India's online marketplaces could be fashion's next frontier, says report

India’s online marketplaces are set to triple in the next five years, presenting opportunities for fashion companies who desire access to one of the world’s fastest growing economies.

Research from Bain & Company and Accel shows India’s marketplaces will reach 350 billion dollars in gross merchandising value (GMV) and contribute more than 5 percent to India’s GDP.

In a report titled The Rise of Digital Bazaars in India, more than 15 million micro, small, and medium enterprises (MSMEs) could grow their businesses online, creating 7 million jobs by 2027.

15 million companies will be active on marketplaces

Arpan Sheth, Partner at Bain & Company and co-author of the report said “Marketplaces have contributed to India’s growth story by offering greater access to capital and innovative financing solutions for traditionally underserved segments; enabled MSMEs to transact online, with an increased pan-India reach; and have provided employment opportunities to more than 3 million gig workers in India.”

"India has cultivated a vibrant and successful marketplace landscape, demonstrated by the sheer breadth of more than 300 funded marketplaces across multiple categories like retail, education, healthcare, travel, financial services, etc."

Investors are eyeing marketplaces

Not just for buyers and sellers, marketplaces have seen significant traction with investors in recent years, having received cumulative funding of 30 billion dollars between 2018 and October 2022.

In 2018 the most popular marketplaces were B2C but it is a growing B2B e-commerce marketplace channel that is booming, taking 31 percent of deal volumes so far this year.

Prabhav Kashyap, Partner at Bain and Company and co-author of the report said, “The future of marketplaces is robust and with strong growth in their GMV and continued interest from investors, we expect the segment to see ample opportunities and a strong pick up."

India is a fast growing market

Anand Daniel, Partner at Accel and co-author of the report said, “India is one of the world’s fastest growing and most dynamic emerging markets. Our report on the country’s digital bazaars reveals the extent to which marketplaces have grown in this market across both business-to-consumer and business-to-business segments."

While India is the world’s second-largest producer and exporter of textiles and garments, it also has a growing consumer appetite for fashion, with it’s e-retail market set to reach 50 billion dollars in 2022. Rising affluence will fuel consumption and increase spending per shopper, says Bain, and is estimated to grow to 170 billion dollars by 2027. Currently India has the world’s third largest online consumer base.

Rising affluence

Fashion is one of the key growth categories along with personal care and general merchandise, expected to reach two-thirds of the e-retail market by 2027. Popular India marketplaces include Myntra, Amazon and Paytm Mall.