Hello, this is Priyanka Salve writing from Singapore.
Welcome to the latest edition of Inside India. A one-stop-shop for the stories and developments of the world’s fastest growing large economy.
Amazon and Walmart’s Flipkart dominate India’s e-commerce market. This week, we find out why major American companies are so keen to expand in the South Asian country where only 30% of the population shops online.
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Last December, Amazon pledged a massive $35 billion investment in India, including digitizing more than 12 million small and medium-sized enterprises and strengthening logistics infrastructure, but the size of the promise appeared disproportionate to the size of the market.
A Bain & Company report earlier this month found that only 30% of Indians will shop online in 2025, far behind China (92%) and the United States (74%). Bain added that e-commerce accounts for just 1.6% of India’s GDP, compared to 4-4.5% in Indonesia and 13-14% in China.
However, India is the fastest growing e-commerce market in the world and online shopping is rapidly spreading from major cities to smaller cities and towns.
Take Evelyn Nazareth, a 30-something school teacher in Jaipur. She is one of the growing number of avid online shoppers outside India’s major cities. She shops on major e-commerce platforms three to four times a month and orders from super-fast delivery apps almost every day.
Once, she ordered a smartphone online, received a feature phone, but was charged for the former. But despite the unpleasant experience, Nazareth didn’t shy away from online shopping. She simply switched platforms.
Since then, online shopping has become a habit. “You can shop whenever you want without taking away from what you’re doing,” she said, pointing to the expanded options available online, especially when it comes to fashion. “When I buy something that other people around me don’t have, I feel different.”
Praveen Govindu, partner at Deloitte India, told CNBC that Jaipur is not a big city and it is these smaller cities that currently account for more than 60% of India’s online shoppers. E-commerce orders are occurring at a similar rate, indicating a “definitive shift in audience dynamics,” he said.
An employee scans a package before it is shipped from a Flipkart distribution center in Sampka, Haryana, on August 26, 2025.
Sajjad Hussain | AFP | Getty Images
India’s e-commerce market grew at a compound annual rate of 23% from 2020 to 2025, driven by both an increase in the number of users and an increase in spending per shopper, Govindu said. Deloitte predicted in a report earlier this month that the sector will become a $250 billion market by 2030.
The Walmart-owned Flipkart Group, which includes Flipkart Minutes, Myntra and Shopsy, is “widely seen as the market leader in India’s e-retail industry,” said Manan Bhasin, a partner at Bain & Company.
In June last year, a report by market analysis firm MerchantSpring said Flipkart had 48% of India’s e-commerce market, while Amazon had 30-35%.
Both Bain and Deloitte estimate that around 300 million Indians shopped online last year, with most new users expected to come from smaller cities.
“Consumers in smaller cities have always been as ambitious as consumers in larger cities,” says Yash Dholakia, a partner at New Delhi-based venture capital firm Sauce.vc. “What they lacked was access, and online retail is filling that gap.”
The rapid rise of quick commerce
The expansion of e-commerce has also exposed consumers in smaller cities to luxury brands and niche products, Dholakia said. The company backs several online-first consumer brands.
A decade ago, e-commerce was limited in small cities due to poor internet access, nascent digital payments, and undeveloped road infrastructure.
However, over time, the rollout of low-cost 5G, the rapid adoption of Unified Payments Interface (UPI)-based digital payments, and improved road connectivity have made large e-commerce companies accessible even to smaller towns and cities, experts say.
“Consumers in smaller cities are seeing the same social media content as people on the subway, including travel, fitness and beauty influencers,” Dholakia said. This exposure has increased demand for products such as protein supplements, Korean skin care, and luxury sneakers.
Industry experts say the most effective way to tap into that demand is through quick commerce, the 20-minute delivery time model defined in India. eternal and swiggy It pioneered this format and has encouraged major players like Flipkart and Amazon to follow suit.
For example, Flipkart has expanded its super-fast delivery service to 30 cities.
In big cities, quick commerce apps are usually used for essential items. According to Dholakia, smaller cities are increasingly functioning as “luxury stores.” Both Amazon and Flipkart have invested heavily in their delivery networks to support super-fast fulfillment.
Amazon CEO Andy Jassy told shareholders last week that the company is rapidly expanding its quick-commerce delivery service Amazon Now in India.
“Orders on Amazon Now are up 25% month over month, and Prime members shop three times more often once they start using it,” he said.
Deloitte predicts that by 2030, there will be nearly twice as many online shoppers in small cities as in major cities, and the average monthly spend per user will increase from $25 to $45 in 2025.
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