The direct-to-consumer (D2C) channel is rapidly emerging as the preferred distribution platform for micro, small and medium enterprises (MSMEs), according to a report by McKinsey & Company. The shift is driving a sharp increase in D2C sales across India.
The report estimates that D2C sales will grow from $10–11 billion currently to $55–60 billion by 2030, registering a compound annual growth rate (CAGR) of 38% over the next five years. Quick commerce is also expected to surge, expanding from $5–6 billion to $35–40 billion by 2030, at a five-year CAGR of 45%.
Overall, India’s e-commerce market is projected to double from $70–80 billion to $180–200 billion by 2030, led by the rapid growth of D2C and quick commerce. Despite this expansion, e-commerce penetration in India remains relatively low at 6–8%, compared to 23–25% in the US and 25–27% in China, indicating significant headroom for growth.
Large e-commerce marketplaces such as Amazon, Flipkart, Myntra and Meesho will continue to play a foundational role in India’s digital commerce ecosystem. However, growth dynamics are shifting.
D2C is accelerating three times faster than marketplaces, with nearly half of the incremental gross merchandise value (GMV) by 2030 expected to come from MSMEs operating outside traditional marketplaces. Marketplace sales, currently at $60 billion, are projected to reach $100 billion by 2030, growing at a five-year CAGR of 10–12%.
$100 Billion Tug-of-War
Tier 2 and Tier 3 cities are expected to anchor marketplace growth, supported by rising internet penetration, increasing household incomes and a growing preference among consumers to purchase specific products online rather than rely on limited local availability.
According to the report, MSMEs are increasingly opting for D2C channels as they offer more flexible, direct and cost-effective access to consumers. These platforms typically provide lower distribution fees, better access to first-party customer data, improved margins and greater branding flexibility.
Quick commerce growth will be driven by deeper product assortments, faster delivery service-level agreements, just-in-time fulfilment models, habit-forming consumer behaviour and strong internet penetration across metro markets.
“By 2030, India could add over 140 million households earning more than $10,000 annually, dramatically expanding the addressable market for online businesses,” said Neelesh Mundra, Senior Partner at McKinsey & Company.
Small-Town Surge
Small towns, which already account for more than 60% of e-commerce shipments, are expected to dominate future demand, as more MSME suppliers seek to access and directly serve local, national and global customers.