Online retail to grow on the back of quick commerce, hyper-value commerce: Bain & Co report

The Indian e-retail market is expected to surge over $60 billion in GMV driven by the popularity of quick commerce, adoption of hyper-value commerce, and trend-first approaches in the market, according to a combined report from Bain & Company and Flipkart.

Hyper-value commerce, which primarily refers to ultra-low price assortment, has grown from 5% of e-retail GMV in 2021 to more than 12% in 2024. The shift is growing on the back of internet penetration, traction among lower-middle-income consumers, particularly in Tier II or smaller cities.

"​There are a lot of tier-three and tier-two consumers that have come on as well. In fact, 60% of the new consumers we've seen since 2020 have come from Tier III cities. This increases the demand for entry products in price points significantly," said Manan Bhasin, Partner at Bain & Company and co-author of the report, told YourStory.

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The report draws a parallel with the success of Temu in the US, which currently boasts 55-60 million monthly active users within a year of its launch, trailing Amazon.

According to another report by Redseer, Indian retail sees a large share of consumers favouring small-ticket transactions and prioritising affordability.

Platforms in the affordable ecommerce space have rapidly onboarded sellers by offering attractive growth with a zero-commission model and seller financing, stated the report. Since 2021, over 60% of new sellers hail from Tier II cities or smaller

The e-retail market is further disrupted by scale and competition within its quick commerce segment, which sees over two-thirds of all e-grocery orders and a tenth of overall e-retail dollars. The sector has evolved to see about 15% to 20% of its GMV from general merchandise, mobile phones, electronics, and apparel.

"While there are early proof points and concepts, a key concern for all players is whether order density, purchase frequency, or spend per order will be low. Driving these factors has been crucial in improving overall unit economics. The players in this space will adapt their models for smaller cities, whether through pricing, assortment, or other factors, to capture a larger market share. However, the viability of the model beyond these top cities at scale has yet to be proven," added Bhasin.

The report also highlighted the growing shift towards trend-first commerce, which refers to frequent launches of affordable, trendy collections, that is expected to be driven by online sales. The trend is manifesting in categories beyond apparel, moving towards beauty, electronics, and luggage.

This is particularly boosted by the growing share of GenZ in the workforce and an increase in their purchasing power; these value-conscious, social media-savvy shoppers are willing to take a bet on new-age brands.