Business News | MSMEs to Account for Nearly Half of India's E-commerce Growth by 2030: McKinsey

New Delhi [India], March 17 (ANI): India's share of e-commerce as a percentage of overall retail could increase from around 6 per cent to up to 11 per cent by 2030, and MSMEs will likely account for around half of this growth, according to a report by global consulting firm McKinsey & Company.

MSMEs form the backbone of the retail ecosystem, collectively contributing close to USD 1 trillion in value to the economy every year, which is roughly 30 per cent of national GDP.

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These MSMEs operate across multiple sub-segments defined by category, geography, scale, and formality.

India's retail landscape is deeply fragmented. Fragmentation, according to the report, is structural and likely to persist, creating a unique environment where small sellers and local traders coexist alongside large national and international retailers.

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"We therefore believe this large, fragmented, and growing group of sellers will seek services and digital solutions that are fit-for-purpose: unbundled, flexible, lower cost and more 'consumer direct' relative to offerings provided by today's dominant marketplaces," the report read.

MSMEs are fueling a new wave of e-commerce growth, it reasserted.

At the ecosystem level, government-led initiatives, including the Open Network for Digital Commerce (ONDC), are further lowering entry barriers and expanding market access for all.

"Indian MSMEs can reach consumers through three online channels: traditional, large e-commerce marketplaces that offer scale and discovery; quick commerce platforms that emphasise speed and convenience; and the direct-to-consumer channel, including websites, social media, and apps," it said.

MSMEs are increasingly seeking more flexible, direct, and lower-cost pathways to reach consumers.

"We observe that D2C adoption is accelerating nearly three times faster than e-commerce marketplace growth. The D2C channel accounts for USD 10 billion to USD 12 billion in e-commerce sales in India today. This could reach USD 60 billion by 2030.

A recent McKinsey survey of more than 1,000 Indian MSMEs showed that these businesses are almost evenly split in their channel preferences, with 53 per cent favouring D2C routes and 47 per cent relying on marketplaces.

It noted that rapid D2C channel growth does not mean that the traditional e-commerce marketplace will lose appeal.

Large e-commerce marketplaces will likely remain popular choices, with sales expected to reach up to USD 100 billion in 2030.

"Their scale, discovery engines, and fulfilment networks make them foundational to India's digital ecosystem, and could continue to fulfil a large proportion of the demand," it said. (ANI)

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