India may have the second-largest internet consumer population in two years

According to a report by consulting company Bain & Company, India's e-retail business is anticipated to grow to $150–170 billion by 2027 as a result of the country's strong structural drivers and excellent online shopper onboarding. The e-retail market in India is anticipated to reach $50 billion in 2022, expanding by 25% from 2021.

According to the research How India Shops Online 2022, India is on track to overtake the United States to have the second-largest global consumer base within the next one to 2 years.

With 180–190 million online shoppers in 2021, the country will have the third-largest worldwide consumer base, and by 2027, that number is expected to rise to 400–450 million.

The analysis, which was created in collaboration with Flipkart, stressed that India has all the solid underpinnings necessary for an ongoing boom in e-retail.

"Massive headroom in terms of smartphone penetration—36% in India vs. 63% in China and 76% in the US—and affluence—$2K per capita in India vs. $12K in China and $69K in the US—along with already cheap data pricing, give the perfect ingredients for continued development," the report stated.

The authors, Arpan Sheth, Shyam Unnikrishnan, Manan Bhasin, and Abhishek Raj, caution that while the market may experience a short-term headwind due to the current inflationary environment, the long-term prognosis is strong due to structural drivers.

The report also provided insight into the nation's e-retail environment and recent trends.

changing category mix of online purchases

According to the authors, general merchandise categories and groceries will have the highest penetration over the next five years as the category mix of online purchases changes.

"Historically, the e-retail business has been dominated by segments including mobile phones, electronics, and appliances. Over the following five years, this will alter, "they pointed out.

already a digital funnel participant

Only 180–190 million of the 450–500 million people who used social media to shop online in 2021, according to the survey. In 2020, India's consumer base will have risen by 40 to 50 million, or 30 to 35%.

from Tier 3 cities, Gen Z

The survey highlights the fact that Gen Z and other new shoppers are primarily from tier three or smaller cities. They start their internet shopping with fashion as their primary category and frequently acquire items at lower price points.

It stated that "Gen Z (18 to 25 years old), a new generation of digital natives, has begun transacting online and will become a significant cohort in the future."

Democratizing e-commerce

The construction of the Open Network for Digital Commerce by the Indian government is also essential in democratising e-retail for India, according to the authors.

Similar to the Unified Payment Interface network for payments, ONDC allows an interoperable network for digital commerce.

The Indian e-retail ecosystem may benefit from the initiative's successful and widespread execution, they claimed.