India’s online retail market is expected to cross US$90 billion in 2026. It is expected to register an annual growth of 22-24 percent, the fastest in five years. The main reason for this growth is the increasing demand for daily necessities like groceries rather than mobile phones. This has been stated in a report by Radseer Strategy Consultants. According to the analysis, e-commerce gross merchandise value (GMV) is expected to grow nearly 25 percent year-on-year to nearly $38 billion in the first half of 2026, its strongest half-year performance in four years.

Mobile sales remained flat during the first half amid a boom in online retail and are expected to grow only 2-3 percent for the full year due to limited sales volumes due to sharp price hikes. In such a scenario, after fashion, the grocery segment is poised to overtake mobile phones to become the second largest segment of Indian e-commerce. Grocery, beauty and personal care (BPC) and home decor and furniture will account for nearly 40 percent of total online retail GMV in 2026, the report said.

The contribution of groceries alone is estimated to be about a third of the total additional GMV. It is expected to grow by 50-53 percent throughout the year, which will increase its market share from 16 percent in 2025 to 19 percent in 2026. Mobile, which accounted for about 19 percent of total sales last year, is expected to lose about 16 percent of its market share.

What causes the surge?

The BPC (beauty, personal care and cosmetics) segment is estimated to grow at 36-39 percent, while the home and furniture segment is expected to grow at 31-34 percent during 2026. In contrast, the electronics segment saw a strong rebound of 22 percent in the first half (after H256 percent in the same period). 2025. According to Redseer, there were several reasons behind this surge: reduction of GST on major appliances from 28 per cent to 18 per cent in September 2025, heavy discounts on air conditioners due to change in Bureau of Energy Efficiency (BEE) star rating, 200-300 per cent surge in future short-term demand for compontop. People buy laptops in advance due to the fear of inflation.

25 percent increase in online sales

In the second half (H2), the growth rate of the electronics segment is expected to normalize to 12-15 percent. Online sales in the 30-35 days before Diwali are expected to increase by around 25 percent over last year. This could lead to total sales of US$15-16 billion, which would be the biggest growth recorded during the festive season in the last five years. RedSeer expects pre-festive season growth seen in grocery, BPC (beauty, personal care), home & furniture and general merchandise to continue during the festive season.

It is estimated that grocery will grow by 48-50%, BPC by 35-40% and home and furniture by 32-35%, while mobile is expected to grow by 5-7%. The report further states that RedSeer estimates that the combined share of mobile and electronic in festival GMV (gross sales value) will be less than half this year. In our view, it may come down from 51 percent to 46 percent, as its sales will decrease due to steep price hike.