Bain and Flipkart foresee 350 million online shoppers by 2025

29 June 2020 6 min. read
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A new Bain & Company and Flipkart report expects the e-retail market in India to boom over the next few years, driven by expanding online penetration into tier-2 towns and even rural areas. Up to 350 million people might be engaged in e-retail over the next half a decade.

India’s retail sector is already worth $850 billion according to Bain and Flipkart, when accounting for large segments that fall under the ’unorganised’ retail label. Previous estimates from Bain have predicted that India’s consumer market could reach a staggering value of $6 trillion by 2030, on the back of a large population a growing middle class.

Add to this the fact that India is the fastest growing market when it comes to online penetration. Boston Consulting Group estimates that India will have 850 million online users by 2025. Bain and Flipkart’s latest report indicates that this figure will reach 1 billion by 2030, judging by the fast rate of growth over the last five years, which has outpaced all other major markets in the world.

E-retail in India is booming and there is signi cant potential for further growth

Part of what is driving this growth is the expansion of internet connectivity beyond the major urban centres in India. The advent of Reliance Jio in 2016 revolutionalised the mobile data landscape in India, making Internet connectivity cheaply accessible, and boosting the spread into rural areas.

For now, internet usage remains limited to messaging, video streaming and social media. Financial inclusion as a whole remains a work in progress in India, which puts the use of online platforms for payments even further into the distance.

China as a best practice

From an e-tail perspective, it is crucial that this process gains momentum in the next few years. Bain & Company and Flipkart use the example of China to illustrate that India is on the right track. The report demonstrates how internet penetration across a vast population was the first step for China as well.

With the infrastructure laid down, significant investments from companies such as Alibaba and were rolled-out, which developed an ecommerce fundament that would allow a greater share of the population to make online purchases.

Increased mobile and internet penetration coupled with improved logistics and payment infrastructure drove Chinese e-retail growthThis was the inflection point for the Chinese market, following which e-retailing in the country has boomed. Major global online retailers such as Amazon have been investing significantly in the Indian market, while Flipkart has always been a key domestic ecommerce player.


Meanwhile, digital payments systems are also growing more advanced, with Indian consumers ranking as the world’s top adopters of financial technology (FinTech) as of last year, according to an EY report. It is only a matter of time before online penetration and growing investments translate into e-retail growth in India. Overall, Bain and Flipkart suggest that India’s e-retail market is running approximately six to seven years behind China’s.

Judging by this trajectory, India’s e-retail market should have reached a Gross Merchandise Value (GMV) of between $100 and $120 billion by 2025, growing at a compound annual growth rate (CAGR) of 30% over the next five years. Anywhere between 300 and 350 million online shoppers will contribute to this value, while overall growth will be driven by a number of factors.

E-retail in India is expected to have 300-350M shoppers and $100-120 billion in GMV by 2025

The 1 billion online consumer base will help, while mobile data prices in 2025 will have dropped by 95% compared to prices in 2014. At the same time, online commerce will have reached more than 30% penetration in key economic segments such as mobiles and electronics by this point, helping in overall value generation.

Demographics also will have a key role to play in this growth trajectory. Millennials have long been positioned as drivers of growth in India’s consumer market, and they are also expected to drive the transition to online. According to the authors, more than three-quarters of India’s population in 2030 will be either Millennials or GenZ (born 1995-2015).

The younger generation is likely to be more tech savvy with a larger share of digital natives to engage in online retail. And age is not the only demographic to play a role in India’s e-retail landscape.

Small town India is turbo-charging growth and accounts for 3 of every 5 online orders

Outside the metropoles

As growing parts of India urbanise and a wealthy middle class expands, a number of ‘tier 2’ urban centres are emerging outside of the large metropolitans, where online commerce is expected to thrive. In fact, the report reveals that three of every five online orders in India is registered in a small town.

Brands are also starting to work on marketing to smaller towns, revamping their sales and online infrastructure to align with local culture and vernacular languages. As the sellers and consumers converge in the online space, Bain and Flipkart anticipate a thriving online environment.

“We expect India’s e-commerce growth story to be inclusive – one that empowers the sellers and consumers both. For the consumers,it will provide convenient access to a wide assortment of products across all geographies and income segments,” wrote the report authors Arpan Sheth and Shyam Unnikrishnan, both partners at Bain & Company.

“For sellers (kiranas, artisans, traders and homemakers) it will provide an unprecedented impetus, by creating easy access to a large base of customers across the country and keeping their stores running 24x7.”