India's digital economy is primed for significant expansion: Bessemer

Business Standard

6 hours ago

India's digital economy is primed for significant expansion, according to a new report released by the India practice of Bessemer Venture Partners.
Titled 'Click, Watch, Shop: The Consumer Opportunity in India,' the report outlines how a convergence of technological advances, demographic shifts, and favourable policy developments over the past decade has unlocked what Bessemer estimates to be a $1 trillion digital opportunity.
The venture firm points to a 'tailwind trifecta'— rapid internet penetration, a young and tech-savvy population, and supportive government reforms — as key enablers of a new generation of consumer-focused startups.
Companies such as Swiggy, Urban Company, Boldfit and Vetic have ridden this wave. They are capitalising on India's growing appetite for on-demand services, health and wellness products, and personalised digital experiences.
Looking ahead, Bessemer identifies the continued evolution of online marketplaces, the rise of local content platforms, and shifting consumer aspirations as central to the next wave of growth.
'India presents a $1 trillion dollar digital opportunity. The emergence of multiple consumer marketplaces, platforms and new-age brands in the past decade is a testament to the growing aspirations of an emerging India,' said Anant Vidur Puri, Partner at Bessemer. Puri added, 'This makes us exceptionally optimistic about the potential for many more consumer plays to emerge in the coming years.'
Quick commerce
The report highlighted that India's burgeoning online commerce sector has witnessed an extraordinary expansion in recent years. Starting from a base of $30 billion in 2020, it is expected to reach $300 billion by the end of the decade in 2030, contributing to a $1 trillion dollar digital opportunity.
This demonstrates it is no longer a niche phenomenon catering to a small segment but has firmly established itself as a dominant force within the Indian retail landscape for a significant and growing share of the population.
In addition, the recent rise of quick commerce (q-commerce) has introduced a new dimension to the online retail ecosystem, further revolutionising the way consumers access goods. Platforms such as BigBasket, Blinkit, Swiggy, and Zepto have spearheaded this movement, demonstrating the viability and consumer appeal of rapid delivery services. This segment is seeing a further trend of verticalised q-commerce emerging, with startups like Snabbit, Swish and Slikk catering to niche needs.
Lastly, direct to consumer (D2C) brands are increasingly catering to an aspirational mass-premium audience — an audience characterised by the demand for newer, better priced, higher quality products.
Content revolution
The report said that India is also experiencing a content revolution driven by consumers' diverse appetites for entertainment, education, and gaming. Characterised by short attention spans and a multitude of accessible platforms across interests, languages, and budgets, user engagement is rapid, facilitated by frictionless microtransactions or autopay-led subscriptions.
Platforms are adapting to these shorter attention spans with quick and engaging content. Over the past five years, short-form video platforms in India have witnessed a 3.6 times growth in daily active users, competing with mainstream digital platforms. Moreover, the rise of virtual tipping, UPI autopay and other micro-transactions is expected to reach $1.5 billion by 2029. They exemplify the growth of UPI-enabled microtransactions, which allow companies to experiment with diverse monetisation models beyond just ads.
New Lifestyle
The modern Indian consumer's choices increasingly prioritise what were previously seen as lifestyle spending. These include previously thought 'non-essential' spending in areas such as physical and mental health, financial wellness, and pet care. This expenditure has moved from being a good-to-have to a must-have for Indian consumers.
For instance, there is increased spending on organic food, protein, fitness gadgets, preventive healthcare, and wellness services. Health-focused food and beverages (F&B) as a category has expanded from about 11 per cent to 16 per cent of F&B spend and is expected to continue increasing as brands have been quick to adapt to this trend.
Similar trends can be seen in segments such as financial services, for example, personal finance offerings by players such as Groww.
The report concludes with the metrics and numbers that Bessemer tracks to evaluate the robustness of a business.
These metrics, pertaining to total addressable market (TAM), acquisition, usage and retention are important for founders to track the health of their business.