Presently, online spending constitutes only five to six percent of total retail expenses in India, which is very different from the U.S., where it constitutes 23-24%, and China, where it is 35%. The e-retail market in India is projected to surpass $160 billion (over ₹13 lakh crore) by 2028. Expected to achieve approximately $57-60 billion in 2023, the e-retail market is ready for significant expansion, with an annual consumer base of approximately 240 million. This represents an incremental upsurge of $8-12 billion yearly since 2020. This massive gap compared to major economies indicates significant potential for growth in the Indian e-retail sector.

The online retail landscape has experienced a notable change over the past three years, marked by the significant doubling of e-retail spending per consumer. The year 2022 saw a significant wave, with the addition of double vendors as compared to the previous year. Two-thirds came from the emerging urban cities, and three-fourths operate in the lifestyle, home, and electronics categories. In India, more than half of the seller base comes from seven cities mainly, Delhi NCR (20 to 22%), Surat (11 to 13%), Jaipur(6 to 8%), Mumbai (4 to 6%), Bengaluru (2 to 4%), Hyderabad (1 to 3%), Kolkata(1 to 3%), creating seller hubs. Government programs like the Open Network for Digital Commerce (ONDC) will contribute to the continued expansion of e-retail in India. Presently, 7 out of 10 online shoppers live in Tier 2 cities, and a third of online shoppers are from low-income or low-middle-income fellows, adding that quick commerce orders doubled over the last year, and now account for 40%–50% of India’s e-grocery spend.

In complement to continuous enhancements in basic business economics, online retailers are concentrating on monetization by employing five primary strategies: advertising, seller services, fintech, externalization of services like logistics and cloud, and subscription-oriented loyalty programs. Global e-retailers use numerous monetization levers, but advertisement is the main lever in India. E-commerce advertisement spending quadrupled, yet there’s still huge growth potential.