Hello, this is Priyanka Salve, writing to you from Singapore.
Welcome to the latest edition of “Inside India“ — your one-stop destination for stories and developments from the world’s fastest growing large economy.
Amazon and Walmart’s Flipkart dominate India’s e‑commerce market. This week, I unpack why the U.S. giants are keen to expand in the South Asian country where only 30% of the population shops online.
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The big story
Last December, when Amazon pledged a massive $35 billion investment in India including for digitizing over 12 million small businesses and enhancing logistical infrastructure, the scale of the commitment seemed disproportionate to the market’s size.
Only 30% of Indians shopped online in 2025, far behind China (92%) and the U.S. (74%), according to a Bain & Co. report earlier this month. E‑commerce accounted for just 1.6% of India’s GDP, compared with 4%–4.5% in Indonesia and 13%–14% in China, Bain added.
But then India is the world’s fastest‑growing e‑commerce market, with online shopping spreading rapidly from major metros to smaller cities and towns.
Take Evelyn Nazareth, a schoolteacher in her 30s who lives in Jaipur, and is among a growing cohort of avid online shoppers outside India’s largest cities. She shops on major e‑commerce platforms three to four times a month and orders from ultra‑fast delivery apps almost daily.
Once, she ordered a smartphone online and received a feature phone but was billed for the former. That unpleasant experience, however, did not turn Nazareth away from online shopping. She simply switched platforms.
Online shopping has since become a habit. “I can shop anytime without stepping away from what I’m doing,” she said, noting the broader choice available online, especially for fashion. “When I buy something others around me don’t have, it makes me feel different.”
Jaipur is not a metropolis, and it is these relatively smaller cities that now account for more than 60% of India’s online shoppers, Praveen Govindu, a partner at Deloitte India, told CNBC. They generate a similar proportion of e‑commerce orders, he said, marking “a decisive shift in audience dynamics.”
Workers scan packages ahead of dispatch from the Flipkart fulfillment center at Sanpka in Haryana on August 26, 2025.
Sajjad Hussain | Afp | Getty Images
India’s e‑commerce market experienced a compound annual growth of 23% between 2020 and 2025, driven by both a rising number of users and higher spending per shopper, Govindu said. Deloitte, in a report on earlier this month, forecast that the sector will become a $250 billion market by 2030.
Walmart-owned Flipkart Group, which includes Flipkart Minutes, Myntra and Shopsy, “is widely viewed as the market leader in India’s e‑retail landscape,” said Manan Bhasin, a partner at Bain & Company.
In June last year, a report by marketplace analytics firm MerchantSpring said Flipkart holds 48% of the Indian e-commerce market, while Amazon has 30%-35%.
Both Bain and Deloitte estimate that about 300 million Indians shopped online last year, with most new users expected to come from smaller cities.
“Consumers in smaller cities were always just as aspirational as those in bigger ones,” said Yash Dholakia, a partner at New Delhi‑based venture capital firm Sauce.vc. “What they lacked was access — and online retail is closing that gap.”
Rapid rise of quick commerce
The expansion of e‑commerce has also exposed smaller‑city consumers to premium brands and niche products, said Dholakia, whose firm backs several online‑first consumer brands.
Ten years back, poor internet access, nascent digital payments, and underdeveloped road infrastructure restricted e‑commerce in smaller cities.
Over time, however, the rollout of low‑cost 5G, rapid adoption of Unified Payments Interface (UPI)-based digital payments, and improved road connectivity have made small towns and cities accessible to major e-commerce companies, experts said.
“A consumer in a small city is seeing the same social media content — whether it’s travel, fitness, or beauty influencers — as someone in a metro,” said Dholakia. That exposure is fueling demand for products such as protein supplements, Korean skincare, and high‑end sneakers.
Industry experts say the most effective way to tap that demand is through quick commerce, a model defined in India by delivery times of under 20 minutes. Eternal and Swiggy pioneered the format and have pushed larger players like Flipkart and Amazon to follow suit.
Flipkart, for instance, has expanded its ultra-fast delivery services to 30 cities.
In large cities, quick‑commerce apps are typically used for essentials. In smaller cities, they increasingly function as “premium stores,” Dholakia said. Both Amazon and Flipkart are investing heavily in delivery networks to support ultra‑fast fulfillment.
Addressing shareholders last week, Amazon CEO Andy Jassy said the company is rapidly expanding its quick commerce delivery service, Amazon Now, in India.
“Orders on Amazon Now are growing 25% month over month, with Prime members tripling their shopping frequency once they start using it,” he said.
Deloitte forecasts that by 2030, the number of online shoppers in smaller cities will be roughly double that in major metros, with average monthly spending per user rising to $45 from $25 in 2025.
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Coming up
April 14-17: Federal Chancellor of the Republic of Austria visits India
April 17: Citius TransNet Investment Trust IPO opens