India is rewriting the retail and consumption playbook as the fastest-growing major economy in the world. It is on track to become the third-largest consumer economy globally. Redseer’s upcoming report on the evolving logistics needs of new-age brands highlights the retail market’s promising trajectory, projecting it to reach approximately $1.5 trillion by FY29 and $2.4 trillion by FY34, with logistics emerging as a critical enabler in this transformation.
The $ 1 Tn opportunity for brands
India is moving fundamentally from a brand-deficient market to a branded market. Growth of new age and traditional brands across the channels is expected to drive this transformation- as branded retail is projected to cross $1 trillion of scale in 10 years (~4x of today’s scale). Further, the digitization and brandification of India’s retail base underscore a market which has never been “one size fits all” From cosmopolitans in metro regions with high discretionary spending to emergent buyers in Tier 3+ cities prioritizing affordability, each segment exhibits distinct purchasing behaviours and brands need to adapt accordingly
Rise of multiple eCommerce models to support India’s brandification
eCommerce is also predicted to contribute over $160 billion in GMV by FY29, largely driven by growth in fashion, beauty and personal care (BPC), and grocery categories, and increasing consumption from Tier 2+ cities.
Further, despite the rapid growth of quick commerce, traditional eCommerce constructs will be well positioned to reach $100-120 Bn in terms of GMV in this period, which will also include a large share from constructs like same-day delivery. The rise of various eCommerce models is creating vast opportunities for brands to engage with consumers seeking convenience and urgency on one side and drive access to long-tail product diversity on the other side.
Additionally, brand.com remains a critical online channel, offering brands instant retail access, minimal inventory requirements, and immediate customer feedback. Although challenges like high CAC and operational complexities persist, brand.com’s strategic importance is underscored by its ability to engage premium clientele and enhance brand visibility. As a result, brand.com channel is poised for remarkable growth, with its market size projected to rise from USD 5.5 billion in FY24 to USD 15 billion by FY29, driven by a robust CAGR of 23-25%.
This rapidly growing demand across multiple online channels presents a massive opportunity for brands – but also introduces significant logistical challenges. To meet these growing expectations, the role of logistics has evolved from being a backend function to a strategic enabler of growth. Effective supply chain management is now an important part of India’s retail revolution.
Rising Distribution Complexity for Brands
As India’s offline and online retail markets expand for brands, the upcoming report highlights the increasing logistical complexity -as India’s retail and e-commerce sectors have transitioned from linear supply chains to highly complex, multichannel distribution networks. In this environment, logistics providers, especially third-party logistics (3PLs), play an indispensable role in enabling brands to scale effectively and deliver timely while managing costs and ensuring superior customer experience.
The rising prominence of tier 2+ cities further increases distribution complexity for brands
Tier 2+ cities are emerging as powerful growth engines, projected to contribute over $100 billion in GMV by FY29 for eCommerce. As this growth brings more opportunities, so does it increase the layers of complexity for brands. Not only do brands serving consumers in these regions face the hurdle of heterogenous demand patterns, but these brands also need to effectively manage multiple large and emerging marketplaces serving these regions. Thus, brands require a robust logistics network.
Looking Ahead
The retail landscape presents both opportunities and challenges. As brands race to capture growth in new markets through multiple digital channels, partnering with and working effectively with the right logistics providers emerges as a key unlock for this growth. Stay tuned for our upcoming report, which will also deep dive into new-age brands’ logistics priorities while double-clicking on the challenges they face. The report will further detail recommended frameworks for brands to select the right logistics partner and thrive in this complex era of digital distribution.
At Redseer Strategy Consultants, we empower brands with actionable insights to navigate complexities across all facets of their growth journey. Discover how Redseer’s consulting expertise, deep research insights, and strategic planning services can drive and unlock growth for your brand. Get in touch with us today!
