India's Online Shopaholics: A Billion-Dollar Market Driven by Gen Z

The pandemic pressed the fast-forward button on the future of retail, thrusting us into an era where everything from groceries to gadgets can be summoned with a few taps. Online shopping, once a novelty, has morphed into a lifestyle staple. A recent report underscores this seismic shift, predicting that e-commerce will gobble up a fifth of all lifestyle spending by 2028. This means that the familiar clatter of shopping bags might soon be replaced by the satisfying ping of purchase confirmations.

Already, over 175 million Indians are digitally window shopping, making an average of six to seven online shopping trips annually. But it's the Gen Z cohort, a tech-savvy army of 60 million, who are truly driving this retail revolution, clicking and buying with an almost obsessive frequency of eight to nine times a year.

India’s Online Fashion and Lifestyle Market Up For Explosive Growth

India’s online fashion and lifestyle market is on the cusp of a significant transformation, set to grow from $16-17 billion to a staggering $40-45 billion by 2028. This forecast, outlined in the "Decoding India’s Online Fashion and Lifestyle Shopping Trends" report by Bain & Company and Myntra, highlights the evolving e-commerce landscape in the country.

India, a multicultural nation with a rich cultural heritage, has profoundly influenced the fashion industry. In recent years, the Indian fashion startup scene has experienced remarkable growth, with numerous emerging companies revolutionizing the market with their innovative products and services.

The evolving e-commerce landscape in the country also signals a robust opportunity for the Indian startup ecosystem. As the market expands, startups in fashion tech, logistics, digital marketing, and fintech are poised to benefit, driving innovation, creating jobs, and attracting substantial investment.

A Rapidly Expanding Market

The overall lifestyle market in India, currently valued at $130 billion, is expected to reach $210 billion by 2028, growing at a Compound Annual Growth Rate (CAGR) of 10-12%. This surge is driven by increasing e-commerce penetration in the lifestyle sector, projected to rise from 13% to 18-22% by 2028. This means that by 2028, one in every five dollars spent on lifestyle products will be through online channels.

The growth will be driven by the easing of short-term inflationary pressures and favorable structural demand shifts. These include rising incomes and an increase in affluence, with 65 million households projected to enter the upper-middle and high-income brackets over the next five years. Additionally, there is growing brand awareness, a shift in the consumer base with more fashion-forward and digital-native Gen Z shoppers, and an increasing demand for organized retail channels, the report highlighted.

Gen Z is used as an informal reference for the demographic group that comprises youth born between mid 1990s and early 2010s.

According to the report, presently, over 175 million Indians shop online for lifestyle products, averaging 6-7 transactions annually. Gen-Z shoppers, approximately 60 million strong, are leading this growth with an even higher purchase frequency of 8-9 times per year compared to 5-6 times for non-Gen-Z shoppers.

This means every one out of three shoppers belongs to Gen Z, accounting for 25% of the e-lifestyle market today. However, this cohort is expected to grow in salience with an increase in its purchasing power, the study said.

Fashion Dominates the Market

Fashion remains the dominant segment in the e-lifestyle market, capturing a 75-80% share. This is followed by beauty and personal care products. The trend-first market, a niche within online fashion, is predicted to balloon from $0.5 billion to $4-5 billion by 2028, with online penetration rising from 30-35% to 50-55%.

“India’s apparel sourcing landscape has matured, with new manufacturing clusters beyond Surat and Tirupur emerging across the length and breadth of the country,” says Manan Bhasin, Partner at Bain & Company. “Share of India sourcing has increased steadily to 20-30% for some leading global brands. Enhanced textile manufacturing capabilities, tighter brand-supplier relationships, and greater technology enablement signal the evolution of India’s apparel manufacturing ecosystem,” he adds.

Technological Advancements and Gen-Z Influence

Several factors are driving this unprecedented growth, including easing inflationary pressures, rising incomes, and the surge of fashion-forward Gen-Z shoppers. Additionally, advancements in technology, such as AI-driven personalization, virtual try-ons, and voice-assisted shopping, are enhancing the online shopping experience, making it more engaging and efficient.

The report also highlights the increasing role of social media in driving discovery and purchases. Over the past two years, social platforms have contributed 20% of the incremental traffic for the top 30 Direct-to-Consumer (D2C) brands. This trend underscores the importance of digital marketing strategies in capturing the attention of young, tech-savvy consumers.

According to a report, India’s D2C market, projected to reach $100 billion by 2025, has seen exponential growth in recent years. Fashion startups dominate the D2C segment, with the fashion industry poised to expand to $43.2 billion by 2025, reflecting its immense potential. D2C brands are capitalizing on the growing appetite of Indian consumers for innovation and the declining loyalty towards traditional players.

India is home to more than 190 Million digital shoppers and is third-largest online shopping base in the world. 

Global Brands and Strategic Approaches

With 90% of the top 50 global lifestyle brands active in India, and half of them generating over $30 million in revenue, the country is becoming a significant market for international players. For these brands, the report outlines a winning playbook that includes offering a differentiated customer proposition, efficient sourcing, strategic marketing, and leveraging partnerships for India-specific growth.

"India has kept up with the growing trend of affluence and premiumisation, and the country has matured as a fashion-sourcing destination for brands," the report states. For instance, nearly 60% of Decathlon India’s assortment and 30% of Asics’ products are sourced domestically.

Future Outlook

As India’s e-lifestyle market continues to evolve, the report suggests that brands and platforms must work closely together to deliver the best proposition to the Indian consumer, capitalizing on the country’s digital transformation and changing consumer preferences. Structural shifts in consumer wants and preferences, along with demand for a superior customer value proposition, will drive India’s $130-billion lifestyle market.

With two-thirds of shoppers coming from cities beyond the top 50 and 50% from the low/low-mid income segment, there is a growing demand for trendy, value-for-money products and an omnichannel shopping experience. Brands looking to tap into this burgeoning market must focus on creating efficient sourcing channels, offering differentiated customer propositions, and utilizing granular customer data to stay ahead of trends.

India’s online fashion and lifestyle market is set for explosive growth, fueled by technological advancements, rising incomes, and the increasing influence of Gen-Z shoppers. Brands that can adapt to these changes and strategically position themselves will be well-placed to capitalize on this booming market, expected to reach $40-$45 billion by 2028.

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