The size of the country’s online retail market may reach USD 325 billion (roughly Rs. 26,65,081 crore) by 2030 against USD 70,000 million (roughly Rs. 5,74,017 crore) in 2022, mainly due to the rapid growth of e-commerce in Tier 2 and Tier 3 cities, according to a Deloitte India report published on Tuesday.
He also said that online retail penetration is projected to grow at an extraordinary rate, surpassing offline retail by 2.5 times in the next decade.
As India climbs to become the world’s third-largest consumer market, Deloitte Touche Tohmatsu India LLP’s (Deloitte India) ‘Future of Retail’ report “foresees the online retail sector, which stood at $70k million (approximately Rs. 5,74,017 crore) in 2022, to increase to USD 325 billion (approximately Rs. 26,65,081 crore) by 2030”.
The report attributes these projections to the rapid growth of e-commerce in Tier 2 and Tier 3 cities, which have surpassed Tier 1 markets in terms of total orders.
In 2022, these cities accounted for more than 60 percent of all orders, with Tier 3 cities experiencing a remarkable 65 percent growth in order volume and Tier 2 cities witnessing substantial 50 percent growth, said.
“The increase in online retail can be attributed to several factors. The convenience of ordering and returns, bolstered by a robust logistics infrastructure encompassing more than 19,000 PIN codes, has played a critical role,” he added.
Furthermore, the report says that India boasts a digitally savvy consumer base of 220 million online shoppers, further fueling the growth of e-commerce.
In addition, the sector has seen significant investments from private equity and venture capital firms, totaling $23 billion in the past five years, according to the report.
Online sales are poised to overtake organized retail, with a growing emphasis on omnichannel retail strategies where retailers seamlessly integrate their online and offline channels to give consumers the best of both worlds, he added.
“I am optimistic about the exponential growth potential of India’s retail sector, driven by rising revenue, expanding middle class and rapid digitization.
“By harnessing the power of technology, sustainability and forward-thinking strategies, retailers can create an ecosystem that not only meets changing consumer demands, but also sets new benchmarks for value, engagement and unforgettable shopping experiences,” Anand Ramanathan, partner and Consumer Industry Leader – Consulting, Deloitte India, said.
Furthermore, he suggested that new trade channels driven by factors such as increased internet usage in Tier 2 cities, ease of starting online businesses, government support, convenience, customization, easy discovery and checkout, and trust in influencers are set to redefine retail. landscape in the country.
“Augmented reality (AR), virtual reality (VR), the metaverse, and experiential retail are transforming customer interactions. Retailers can improve customer engagement, satisfaction, and sales by creating environments of engaging and interactive shopping,” the report says.
The integration of kiranas into the larger retail ecosystem opens up new markets, expands the product range and strengthens its business presence, he added.