It is fair to say that India was a little late to the e-commerce party. Until recently, low rates of internet penetration among both consumers and smaller businesses alike held back online sales. Now, however, business is booming, particularly for marketplaces – new research suggests India’s online marketplaces could be making sales worth as much as $350 billion a year by 2027.

That forecast, from a new report published jointly today by consultant Bain & Company and the global venture capital investor Accel, would represent a tripling of the size of the market from current levels. Online marketplaces currently generate a little over $100 billion of sales, Bain and Accel say.

Such growth represents a tremendous opportunity for start-ups and existing small and medium-sized enterprises (SMEs) to sell their products and services through online marketplaces. The research estimates that as many as 15 million of these enterprises could be selling online through marketplaces by 2027; that would help drive the creation of 7 million new jobs in India, and could increase the size of the country’s economy by 5%.

“Increasingly rapid internet penetration, particularly on mobiles, a fall in the cost of data, and the fact that people have become more comfortable with transacting online are all driving e-commerce,” explains Prabhav Kashyap, a partner at Bain. “SMEs have had to go on that journey too, but we’re seeing more and more of them start to digitalise now.”

India also has structural tailwinds at its back, points out Anand Daniel, a partner at Accel. “We have a very large younger generation, who have grown up online and on mobile,” he points out. “We also have a sophisticated financial infrastructure, with some of the best payments rails in the world.” Logistics, previously a challenge as marketplaces sought to fulfill customers’ orders, has also improved dramatically, he argues.


The result, the researchers say, is a rapidly-maturing online marketplace sector that is now seeing growth across multiple niches. They have documented more than 300 such marketplaces across categories including retail, education, healthcare, travel and financial services. Almost 20 marketplaces have now reached annual sales of $1 billion or more, with a growing number of ventures now profitable.

Bain and Accel expect growth to be especially rapid among business-to-business (B2B) marketplaces over the next five years, with online food delivery also accelerating at a very rapid pace.

While consumer-facing marketplaces will continue to lead the way – the research estimates they will account for 40% of total sales by 2027, the contribution of B2B e-commerce marketplaces is expected to grow to five times to its current size to reach $55 billion. The research suggests the online food delivery sector will almost triple in size to nearly $22 billion.

“The B2B sector is less mature so there is naturally more headroom for growth,” adds Kashyap. “But there is also so much potential for this type of marketplace to add value – to take some of the intermediaries out of the value chain and to drive down margin leakage for businesses.”

Such appeal, along with the opportunities across the online marketplace sector, continues to capture investors’ attention. Funding raised by Indian marketplaces reached $16 billion last year, four times more than in 2018. The pace of fund raising appears to have slowed somewhat in 2022, in line with increasing global caution on the economic outlook, as well as falls on public markets, but investors continue to circle the sector.

Daniel expects any fall-off in investment to be a relatively minor blip in the ongoing success story of online markets. “India is a country where trust and confidence is especially important, but we are beginning to see customers show that trust and confidence to online marketplaces,” he argues. “We’re effectively replicating the experience and relationships that people have enjoyed in their local bazaars.”


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