Executive summary

India is a critical consumption engine globally, poised to capture one in eight incremental consumption dollars over the next five years.

In 2025, overall consumption and discretionary spending reaccelerated following a temporary period of moderation post-Covid-19. Private consumption growth increased from 8% (2022–24) to 10.5% (2025). Growth was supported by government-led policy interventions, including a reduction in the Goods and Services Tax (GST) for select categories, personal income tax relief, easing inflation, and lower lending rates.

Written in collaboration with

Written in collaboration with

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E-retail mirrored the broader consumption revival, scaling to $65–$66 billion in gross merchandise value (GMV) in 2025. The market grew at 19%–21% CAGR, with significantly faster growth in the second half of the year and sustained momentum in Q1 2026, in line with broader consumption patterns. E-retail growth over the past five years has been supported by increases in the number of both consumers and sellers.

The e-retail market more than doubled over the past five years, accompanied by shoppers doubling to reach 290–300 million. Gen Z, Tier 2+ cities, and middle-income households led incremental shopper growth. Gen Z has emerged as a sizable cohort, now accounting for 40%–45% of e-retail shoppers. Simultaneously, Bharat (Tier 2+ cities) has become a key cohort, contributing approximately half of incremental e-retail orders in 2025. The seller base also tripled over the past five years, with a sizable share emerging from Tier 2+ cities.  

The evolution of e-retail in India is underpinned by improvements in the customer value proposition across access (i.e., reach and speed), affordability, assortment, and discovery. Leading platforms are increasingly anchoring on value, mirroring global trends where players such as Pinduoduo, Shein, and Shopee have captured a disproportionate share of organized retail by growing over 1.5x faster than the market.

E-retail in India has significant headroom, accounting for roughly 1.6% of GDP in 2025 compared to 4%–4.5% in Indonesia and 13%–14% in China. This upside is largely driven by grocery—the largest component of retail—which remains structurally underpenetrated online. Building on momentum from the second half of 2025, India’s e-retail market is expected to sustain a more than 20% CAGR and scale to $170–$180 billion in GMV by 2030. By the end of the decade, more than one in ten retail dollars and one in four non-grocery retail dollars are expected to be spent online.

Growth will partially be driven by continued gains in shopper penetration. India’s e-retail shopper penetration is approximately 30% of Internet users, which trails mature markets such as China (92%) and the United States (74%). There is significant headroom in shopper penetration, even at current Internet penetration levels. For example, shopper penetration in Indonesia is nearly twice that of India, despite similar levels of Internet adoption. Higher levels of shopper penetration are certainly possible in India. In mature metro cities such as Bengaluru and Hyderabad, more than seven in ten Internet users already shop online. Moreover, a majority of the next 500 million online shoppers are already in the digital funnel. Two-thirds of chat and social media users are yet to shop online.

E-retail shopper growth will be complemented by an increase in spend per shopper as affluence increases. India’s GDP per capita is expected to surpass $4,000 by 2030, which has been a key inflection point for discretionary spending in other markets. In China and Indonesia, for example, growth in GDP per capita has driven substantial increases in e-retail spend per shopper. This trend is already evident in India: In top metro cities, where GDP per capita is about $8,500, spend per shopper is about 65% higher than the national average.

E-retail journeys continue to evolve, becoming more targeted and deterministic. Improvements in personalization and advertising relevance are fueling purchase consideration. Brands are increasingly considering e-retail advertising as a core component of their advertising strategies, with e-retail ads accounting for roughly 25% of digital ad spend in 2025.

This year, we are highlighting two trends in e-retail: Quick commerce (Q-commerce) and conversational commerce.

Q-commerce (delivery in less than 30 minutes): India has emerged at the forefront of Q-commerce globally, scaling to $10–$11 billion GMV, supported by structural factors such as high population density, low manpower and real estate costs, and low online grocery penetration.

Q-commerce is expanding the overall e-retail pie by accelerating e-grocery adoption. Since Q-commerce’s launch in 2020, e-grocery penetration has increased fivefold and now accounts for approximately 1.5% of the overall grocery market. In Metro cities—the core market for Q-commerce—share of e-grocery has reached 6%–7%.

While traditional e-retail remains core (over 80% of overall e-retail market), Q-commerce in India has doubled annually over the past two years and is projected to reach $65–$70 billion by 2030. Overall, Q-commerce is projected to contribute 45%–50% of incremental e-retail GMV over the next five years.

Q-commerce plays a dual role. It serves as a convenience channel for household essentials (which account for 85%–90% of GMV), where speed is table stakes. In addition, it is a fulfillment channel for discretionary categories, positioning speed as a customer-delight lever and trust marker.

Key players are looking to scale non-grocery categories and expand their micro-fulfillment center networks. The micro-fulfillment center network rapidly expanded to more than 7,000 centers, with two-thirds of new center additions concentrated in top 10 cities. Scale and demand density have improved profitability. However, customer adoption and profitability beyond top Metro and Tier 1 cities remain unproven.

Q-commerce is geared towards shopping missions that are led by predetermined needs with sub-five-minute session durations vs. more than ten minutes in e-retail and eight times higher visit-to-order conversion. This is reflected in a higher share of search-led GMV, fewer product pages viewed per order, and lower reliance on cash-on-delivery compared to traditional e-retail. Q-commerce is also characterized by top-up missions, resulting in lower average order value and smaller pack sizes.

Brands and sellers can capitalize on the nature of Q-commerce shopping missions by tailoring assortment at the micro-market level and optimizing marketing to secure first-screen visibility and capture high-intent moments.

Conversational commerce (assisted shopping powered by AI): 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 is the world’s second-largest market for ChatGPT, with the user base growing approximately 4.5x in 2025 to reach more than 160 million monthly active users. Gen Z accounts for about one-third of users.

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.

Overall, conversational commerce is nascent, and e-retailers and LLMs are experimenting along two parallel paths. E-retailer-led agents (e.g., Amazon’s Rufus and Flipkart’s conversational commerce engine) are enabling discovery and aiding conversion, while LLM-led shopping agents (e.g., Instant Checkout by ChatGPT) are shaping discovery and consideration.

Brands, sellers, and e-retailers should closely watch this emerging space. Traditional e-retailers are likely to maintain their dominance as conversational commerce evolves, protected by strategic moats in brand trust, product fulfillment, and value-added offerings.

India’s e-retail market: Poised for the next wave of expansion

• India is emerging as a critical global consumption engine, with GDP growth projected to be nearly double that of leading economies. It is expected to contribute approximately one in eight incremental global consumption dollars as it becomes the world’s third-largest economy.
• Consumption and discretionary spending rebounded in 2025, supported by policy-led tailwinds. E-retail mirrored this recovery, growing 19%–21% in 2025. Improving macro conditions and consumer sentiment supported second-half growth of 22%–24%, roughly 1.5x the year-over-year growth seen in the first half. This momentum was sustained into Q1 2026, with e-retail growth estimated to be 23%–25%.
• India’s e-retail GMV more than doubled over the past five years, reaching $65–$66 billion in 2025. Growth was driven by an increase in both shoppers and sellers. Shoppers doubled to 290–300 million, while sellers tripled. E-retail has also democratized shopping, with new shoppers and sellers increasingly coming from Tier 2+ cities.
• Incremental shopper growth is led by Gen Z, Tier 2+ cities, and middle-income households, contributing approximately 40%, 65%, and 50% of new shoppers, respectively. Festive periods remain critical acquisition windows, accounting for around one in four new shoppers, with nearly triple daily traffic during events such as Flipkart’s Big Billion Days vs. business as usual (BAU).
  • Gen Z is a critical cohort, accounting for 40%–45% of e-retail shoppers and nearly half of incremental orders in 2025. These shoppers have distinct shopping preferences such as influencer-led trend discovery on social media, immersive videos/feeds, and use of instant credit.
  • Tier 2+ cities are structurally primed for the next phase of growth with improved physical and digital access, contributing about 50% of incremental orders in 2025 despite shopper penetration of just 25%–30% of internet users (vs. 45%–50% in Metro/Tier 1).
• E-retail evolution is underpinned by continuous enhancements in customer proposition across affordability, access, assortment, and discovery. Leading players are increasingly anchoring on value and affordability, in line with global trends where players such as Pinduoduo, Shein, and Shopee have captured an outsized share of organized retail by growing over 1.5x faster than the market.
• India’s e-retail market has substantial headroom—it accounts for only about 1.6% of GDP vs. 4%–4.5% for Indonesia and 13%–14% for China. The e-retail market is poised to grow at a CAGR of more than 20%, reaching 10%–12% of total retail spend by 2030 (28%–30% of non-grocery spend), supported by untapped potential in both shopper penetration and spend per shopper.
  • The majority of the next 500 million shoppers are already in the digital funnel. Only one-third of chat and social media users currently shop online—well below global benchmarks with comparable levels of Internet adoption. Cities like Bengaluru and Hyderabad already exceed 70% shopper penetration, nearing best-in-class global levels.
  • Spend per shopper is entering a structurally stronger growth phase with per-capita GDP surpassing $4,000—an inflection point for e-retail spend basis global markets—thereby increasing premiumization.
• E-retail journeys continue to evolve with higher personalization, ad salience, a shift from cash-on-delivery to Unified Payments Interface (UPI) at delivery, and growing adoption of post-purchase value-added services.
• E-retail ads account for a quarter of digital ad spends as brands increasingly consider e-retail ads as core to their digital marketing strategies.

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Spotlight: Quick and conversational commerce

This year, we explore two trends in India’s e-retail: Quick commerce (Q-commerce) and conversational commerce.

• Q-commerce (less than 30-minute delivery): India is a global leader in Q-commerce adoption, with 16%–17% of e-retail GMV flowing through Q-commerce platforms—significantly higher than most markets, including China, the only other country with breakout Q-commerce growth. India has unique structural advantages for this format, including dense urban demand pockets, favorable last-mile economics, and low grocery penetration.
• Q-commerce GMV has doubled annually since 2023, reaching $10–$11 billion in 2025. This surge has driven an inflection in grocery, which is historically underpenetrated online. E-grocery penetration has grown roughly fivefold, reaching 1.5% of the overall grocery market in 2025. Looking ahead, Q-commerce is expected to reach $65–$70 billion by the end of the decade 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 plays dual roles across categories. It acts as a convenience channel for habit-forming household essentials (which account for 85%–90% of GMV) and as a fulfillment channel that delights customers in select discretionary categories.
• The micro-fulfillment center network has expanded to over 7,000 centers across more than 200 cities. Two-thirds of new center additions have been in the top ten cities. Operating scale has materially improved profitability; however, customer adoption and sustainable unit economics remain unproven beyond top Metros and Tier 1 cities.
• Q-commerce is characterized by more focused, predetermined shopping missions (sub-five-minute sessions vs. over ten minutes in e-retail and an eight times visit-to-order conversion vs. e-retail) and top-up missions (high salience of small packs) requiring tailored, mission-specific assortment, pricing, and marketing strategies.
• Conversational commerce (assisted shopping powered by AI): Generative AI adoption is occurring at an unprecedented speed, with LLMs reaching 50 million monthly active users (MAU) within one to one and a half years, significantly outpacing prior digital platforms. India has emerged as the world’s second-largest market for ChatGPT, with the user base expanding roughly 4.5 times in 2025 to reach over 160 million MAU. Adoption is particularly strong among Gen Z, which accounts for one-third of ChatGPT users. Engagement levels are among the highest globally, with users spending approximately 30% more time on ChatGPT than global averages across use cases such as research and education.
• Shopping journeys may evolve from manual search to agentic journeys. While conversational commerce is nascent, product discovery and comparison are emerging use cases globally and in India.
• Two models of conversational commerce are evolving: e-retailer-led agents (e.g., Amazon’s Rufus and Flipkart’s conversational commerce engine) and LLM-led agents (e.g., Instant Checkout by ChatGPT). As both models evolve, traditional e-retail platforms will continue to thrive, protected by differentiated moats, including consumer trust, established fulfillment networks, value-added offerings, native shopping experience (e.g., video and feed), and personalization.
• E-retailers, brands, and sellers must keep a close watch on this emerging space.

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About Flipkart

The Flipkart Group is one of India’s leading digital commerce entities with a strong technology-first foundation and includes group companies Flipkart, Myntra, Flipkart Wholesale, Cleartrip, and super.money. Established in 2007, Flipkart has enabled millions of sellers, merchants, and small businesses to participate in India’s digital commerce revolution. With a registered user base of more than 500 million, Flipkart’s marketplace offers over 150 million products across 80+ categories. Today, there are over 1.4 million 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 pioneered services such as Cash on Delivery, No Cost EMI, Easy Returns, and UPI payments. Beyond shopping, Flipkart continues to create jobs, empower entrepreneurs, and strengthen India’s digital economy.