Tier II and III cities power India’s D2C, driving 66% of new orders in FY26

India’s smaller cities are rapidly emerging as the growth engine for direct-to-consumer (D2C) brands, accounting for nearly two-thirds of new online orders in the last financial year, according to a new analysis by Unicommerce.

The report found that 66% of new D2C orders in FY2026 originated from Tier II and Tier III cities, a significant shift away from metro-led ecommerce demand. These markets also contributed 60% of incremental gross merchandise value (GMV) compared to the previous year, reflecting both rising consumption and deeper market penetration beyond urban hubs.

Overall, India’s D2C sector maintained strong momentum, with order volumes increasing by 33% and GMV growing by 32% year-on-year, based on an analysis of over 400 million order items processed through Unicommerce’s Uniware platform between April 2024 and February 2026.

The findings, drawn from over 6,000 digitally native brands, highlight how ecommerce growth is becoming more geographically distributed. As demand expands, companies are also improving logistics and fulfillment systems to keep pace.

Data from Shipway, Unicommerce’s logistics arm, showed an improvement in delivery efficiency. Return-to-origin (RTO) rates dropped from nearly 39% during the November 2025 festive season to about 21% by February 2026, indicating better order verification and execution despite challenges like cash-on-delivery transactions and first-time buyers.

India’s D2C market, currently valued at $10–12 billion, is projected to expand to $60 billion by 2030, as brands focus on operational efficiency, customer retention, and consistent service quality in an increasingly competitive landscape.

The analysis signals a maturing ecommerce ecosystem, where growth will increasingly depend on how well companies adapt to a broader, more diverse customer base across the country.