India’s e-commerce sector is poised for significant expansion over the next decade, with its share of total retail projected to nearly double from around 6 per cent today to as much as 11 per cent by 2030, according to a report by McKinsey & Company. The growth, the report notes, will be driven in large part by micro, small and medium enterprises (MSMEs), which are expected to contribute nearly half of this increase.
MSMEs remain central to India’s economic engine, collectively generating close to $1 trillion in annual value—roughly 30 per cent of the country’s GDP. Operating across diverse categories, geographies, and levels of formality, these enterprises are a defining feature of India’s highly fragmented retail landscape. This structural fragmentation, the report suggests, is likely to persist, enabling small sellers and local traders to coexist alongside large domestic and global retailers.
Against this backdrop, MSMEs are increasingly demanding tailored digital solutions that are flexible, cost-effective, and designed for direct consumer engagement. “This large, fragmented, and growing group of sellers will seek services that are unbundled and fit-for-purpose,” the report noted, highlighting a shift away from one-size-fits-all marketplace models.
A key trend shaping this evolution is the rapid rise of direct-to-consumer (D2C) channels. MSMEs are leveraging their own websites, apps, and social media platforms to build direct relationships with customers. According to the report, D2C adoption is growing nearly three times faster than traditional marketplace e-commerce. Currently valued at $10–12 billion, the D2C segment is expected to surge to around $60 billion by 2030.
However, the report emphasizes that the growth of D2C does not signal a decline in conventional e-commerce platforms. Large marketplaces are projected to remain a cornerstone of India’s digital retail ecosystem, with sales potentially reaching $100 billion by the end of the decade. Their scale, advanced discovery algorithms, and robust fulfilment networks continue to offer significant advantages to sellers.
Government-backed initiatives such as the Open Network for Digital Commerce (ONDC) are also playing a critical role in democratizing access to online markets. By lowering entry barriers and expanding reach, such initiatives are enabling more MSMEs to participate in digital commerce.
Overall, the report underscores that India’s next phase of e-commerce growth will be shaped by a hybrid ecosystem—where large marketplaces, quick commerce platforms, and D2C channels coexist—powered by the rising ambitions and digital adoption of MSMEs.
