India online retail set to cross $90 billion as growth hits five year high

MUMBAI: India’s online shopping cart is getting heavier, and the growth engine is shifting well beyond phones and laptops. India’s online retail market is set to cross $90 billion in 2026, growing 22 to 24 per cent during the year, according to Redseer Strategy Consultants. That would mark the fastest annual growth pace for the market in five years, with grocery, quick commerce, value-led shopping and Gen Z emerging as increasingly important drivers.

The market has already made a strong start to the year. Online retail grew around 25 per cent year on year to approximately $38 billion in the first half of 2026, making it the strongest first-half performance in four years, according to Redseer’s India Online Retail 2026 report.

What makes the growth particularly significant is that it is broad-based. Every major category recorded faster growth than a year earlier in H1, led by grocery at 51 per cent, beauty and personal care at 38 per cent and home and furniture at 33 per cent.

Grocery is now on track to overtake mobiles as India’s second-largest online retail category. Redseer expects grocery to account for around 19 per cent of the market in 2026, compared with roughly 16 per cent for mobiles, signalling a shift in online consumption from traditionally electronics-heavy shopping towards more frequent everyday purchases.

The rise of grocery is part of a wider change in what Indians are buying online. While electronics remain a major contributor to online retail, everyday categories are increasingly taking a larger slice of the digital shopping basket.

Electronics grew around 20 to 22 per cent in the first half, supported by a GST cut on large appliances, strong air-conditioner demand and purchases of laptops and tablets being brought forward ahead of expected price increases. Mobiles, however, remained flat during the period.

The electronics momentum is also expected to moderate in the second half. Redseer forecasts electronics growth of 12 to 15 per cent in H2 as some demand was pulled forward into the first six months of the year.

Mobiles are expected to grow by only 3 to 5 per cent in the second half, with price increases likely to put pressure on volumes. That could further strengthen the relative position of everyday categories such as grocery, beauty and personal care and home-related products.

If grocery is changing what consumers buy online, quick commerce is changing how quickly they expect to receive it. Quick commerce accounted for 22 per cent of the online retail market in H1, up sharply from 14 per cent a year earlier.

The segment doubled for the third consecutive year, reaching around $9 billion in the first half. It also crossed more than 60 million monthly transacting users, giving quick commerce a sizeable consumer base beyond its initial role as a convenience channel.

Redseer expects that momentum to continue into the festive season. Quick commerce is forecast to grow 110 to 120 per cent during the festive window, lifting its share of festive online retail from 11 per cent to 18 per cent.

The acceleration suggests that quick commerce is increasingly becoming a structural part of online retail rather than simply a short-lived response to convenience-led shopping. Its expansion also puts everyday categories closer to the centre of the festive shopping conversation, traditionally dominated by mobiles and electronics.

The other major force reshaping the market is the generation increasingly driving digital consumption. Gen Z accounted for around 35 per cent of online retail gross merchandise value in H1 2026, a dramatic increase from approximately 10 per cent in 2022.

The rise means Gen Z is no longer simply an important consumer group for digital brands; it is becoming a substantial part of the overall online retail economy. Its influence is also feeding into categories such as fashion, beauty and personal care, where digital discovery and frequent purchases can translate quickly into online transactions.

Tier 2 and smaller cities are adding another layer to this expansion. In the first half, Tier 2-plus cities outgrew metros in fashion as well as beauty and personal care, pointing to a wider geographical spread of online consumption.

That combination of younger consumers and smaller-city demand is helping online retail move beyond its traditional urban core. The growth story is increasingly being written not just in major metros, but across a much wider set of Indian consumers.

The second half is expected to maintain the momentum, with Redseer forecasting online retail growth of 21 to 25 per cent. The festive period is expected to be particularly strong, with festive online sales projected to rise around 25 per cent to $15 billion to $16 billion.

That would make the 2026 festive season the strongest in around five years. The number of festive online shoppers is also expected to climb to 180 million to 185 million, up from 160 million in 2025.

But the festive basket is changing too. Mobiles and electronics are expected to account for less than 50 per cent of festive sales as everyday categories maintain their momentum and capture a larger share of consumer spending.

Quick commerce is likely to be one of the biggest beneficiaries of that shift. With growth of 110 to 120 per cent forecast during the festive window, its share is expected to rise to 18 per cent from 11 per cent.

The broader picture is therefore becoming less about one blockbuster category and more about a diversified online shopping economy. Grocery is moving towards the number two position, beauty and personal care are expanding rapidly, home and furniture are gaining ground, while quick commerce is turning speed into a structural advantage.

Redseer describes quick commerce, value commerce and Gen Z as having moved from short-term boosts to structural growth levers for online retail. Their combined influence could make 2026 a turning point for the market, as growth increasingly comes from what consumers buy every day, how quickly they want it and where the next generation chooses to shop.

With the market heading beyond $90 billion and festive sales potentially reaching $15 billion to $16 billion, India’s online retail story is clearly getting bigger. The more interesting twist is that it is also getting broader, faster and considerably less dependent on the smartphone-shaped shopping basket that once dominated the digital marketplace.