India’s e-retail sector is undergoing a rapid transformation driven by three disruptive business models—trend-first commerce, hyper-value commerce, and quick commerce, according to a report by Bain & Company and Flipkart.
As the landscape evolves, powered by a youthful, digital-first population and increased regional diversity in consumer behaviour, the opportunities for growth have never been more dynamic.
Trend-first commerce, which revolves around the frequent launch of trendy collections at accessible prices, is gaining significant traction. The trend-first fashion segment alone is projected to quadruple, reaching $8 to $10 billion by 2028, with more than half of this spend anticipated to come from online channels. While fashion remains the anchor, this model is quickly expanding into adjacent categories.
India’s demographic advantage—a large base of young, value-conscious consumers active on social media—makes it an ideal environment for the trend-first wave. Online platforms such as Flipkart Spoyl, Myntra Fwd, and Shein, along with insurgent brands like Urbanic, Snitch, and NewMe, are looking to win over Gen Z consumers and trend-savvy millennials, while established offline players like Zudio, H&M, and Zara have already built a strong trends-first proposition, as per the report titled 'How India Shops Online 2025'.
The global success of trend-first commerce has followed a repeatable playbook—aggressive use of social media to reach Gen Z, algorithm-powered trend spotting to guide daily product launches, test-and-scale operations to replenish high-performing items, and bespoke user experiences that focus on novelty and engagement.
Parallelly, hyper-value commerce is gaining strong momentum, offering ultra-low price assortments that resonate deeply with India’s lower-middle-income shoppers, particularly in Tier-2 and smaller cities. Globally exemplified by the rise of Temu in the United States, which reached 55–60 million monthly active users and a Gross Merchandise Value (GMV) of $14–$16 billion by end-2024, this model has demonstrated the power of affordability.
In India, hyper-value commerce has grown from just 5 per cent of e-retail GMV in 2021 to more than 12 per cent in 2024. These platforms appeal not only through pricing but also by onboarding sellers via zero-commission models and seller financing.
At the heart of this digital shift is the rise of Gen Z, born between 1997 and 2012, now accounting for nearly 40 per cent of India’s e-retail shopper base. Gen Z’s behaviour diverges from previous generations—they are more experimental, spread their purchases across multiple platforms, and demonstrate a strong preference for insurgent fashion brands, the report noted.
Heavily influenced by social media, 70 per cent of Gen Z shoppers discover brands online, make faster purchase decisions, and predominantly use UPI for transactions. As more members of this cohort enter the workforce and their income levels rise, they will become an influential force in the market
Consumer behaviour also varies markedly across India’s regions. In the North, brand choices often signal social status, with a preference for bold fashion trends such as boot-cut jeans and vivid hair colours. In contrast, Southern shoppers associate brands with quality. The Northeast displays demand for smaller clothing sizes due to generally petite body types.
These differences can appear across states, within regions, and even across localities in the same city, driven by factors such as urbanisation, affluence, and local culture. For example, students in eastern Rajasthan favour sports footwear near education hubs like Kota, while casual footwear dominates in the southern districts. Similarly, snack preferences diverge across Bengaluru, with Koramangala leaning toward ready-to-eat and party snacks, while JP Nagar and Banashankari reflect a different consumption profile.
Interestingly, Tier-2 and smaller cities now exhibit e-retail spending patterns comparable to metro areas, particularly in certain categories where average selling prices are only marginally lower. Consumers in these markets are also increasingly embracing premium features and brands, with many viewing sponsored listings as signals of product quality.
Cities with mature e-retail ecosystems such as Coimbatore and Vadodara display 40 per cent higher per-shopper spend compared to less mature cities like Prayagraj and Warangal. Shoppers in mature cities also show a clear preference for premium products and insurgent brands, with selling prices 10 to 25 per cent higher across categories.
Alongside these developments, quick commerce has become a defining trend. In 2024, over two-thirds of all e-grocery orders and one-tenth of e-retail spend took place on q-commerce platforms. This space is projected to grow at more than 40 per cent annually until 2030, with players like Flipkart Minutes, Myntra’s M-now, and Amazon’s Tez leading the charge.
India’s e-retail journey exemplifies a marketplace of ‘many Indias.’ To succeed, brands and sellers should tailor product assortments to local preferences, launch trend-aligned offerings, use targeted advertising to drive brand discovery, and invest in fast delivery and high-quality catalogues, the report suggested.
ALCHEMPro News Desk (HU)
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