India’s e-commerce sector saw a 12% year-on-year (YoY) growth during the 2024 festive season, which spanned from September 15 to October 31, reaching a gross merchandise value (GMV) of approximately US$ 14 billion. This growth highlights the changing consumer behaviour and increasing contributions from smaller cities, particularly Tier-II+ regions, signaling a shift in the retail landscape towards broader geographic inclusivity.

According to a report by Redseer Strategy Consultants, while there was a slowdown in overall shopper growth, there was a noticeable 5-6% increase in per-shopper spending, which points to the maturing market of e-commerce in India. Premium electronics and large appliances saw strong demand in metro cities, while affordable fashion and beauty products continued to drive frequent purchases, particularly in smaller towns, fueling sustained growth in the sector.

Key trends during the festive season reflected a decline in shopper growth but an uptick in spending per shopper, showcasing deeper retail penetration in India’s online market. Notably, smaller cities experienced a 13% increase in spending, as discounts and promotions enabled consumers in these regions to purchase higher average selling price (ASP) items, boosting the overall GMV.

The fashion segment saw significant growth, particularly in ethnic wear, jewellery, and women’s accessories, which were in high demand, especially in Tier-II+ cities. On the other hand, premium and international brands performed well in Tier-I cities, while direct-to-consumer brands benefitted from increased digital visibility. Electronics, especially air conditioners and large appliances, saw a surge in demand, partly driven by the extended summer season and ongoing festive offers.

Quick commerce services also expanded their offerings to meet the festive demand, with extended delivery hours playing a crucial role in meeting customer needs. Key cities such as Delhi, Mumbai, and Bangalore led in non-grocery sales during the festive period.

Mr. Kushal Bhatnagar, Associate Partner at Redseer, noted that the growing spending power in Bharat (Tier-II+ customers) and the rise of quick commerce services are reshaping India’s online retail landscape. This marks a significant shift in consumer behavior, where smaller cities are becoming key contributors to India’s e-commerce growth, both in terms of spending power and frequency of purchases.

Overall, the 2024 festive season was a strong indicator of the e-commerce sector’s growth, driven by strategic discounts, increased shopper spending, and an expanding digital retail ecosystem that is catering to a broader and more diverse consumer base across India.

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