10 dollars
spent on women’s apparel. Online-first players such as Shein and omni-channel players such as
Zara and H&M have each scaled to more than $20 billion in revenue. India’s fast fashion market is
nascent but expected to grow at 30%–35% per annum between 2022 and 2027. Recent invest-
ments are bound to give this model a boost. Tata invested in scaling Zudio, Reliance has partnered
with Shein, and Flipkart Group has entered this space with Spoyl (Flipkart) and FWD (Myntra).

Sustainable growth: Increased focus on profitability and monetization

The e-retail industry has seen a growing emphasis on profitability in recent years. Multiple retailers,
such as Pinduoduo, Coupang (South Korea), and Shopee (Southeast Asia), achieved positive EBITDA
over the last two years.

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Beyond continued improvement in fundamental business economics, e-retailers have amped up

their focus on monetization and deployed five key monetization levers: advertising, seller services,
fintech, externalization of services (e.g., logistics, cloud), and subscription-based loyalty programs.
Interestingly, the core monetization engine for global platforms has been different. For example,
fintech contributes around 45% of Mercado Libre’s revenues via Mercado Pago, whereas advertising
and seller services accounts for around 50% of Alibaba’s revenues.

The amount of time platforms take to launch monetization levers has dropped drastically over the
last decade. Younger e-retailers such as Noon in the Middle East and Shopee in Southeast Asia
spent only 2–4 years to launch levers like “fulfilled by x” and advertising, whereas mature platforms
such as Amazon.com and JD.com took 16–18 years.

In India, advertising-led monetization continues to be the most salient. Advertising spending by

brands and sellers on e-retail platforms has grown four-fold in three years. Yet, there exists massive
headroom. In India, e-retail only accounts for 15%–20% of digital ad spending, compared to 25%–30%
in the US and 55%–60% in China. An increasing number of brands and sellers recognize the value of
this medium.

Generative AI: A transformative enabler

Generative AI will fundamentally alter the e-retail experience. A series of high-impact use cases are
emerging that will positively impact the shopper and seller journeys. E-retailers are looking at the
technology to disrupt five areas: discovery, seller enablement, targeted marketing, customer support,
and business efficiency.

Global e-retailers have adopted multiple use cases, from designing personalized advertising
campaigns to using chatbots for faster customer service. Flipkart Group has been the torchbearer
of generative AI applications in India’s e-retail space, with multiple live experiments. Most notable
are end-to-end virtual shopping assistant “Flippi” by Flipkart and smart search tool “MyFashion GPT”
by Myntra; these aim to make online shopping even more akin to the offline shopping experience.

Future generative AI applications hold immense potential in e-retail and could transform the shopper
journey entirely. The technology can have a high impact on multi-modal consumer journeys, powered
by individual users’ personal preferences.

E-retail has made an indelible impact on the country: it has democratized shopping, helped small
and medium-sized business grow, and created scalable employment. The next chapter in India’s
e-retail growth promises to be even more exhilarating, as the industry pushes boundaries and
pioneers new frontiers.

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Solid Foundations:
India’s long-term growth
fundamentals are robust

Figure 1: Globally, e-retail boomed over the last decade

Online-first sales gaining prominence: ~3x increase in sales contribution for top online-first retailers

Contribution in sales of top 10 global retailers by player type

• Online sales are booming

globally: online-first retailers
2013 15%–25% 75%–85% drove 55%–65% sales of the
top 10 global retailers in 2022
(up from 15%–25% almost a
~3x decade ago)
sales contribution
of online-first
retailers • Offline-first retail giants
have also jumped on the
online bandwagon (e.g.,
Online-first Offline-first
2022 Walmart’s e-retail contribution
55%–65% 35%–45% in sales mix grew 6–7x over
2013–22)

Note: Top 10 global retailers in 2013 and 2022 are different

Sources: Company annual reports; Company websites; Analyst reports

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How India Shops Online 2023

Figure 2: Covid-19 accelerated e-retail adoption with some markets sustaining uptick

Annual e-retail penetration growth in post-Covid period (2021–2023) over pre-Covid period (2015–2019)

1.6–1.8x 1.2–1.4x 0.7–1x

Indonesia India China Brazil US

Turbocharged penetration uptick Sustained penetration uptick Return to pre-pandemic normal

Ultra-high growth in penetration Higher growth rate sustained in Penetration growth saw a spike
post-Covid era (vs. pre-Covid) post-Covid era (vs. pre-Covid) during Covid, then reverted to pre-Covid
growth levels

Notes: Pre-pandemic growth has been defined as over 2015–19; Growth rates refer to year-over-year e-retail penetration growth
Sources: National Bureau of Statistics, China; US Census Bureau; Euromonitor; Forrester; Market participant interviews

Figure 3: In India, e-retailers are adapting to unique structural characteristics

Salience of General Trade (GT) in India Fragmentation of demand in India

(esp. Grocery) (vs. US, China)

General Trade (GT) share of overall retail market (2022) Top 50 cities1 share Top 50 cities1 share
of total area of consumption (2022)

87%

US ~5% 60%–65%

23%

3% China ~5% 55%–60%

US China India

GT salience by category
Grocery 5% 38% 95% India ~10% 20%–25%
Fashion 2% 16% 65%
Electronics 1% 5% 55%

Note: 1. Top cities by consumption; For India ~45% of Top 50 Metro/ Tier 1 cities in North India, ~25% in South India, ~20% in West India and ~10% in East India
Sources: Forrester; National Bureau of Statistics, China; US Census Bureau; CapIQ; Global Data; BEA; BMI, Nielsen; CEIC; Woods & Poole; Market participant
interviews

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Figure 4: Indian e-retail has grown $8–$12 billion annually since 2020 and is now at $57–$60 billion

E-retail market to grow at 23%–25% over 2023–28 Long-term growth fundamentals remain robust

India e-retail market GMV¹ (in $B) Short-term dip in growth partially offset by festive
CAGR
1 recovery
23%–25%
Macro-economic factors (e.g., inflationary pressure, eroding
consumer sentiment) pinched the consumer wallet and led to
2 165–180 deferred/reduced discretionary spending
Higher overall retail slowdown in salient categories for
E-retail e-retail: Essential categories such as Grocery more resilient,
GMV growth vs. discretionary categories such as Fashion

25%–30% Structural long-term tailwinds to drive further

over 2019–22
2 growth

Affluence (GDP per capita) growth: 65 million households

1 57–60
17%–20% estimated to be added to upper-middle-income and upper-
over 2022–23E income brackets3 by 2028
Strong digital funnel with headroom for shoppers: 30%–40%
internet users are online shoppers in India vs 70%+ for US
and China
2023E 2028E India also has high online spend penetration headroom:
Overall penetration of 5%–6% in India vs. 35%+ in China
Penetration2 5%–6% 9%–11%

Notes: 1) GMV = Gross Merchandise Value; 2) Penetration represents e-retail as a percent of total retail; 3) Household income brackets per annum: Upper-middle
income: INR 5–30L, High Income: >INR 30L; E = estimated; Exchange rate: 1 USD = 80 INR
Sources: CRISIL; Forrester; Euromonitor; IDC; Netscribes; Market participant interviews

Figure 5: E-retail comprises 5%–6% of total retail spend in India, indicating massive growth headroom

E-retail penetration (2023E)

5%–6% 15%–17% 23%–24% 27%–30% 35%–37%

India Brazil US Indonesia China

Sources: National Bureau of Statistics, China; US Census Bureau; Forrester; Euromonitor; Market participant interviews

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Figure 6: Three out of four trigger points for e-retail penetration have been met

1 2 3 4
Affordable data E-retail enablers Expanding holistic Affluence
(logistics, fintech) digital ecosystems (GDP per capita)
Enables Internet and e-retail Enables affordability and/or Facilitates enhanced Drives discretionary
access across consumers convenience via lower customer reach, spending and
logistics cost, higher engagement, premiumization
delivery speed, digital and experience
payments, and lending

Pivotal for India’s e-retail growth story thus far Key driver for
future growth

Trigger point played out Trigger point yet to play out

Figure 7: Digital access is nearly pervasive in India, thanks to low data prices

Affordable data
India’s data prices among lowest globally ~95% drop in data prices drove 4x Internet penetration
increase over 2015–23
Average 1 GB data price in 2023 (in $) India's Internet penetration
(Annual active Internet users as percentage of population)
~4x
USA 6.00
~55%

Brazil 0.40

China 0.38

~15%
~45%
Indonesia 0.28

2015 2023
India 0.16 Average 1 GB data price Internet users transact
~$3 ~$0.16 digitally1 (2023)

Note: 1) Includes product buyers as well as service transactors

Sources: World Bank; cable.co.uk; Emarketer; “Internet in India 2022” (ICUBE 2022) report by Kantar, IAMAI; Market participant interviews

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Figure 8: Lower logistics costs helped e-retailers expand reach, deliver faster to customer

E-retail enablers: Logistics

Logistics costs have declined ~6% per annum Scale, player actions (network build out, operational
(2020–23) initiatives), and infrastructure build-out are key drivers

Cost per shipment¹ (CPS) of leading logistics players Delivery network build-out: growing FC2 footprint
(Indexed to 2020) and delivery hubs to reduce middle-mile and last-mile
delivery distance
100%
Higher demand density as orders per day scale
(~20% year-over-year growth in daily orders shipped in
93% March 2023)

CAGR decline Adoption of new technology (e.g., warehouse

(~6%) automation, Internet of Things trackers, address
matching tech, inventory management, etc.)
86%

Continuous cost optimization initiatives (e.g., node

82% reduction in pickup and returns, gig workforce for
last-mile delivery, etc.)

Improved road and rail infrastructure (e.g., ~60%

surge in NH3 road network over the last decade driving
2020 2021 2022 2023E a shift to road freight without compromising speed)

Notes: 1) Cost per shipment includes fixed and variable logistics cost per shipment; 2) FC = fulfillment center; 3) NH = national highway
Source: Market participant interviews

Figure 9: Fintech growth enhanced affordability and convenience; UPI powers more than half of
digital retail payments

E-retail enablers: Fintech

India has seen a steady increase UPI² now powers over half of UPI and BNPL⁵ led GMV on
in fintech user base digital payments in overall retail e-retail has more than doubled in
two years

Retail digital payments³ in India

(Indexed)

1x ~2.2x
~2.5x
UPI led GMV on e-retail
~1.6x Non-UPI⁴
platforms in 2022 vs. 2020
(~45%)
monthly active users (MAU) ~60%
of India’s fintech apps¹
in 2022 vs. 2020
UPI ~2x
(~55%) BNPL⁵ led GMV on e-retail
~40%
platforms in 2022 vs. 2020

2020 2022

Notes: 1) Based on combined MAU for all digital payments, banking, investing, and lending apps in India; 2) UPI = United payments interface; 3) NEFT has been
excluded from analysis due to nature of transactions not being truly retail (e.g., corporate transactions, education fees, etc.); 4) Non-UPI includes credit cards,
debit cards, internet banking, and other digital payment modes like NACH (National Automated Clearing House); 5) BNPL = Buy Now, Pay Later payment mode
Sources: Sensor Tower; RBI Annual Report (2022–23); Market participant interviews

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Figure 10: Affluence will spark e-retail growth and shift consumption

Affluence: GDP per capita

GDP1 per capita growth (esp. beyond $4K) drives This is driven by increase in non-grocery category
growth in e-retail spend per shopper consumption (relevant for discretionary spend)

GMV per shopper ($) Retail market2 split by categories across geographies
(CY22)
China Indonesia ~$1T ~$5.1T ~$4.5T

(25%–30%) Non-grocery3
(relevant for
(60%–65%)
discretionary
spend)
(70%–75%)
(70%–75%)

(35%–40%) Grocery4
(25%–30%)

’08 ’10 ’12 ’14 ’16 ’18 ’20 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 India China US
GDP per
capita 3.5 4.6 6.3 7.7 8.2 10 10.4 3.5 3.3 3.6 3.8 3.9 4.1 3.9 4.3 -20pps Decline in China’s grocery salience over the
last decade with growing affluence
($K)

Notes: 1) Nominal GDP per capita; 2) Retail market excludes Health category spends; 3) Non-grocery categories include fashion, consumer electronics, general
merchandise, and home; 4) Grocery excludes personal care; 1 USD = INR 80
Sources: International Monetary Fund; Forrester; Euromonitor; National Bureau of Statistics, China; US Census Bureau; IBEF retail report; Nielsen; Market
participant interviews

Figure 11: As GDP per capita rises, it will unlock spending and boost e-retail growth

Affluence: GDP per capita

GDP1 per capita (2022)

~$2.5K ~$5K ~$9K ~$13K

India Indonesia Brazil China

60–70M households will be added to upper-middle-income and Upper- and upper-middle-income households to
upper-income brackets by 2028 drive ~85% of India's e-retail GMV
E-retail GMV by income segment of shoppers
Upper income ~15 ~30
Upper income
(25%–30%) 30%–35%
Upper-middle
~100 ~150
income

Upper-middle
Lower-middle
~160 ~140 income (50%–60%) 50%–60%
income
Low
income
(~1%) Low income (~1%)
Low income ~40 ~25 Lower-middle
income (10%–20%) 5%–15%

Millions of households in 2022 Millions of households in 2028E 2022 2028E

Notes: 1) Nominal GDP per capita; 2) Household income brackets per annum: Low income = <INR 1.25L; Lower-middle income = INR 1.25–5L; Upper middle
income = INR 5–30L; Upper income = >INR 30L; 1 USD = INR 80
Sources: International Monetary Fund; “The Rise of India’s Middle Class” from ICE 360 Surveys, PRICE; Market participant interviews

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An evolving landscape:
Diverse consumer micro-
segments served via a
growing seller base

Figure 12: India added ~120 million online shoppers over 2019–22 and still has room to grow

~50% of online shopper base added over 2019–22 >60% of India’s Internet users not shopping online

Online shoppers in India (M) Online shoppers (percentage of active internet users
in 2022)

Estimated 230–250M
in 2023 India 30%–40%

+110–120M new shoppers

Indonesia 60%–70%
220

Brazil 60%–70%

105
US 70%–80%

China 80%–90%
2019 2022

Sources: E-marketer; Market participant interviews

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Figure 13: Distinct consumer micro-segments remain salient for e-retailers

7 in 10 1 in 3 1 in 3
Online shoppers reside in Online shoppers are Gen Z Online shoppers belong to
Tier 2+ cities¹ (i.e., shoppers born in or after 1997) low-/low-middle-income segment²

India will need multiple models of e-commerce to build scale and serve the needs of this diverse shopper base
(i.e., different price sensitivities, service and speed expectations, language requirements, etc.)

Notes: 1) Metro area/ Tier 1 category covers top 50 cities based on population, Tier 2 category covers next 100 cities, rest of India is classified as Tier 3/ smaller
cities; 2) Household income brackets per annum: Low income = <INR 1.25L; Low-middle income = INR 1.25-5L; All metrics pertain to 2022
Source: Market participant interviews

Figure 14: Voice and vernacular offerings helped e-retailers onboard and engage new shoppers

Wide adoption of voice and vernacular offerings Growing salience in overall e-retail GMV

25%–30% $2.5–$3B
New shoppers used voice and GMV of orders served via voice/
vernacular offerings at least once vernacular in 2022
in 2022 (~1.8x vs. 2021)

60%–70% 5%–6%
Voice/vernacular shoppers hail from Voice/vernacular share in e-retail
Tier 3+ cities (2022) GMV in 2022
(vs. ~4% in 2021)

Note: 1 USD = 80 INR (2022), INR values used to calculate 2021–2022 growth
Source: Market participant interviews

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Figure 15: E-retail spending per customer doubled over the past three years

Shopping behavior Spend per customer

Average price point1 in 2022 for

~1.4x new shoppers onboarded in 2019 for
Mobiles/Electronics (vs. 0.8x overall)

Time spent by shoppers who have

spent more than 1 year on e-retail
platforms vs. shoppers who have
spent less than 1 year
~2x
Number of categories2 purchased in
~1.8x
2022 by new shoppers onboarded in 2019
GMV per shopper in 2022 for new
shoppers onboarded in 2019

~2.4x Transactions in 2022 for new shoppers

onboarded in 2019

Notes: 1) As compared to their purchases in the same categories in 2019 ; 2) 4–5 categories in 2022 vs. 2–3 in 2019
Source: Market participant interviews

Figure 16: The seller ecosystem is evolving to serve new and mature digital shoppers

Significant GMV growth for legacy seller1 base Emergence of new sellers, especially from Tier
2+ cities

New sellers added to e-retail platforms

(Indexed to 2021)

2.2x
Metro/Tier 1
30%–40%

1x
70%–75%
Tier 2+ sellers New sellers operate
20%–25% ~60%
60%–70% in Lifestyle, Home,
and Electronics
increase in GMV per seller for legacy sellers on e-retail ~40% categories
platforms in 2022 vs. 2021 2021 2022

“
“In five years of business in home furnishing, we have scaled
to $1 million gross sales on e-retail platforms. Massive
“
“Due to adverse impact on our offline women apparel business
during the pandemic, we shifted to e-retail in 2021. Since then,
customer base, streamlined payments/order management, we have clocked $400,000 annual sales.”
and seller support have been pivotal to our growth”
Legacy seller (operating since 2018) New seller (Joined in 2021)

Note: 1) Legacy sellers are sellers who have been active for at least 3 years on an e-retail platform
Sources: Market participant interviews; e-retailer websites

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Figure 17: In India, more than half of the seller base hails from seven cities, creating seller hubs

Delhi NCR
(20%–22%)

Jaipur

Surat
(11%–13%)
(6%–8%)
Kolkata
(1%–3%)
~40%
Mumbai
(4%–6%)
Hyderabad
(1%–3%)

Bengaluru E-retail seller base originates from

(2%–4%) three cities
(Delhi NCR, Surat, and Jaipur)

Note: Delhi NCR includes New Delhi, Gurgaon, Faridabad, Ghaziabad, Noida, and Meerut
Source: Market participant interviews

Figure 18: Insurgent online-first brands are growing fast

Insurgent brand scale has tripled Lifestyle1 most salient among top Insurgent brands are especially
over 2020–22 ~150 online-first insurgent brands resonating with Gen Z3 consumers

35% 20%
Lifestyle Food and
Beverages

Bewakoof ID Fresh Food

~3x Mamaearth Country Delight

~40%
Revenue of insurgent brands in Gen Z share in GMV of Insurgent
India in 2022 vs. 2020 brands4 on e-retail platforms
20% 25% (vs. ~30% in overall e-retail GMV)
Electronics Others2

boAt
Caratlane
Noise
HealthKart
Atomberg

Notes: 1) Lifestyle includes Fashion, Beauty, and Personal Care; 2) Others include Home, Jewelry, Healthcare Brands; 3) Gen Z defined as customers born in or
after 1997; 4) Based on a sample of leading insurgent (D2C) brands
Sources: Tracxn; CapIQ; Crunchbase; Pitchbook; Market participant interviews

14
 Flipkart | Bain & Company, Inc.

How India Shops Online 2023

Figure 19: Insurgent brands leverage e-retail for growth, even as they adopt omni-channel strategies

Four emerging trends for insurgent brands

1 Emergence of new
categories 2 Omni-channel
3 The influence of
influencers 4 Pivotal role of
marketplaces

Insurgents will tap into Online-first brands Social media influencers Platforms and
new spend pockets and will increasingly explore will continue to help in marketplaces will remain
take on a category the offline channel to brand-building and integral parts of the
creation role (e.g., pet build scale customer acquisition online sales of these
care, health supplements) insurgent brands

15
Waves of change:
New business models are
emerging to serve different
consumer needs

Figure 20: Four new e-retail business models are emerging

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Quick commerce Hyper-value Inspiration-led Fast

(Q-commerce) commerce commerce fashion

Enhanced convenience in Offering selection at Influencer-/social Affordable but stylish

terms of fast delivery ultra low-price points media-driven discovery fashion assortment with
(under 30 minutes) and purchase frequent drops of
new collections

16
 Flipkart | Bain & Company, Inc.

How India Shops Online 2023

Figure 21: Q-commerce will account for 40%–50% of e-grocery GMV in 2023

Quick-commerce (Q-Commerce)
Q-commerce orders doubled over 2022–23 Rapid growth has helped improve unit economics,
but scale-up beyond top cities to be proven

Improved unit economics, driven by:

~2x • Higher order density (~50% growth in orders
Q-commerce orders in per day per dark store over Oct. ‘22–Jun. ‘23)
March 2023 vs. March 2022 • Delivery and warehousing cost optimization
by driving rider productivity and dark store
automation
• Delivery and platform fees
40%–50% • Additional levers (growing AOV1 by expanding
assortment beyond grocery, using higher margin
Share of Q-commerce in e-grocery private labels, advertising)
GMV in 2023

Scale-up beyond top cities to be proven

~80% • Willingness to pay (for delivery, convenience

fee) lower beyond affluent Metro/Tier 1
Q-commerce orders from Top 10 households
Metro/Tier 1 cities in 2023 • Core fast delivery (20–30 min.) proposition
to be tested beyond top Metro/Tier 1 cities

Note: 1) AOV = Average Order Value

Source: Market participant interviews

Figure 22: Hyper-value platforms have grown five-fold in India

Hyper-value commerce
Globally, emerging hyper-value platforms are Even in India, hyper-value platforms are bringing
offering consumers a low-price proposition low-/low-middle-income households into the e-retail fold

Key categories driving

Temu overview 80%–85% GMV
• Low-cost, cross-border marketplace (by China’s
e-commerce giant Pinduoduo) launched in US in
~5x •
•
Apparel
Footwear } Largest
categories
Sep. 2022 and scaled rapidly; subsequently Share of hyper-value platforms in
expanded globally India e-retail market in 2022 vs. 2020 • Beauty and Personal care
• Offers ultra-affordable assortment across categories
• Home
from China-based sellers
• Electronics
(especially accessories)
Key Growth Metrics

200M+ Global app downloads in 2023

(till Sep. ‘23)
70%–80% 85%–90% 250–300 1.5–2x

100M+ Global monthly active users in Sep. ‘23 Shoppers from

Tier 2+ cities
Unbranded
assortment;
Avg. selling price
(ASP in INR)
Delivery days for
hyper-value

$10B+ Expected 2023 GMV (Global)

Driven by Tier 2+ platforms vs.
city sellers (50% large horizontal
of seller base) platforms

Sources: Company websites; Sensor tower; Analyst reports (inc. Morgan Stanley, J.P. Morgan, UBS); Market participant interviews

17
 Flipkart | Bain & Company, Inc.

How India Shops Online 2023

Figure 23: Inspiration-led commerce has scaled globally – TikTok Shop being the best example

Inspiration-led commerce

Live commerce penetration in SEA1 at TikTok Shop’s rapid rise enabled by a strong growth flywheel
~15% with TikTok seeing breakout growth
SEA e-commerce SEA live commerce
GMV (in $B) GMV (in $B)
~$130B ~$20B Creator Differentiated Large, engaged Value-focused
Others ecosystem discovery TikTok userbase proposition
Tokopedia ~7M affiliate creators Interactive 350M+ users Attractive prices
10%–15%
Play in Indonesia; In-house end-to-end shopping watching videos for (frequent flash sales);
10%–15% LazLive creator-brand on app; Strong ~100 mins/day; 10% Zero delivery fee on
Traditional
marketplace recommendation transacting on launch in new markets
commerce engine key enabler TikTok shop
TikTok
(85%) 20%–25%
Shop

Shopee
35%–40%
Live commerce Live
(15%) SHOP LIVE (27)

2022 2022 Haute Active Men Shoes

#EP006 39-44
Targeted
฿800 Buy

product
• Two player archetypes: E-retailers and short video
On-screen Haute Active Men Shoes
catalogue
players (TikTok overall share 4% in 2022, estimated #EP006 41-40

“buy” pop-up with ability

฿900 Buy

10%+ in 2023) Haute Active Men Shoes

to drive in-app to buy built
• Future growth to be impacted by govt. regulations
#EP006 39-44
Haute Active Men Shoes

purchase into live stream

฿800 Buy
#EP006 23-35

(e.g., recent ban of transactions on social platforms ฿1200 Buy

in Indonesia)

Note: 1) SEA – South-East Asia

Sources: Company website; Market participants interviews

Figure 24: The live commerce market is nascent in India

Inspiration-led commerce
Significant headroom for growth in creator ecosystem Business model and ecosystem enablers need to
and short form video (SFV) consumption in India evolve for live commerce to scale in India

Creator
ecosystem
550K+ 1%–2% Building consumer and brand trust for
live commerce offerings
Instagram Share of top
1

influencers with influencers

>10K followers (2022) (>1M followers) vs.
3%–4% in
Indonesia (2022) Improving UI/UX to ensure end-to-end
in-app shopping journey (incl. checkout
and payment)
SFV
consumption 40%–45% 45+ mins
SFV users as % of Daily time spent per
internet users (2022) user on SFV (2022) vs. Developing regulatory environment
vs. 70%+ in Indonesia 130+ mins in Indonesia around content sharing guidelines, paid
sponsorship, etc.

Note: 1) Influencers with >10K followers considered for the analysis

Sources: iResearch; App Annie; QuestMobile; Similarweb; “Online Population Forecast, 2019 to 2024 (Global)” by Forrester Analytics; eMarketer; “Uncovering the
growth of short video in Indonesia” by IPSOS and Snack Video; Hype auditor; “Indonesia TikTok trend report 2022” by affable.ai; Market participant interviews

18
 Flipkart | Bain & Company, Inc.

How India Shops Online 2023

Figure 25: Indian retailers are experimenting with fast fashion, which has surged globally

Fast Fashion
Globally, fast fashion salience has grown rapidly India’s fast fashion market is nascent (especially
online) but multiple players looking to grow this

10%+ 30%+ 30%–35% ~80%

Fast fashion penetration in Online penetration in global Expected year-over-year Share for Top 4 brands
global women’s apparel (2022) women’s fast fashion (2022) growth of online fast fashion (H&M, Zara, Urbanic, Zudio)
in India (2022–27E)

Major global fast fashion players New Entrants

Indian offline fast fashion brand by Tata Trent with

~$23B revenue in 2022 Zudio
Shein presence in 40+ cities in India
~35% year-over-year growth (over 2021)
Myntra FWD Indian e-retailers offering Gen Z-focused trendy
Flipkart Spoyl fashion assortment
~$25B revenue in 2022
Zara
~20% year-over-year growth (over 2021) Global fast fashion brand re-entering India via
Shein
licensing partnership with Reliance

~$21B1 revenue in 2022 Global fast fashion brand entering India by listing
H&M Boohoo
12% year-over-year growth (over 2021) on Indian e-retail platforms

Notes: Exchange rate: 2022: 1 USD = 80 INR; 1) H&M revenue includes revenue of H&M Group
Sources: Euromonitor International; Global Data; Forrester; Annual reports, Company websites, Market participant interviews

19
Sustainable growth:
Increased focus on profitability
and monetization

Figure 26: Multiple e-retailers have become profitable at scale in the last decade

Pinduoduo Coupang Shopee

China South Korea Southeast Asia¹

Year of turning
EBITDA positive
(number of years
2021 2022 2022
(6 years) (12 years) (7 years)
since launch)

Corresponding
year GMV
$380–$385B $31–$33B $47–$49B

Note: 1) Launched in 2015 in Singapore before its expansion to Southeast Asia, Brazil, Mexico, etc.
Sources: Company annual reports; Investor presentations; Analyst reports, Secondary research

20
 Flipkart | Bain & Company, Inc.

How India Shops Online 2023

Figure 27: Industry leaders dramatically reduced the time it takes to launch monetization levers

Years to launch seller services (“Fulfilled by”1) Years to launch advertising monetization

Year of Number of years since Year of Year of Number of years since Year of
Company 0 25 Company 0 25
launch company launch feature launch launch company launch feature launch

JD.com 1998 19 2017 Amazon 1994 18 2012

>10 years
Rakuten 1997 15 2012 JD.com 1998 16 2014
>10 years

Mercado
Alibaba 1999 14 2013 1999 10 2009
Libre

Mercado
1999 14 2013 Rakuten 1997 8 2005
Libre

Amazon 1994 12 2006 Alibaba 1999 8 2007

<10 years

Flipkart 2007 7 2014 Flipkart 2007 8 2015

<10 years

Shopee 2015 4 2019 Shopee 2015 2 2017

Noon 2017 2 2019 Noon 2017 3 2020

Note: 1) “Fulfilled by” refers to warehousing and logistics services offered by e-retailers to sellers on the platform (e.g., FBF = Fulfilled by Flipkart, FBA = Fulfilled
by Amazon)
Sources: Company archives; Company websites; Market participant interviews

Figure 28: Global e-retailers use multiple monetization levers, but advertising is the core lever in India

Advertising Seller services Fintech Externalization Subscriptions

Display and search ads Dedicated services such Lending, insurance, Cloud services; Paid loyalty programs for
to boost visibility; as logistics/warehousing, co-branded cards warehousing and logistics faster delivery, early
off-platform ads financing, etc. for consumers services; tech platforms access to sale events, etc.
(demand side platforms)1 (e.g., ad-tech stack)

Alibaba Mercado Libre JD.com Amazon.com

~50% ~45% ~10% 5%–10%

share of revenue from ads, commissions and seller share of revenue from share of revenue from share of revenue from
services2 of China businesses fintech logistics externalization subscription services

Salience of monetization levers for Indian e-retailers

Increasing salience in India

Notes: 1) Demand side platforms help brands/sellers place ads on networks of publishers (websites/mobiles apps) and ad exchanges; 2) Advertising, seller
services, and commission fees used as proxy for “Customer Management” segment of Alibaba, reported for FY23; 3) All other metrics pertain to 2022
Sources: Company annual reports; Investor presentations and analyst interview transcripts; Analyst reports (inc. Morgan Stanley); Market participant interviews

21
 Flipkart | Bain & Company, Inc.

How India Shops Online 2023

Figure 29: E-retail ad spending quadrupled, yet there’s still massive potential for growth

Ad spends by brands, sellers on Headroom exists for further Electronics, Grocery and GM¹
platforms quadrupled over 3 years growth in ad spend most salient

~4x 15%–20% ~75%

Ad spend on e-retail platforms E-retail share of digital ad spend Ad revenue from Consumer
in 2023 (estimated) vs. 2020 (vs. 25%–30% in USA, electronics2, Grocery, and GM
55%–60% in China) (vs. ~65% salience in e-retail GMV)

Note: All metrics pertain to 2023 unless otherwise stated; 1) GM = General merchandise; 2) Consumer electronics include mobiles, large appliances,
and other electronics
Source: Market participant interviews

22
Generative AI:
A transformative enabler

Figure 30: Generative AI will fundamentally change e-retail

Enhanced Seller/merchant Targeted Seamless Efficiency

discovery enablement marketing customer support improvement

• Shopping • Customer • Ad copy writing • Higher quality • Product

assistants feedback • Ad campaign chat bot-driven cataloguing
• Personalized synthesis optimization query resolution • Enhanced
recommendations • Key account • Hyper- • Automated social business process
• Enhanced management personalization media responses management
navigation, search

End-state use cases may evolve further and transform shopper journeys including pre-/during/post-purchase
(especially high-impact on multi-modal journeys and powered by user preferences)

Note: AI = Artificial Intelligence; Not exhaustive, illustrative use cases only

Sources: Market participant interviews; Bain conversations with global e-retailers

23
 Flipkart | Bain & Company, Inc.

How India Shops Online 2023

Figure 31: Certain e-commerce platforms have launched shopping assistants to make product
discovery easier

Conversational shopping assistant simplifying product discovery Better navigation and search

MyFashionGPT
Flippi Flippi Use AI to find new looks or styles

I need a suit for job interview

Help me find speakers that
connect wirelessly Any discount GENDER
Collection 1
1:41 am ALL

Navy Blue Suit View More >

There's a flat off the actual MRP
Alright, have a look at this selection
4499 of this product, making the
for: “wireless speakers”
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Relevant responses for Generates specific Displays relevant

custom search query offers for the product product and related items

Source: Platform websites and app interfaces

Figure 32: Global e-retailers are building generative AI solutions for seller enablement

Strategic growth Customer feedback Personalized marketing Customer support

inputs synthesis (ad-copy writing) (social media responses)

I’ve had a dropoff in sales from Create ad to sell cozy Trying to report possible
March to now. Why? Respond
The dip in sales is probably due to minimal Very Good 5 17,467 pajamas for Christmas account fraud &team
doesn’t come in till
Send to support
snow. These are summer months in many 4 6,240 morning.wow. Won’t even
regions, so it’s natural for sales to decrease. 3 1,807 let me change password to
27,492 ratings and 553 Remove
2 stop account activity
3,999 reviews 1 1,425
$5k
Generated Responses

$4k
Rating summary by features
Make this year magical Apparel Co.
We apologize for any inconvenience this
$3k
Mar 1 Apr 1 Jul 1 with Apparel Co. may have caused you. Our customer
service team is available 24/7 to help you
Sales over time View report
3.8 4.1 4.1 4.3 with this issue. Please contact them at
1-800-888-8200.
Mar-1-Jul 30, 2023
Apparel Co.
Camera Battery Display Design
Put everything on sale We understand your concerns and take
account fraud seriously. Please call our
Alright, let’s get that sale started: customer service team at 1-800-888-8200
Text review Summary and they will be able to help you in
resolving this issue.
Summer sale Preview
Product discount The product is well appreciated for its Apparel Co.
Type Automatic discount affordable price point & stylish design.
We apologize for the inconvenience. Kieran.
Percentage 10% Customers feel it lags while filming & We understand how important it is to protect
Applies to All products results in poor output. your account. Please email us at
support@victoriassecret.com and we
will assist you as soon as possible.
Create a discount Analyze store Edit theme

One-stop, convenient Synthesized Seamless and Personalized, more

control center for sellers customer text personalized ad-copy effective and faster query
(sales trend analysis, reviews and ratings creation with responses (sentiment
sale event triggers, etc.) minimal prompting and tone analysis, etc.)

Sources: Company official social media pages; Market participant interviews

24
Bold ideas. Bold teams. Extraordinary results.

Bain & Company is a global consultancy that helps the world’s most
ambitious change makers define the future.

Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve
extraordinary results, outperform the competition, and redefine industries. We complement our tailored,
integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring
outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent,
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all companies. Since our founding in 1973, we have measured our success by the success of our clients, and we
proudly maintain the highest level of client advocacy in the industry.

The Flipkart Group is one of India’s leading digital commerce entities and includes group companies Flipkart,
Myntra, Flipkart Wholesale, Flipkart Health+, and Cleartrip.

Started in 2007, Flipkart has enabled millions of sellers, merchants, and small businesses to participate in India’s
digital commerce revolution. With a registered customer base of more than 500 million, Flipkart’s marketplace
offers over 150 million products across 80+ categories. Today, there are over 14 lakh sellers on the platform,
including Shopsy sellers. With a focus on empowering and delighting every Indian by delivering value through
technology and innovation, Flipkart has created lakhs of jobs in the ecosystem while empowering generations
of entrepreneurs and MSMEs. Flipkart is known for pioneering services such as Cash on Delivery, No Cost EMI
and easy returns, which are customer-centric innovations that have made online shopping more accessible and
affordable for millions of Indians.

www.flipkart.com

For more information, visit www.bain.com