Consumer spending in India is expected to exceed $4 trillion by 2030, growing at a compounded annual growth rate (CAGR) of 10%, according to a recent report by e-commerce enablement platform Shiprocket and ONDC.
The ‘eCommerce In The New Bharat And Its Future’ report, released along the sidelines of Shiprocket’s flagship SHIVIR summit, 2023, stated that factors such as technological innovation in consumer products, higher internet penetration, a strong local consumer ecosystem, evolving consumer habits, increasing female workforce participation, policy support in the form of Make in India and Aatmanirbhar Bharat, and a working age majority with a median age of 31 years in 2030 (as opposed to 42 years in China and 40 years in the US) will all be behind this development.
Moreover, as millennials and Gen Z are set to constitute 77% of India’s population by 2030, brands focusing on them will greatly benefit, the report pointed out. Spending on categories such as food, housing, apparel, transport and communication, and personal care is expected to increase two times by 2030 as well.
E-commerce will be one of the key drivers behind the increased consumer spending, the report said, pointing out that nearly 80% of consumers today prefer shopping online at marketplaces.
About 76% of consumers prefer to prepay, the report revealed. UPI, meanwhile, emerged as the most preferred prepay option (57%), followed by credit cards (31%), and other payment options such as wallets, net banking, and debit cards (12%). UPI’s popularity will lead to a 34% decrease in cash transactions and 88% increase in digital payments by 2026, the report predicted.
The report said that fashion and lifestyle (48%) emerged as the “most-shopped” category currently, followed by electronics (32%) and groceries (30%). Moreover, over half of Indian consumers surveyed said quality was the most important factor when making purchase decisions online.
There is still a lot of room for improvement, the report stated. “Surprisingly, over 72% of Indian brands do not sell internationally, presenting significant opportunities for expansion,” it said, pointing out that over 38% of brands are still uncertain about how to sell overseas, even though countries such as the USA remain an appealing market for another 38% of brands. Meanwhile, both Indian and international consumers have shown keen interest in buying Indian products.
While 40% of brands believe all channels combined together drive maximum sales for them rather than only one channel, 38% believe efficient logistics (both domestic and international) is currently the biggest challenge they face.