Greetings from Singapore. This is your latest edition of “Inside India,” your comprehensive source for the most significant narratives and developments emanating from the globe’s most rapidly expanding large economy.
This week, we delve into the realm of e-commerce, where Amazon and Walmart’s Flipkart reign supreme in India. I will elucidate the motivations behind these American titans’ eagerness to amplify their influence in a nation where merely 30% of the populace engages in online shopping.
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The Central Narrative
In December of last year, Amazon made headlines by pledging an extraordinary $35 billion investment in India, aimed at digitizing over 12 million small enterprises and bolstering its logistical framework. This vast commitment appeared disproportionate given the current size of the market.
As of 2025, only 30% of Indians engaged in online shopping, a stark contrast to China (92%) and the U.S. (74%), according to a recent Bain & Co. report. E-commerce constituted a mere 1.6% of India’s GDP, significantly trailing behind Indonesia’s 4%–4.5% and China’s 13%–14%, Bain noted.
Nonetheless, India’s e-commerce landscape is on the ascendant, with online shopping rapidly permeating from metropolitan centers to more modest towns and cities.
Consider Evelyn Nazareth, a schoolteacher in her thirties residing in Jaipur. She epitomizes the burgeoning demographic of online shoppers beyond India’s metropolitan enclaves. Shopping on major platforms three to four times monthly and utilizing ultra-fast delivery services almost daily has become her norm.
Despite an unfortunate incident involving a smartphone order that resulted in her receiving a feature phone, her enthusiasm for online shopping remained undeterred; she merely transitioned to a different platform.
Now, online shopping has evolved into an integral aspect of her life. “The convenience allows me to shop anytime,” she remarked, particularly appreciating the wider selection, especially in fashion. “Finding something unique often sets me apart from others.”
It’s noteworthy that smaller cities now account for over 60% of India’s online shoppers, as highlighted by Praveen Govindu, a partner at Deloitte India. This shift in consumer dynamics is catalyzing significant changes in the e-commerce landscape, generating a similar proportion of online orders.
Workers scan packages ahead of dispatch from the Flipkart fulfillment center in Sanpka, Haryana, on August 26, 2025.
India’s e-commerce sector has witnessed a compound annual growth rate of 23% from 2020 to 2025, propelled by an increasing user base and elevated spending, according to Govindu. Deloitte forecasts that this industry will evolve into a $250 billion market by 2030.
The Flipkart Group, which encompasses Flipkart Minutes, Myntra, and Shopsy, is often hailed as the forerunner in India’s e-retail sector, according to Manan Bhasin, a partner at Bain & Company.
A recent June report from marketplace analytics firm MerchantSpring indicates that Flipkart commands approximately 48% of the Indian e-commerce market, while Amazon holds a market share of 30%-35%.
Both Bain and Deloitte project that around 300 million Indians made online purchases last year, with the majority of new users anticipated to emerge from smaller cities.
“Consumers from smaller cities are just as aspirational as their metropolitan counterparts,” observed Yash Dholakia, a partner at the New Delhi-based venture capital firm Sauce.vc. “What was lacking was accessibility, and online retail is bridging that divide.”
The Ascendancy of Quick Commerce
The surge of e-commerce has similarly unveiled premium brands and niche offerings to consumers in smaller cities, as Dholakia noted, whose firm supports numerous online-first consumer brands.
A decade ago, inadequate internet connectivity, incipient digital payment systems, and subpar road infrastructure were significant hurdles for e-commerce in less urbanized locales.
However, the advent of affordable 5G, swift acceptance of Unified Payments Interface (UPI)-based digital transactions, and enhanced road infrastructure have rendered smaller towns accessible to major e-commerce players, experts contend.
“Consumers in small towns are exposed to the same social media narratives related to travel, fitness, or beauty as those in urban centers,” remarked Dholakia. This broader exposure is inflating demand for products such as protein supplements, Korean skincare, and luxury sneakers.
Industry specialists argue that the most efficacious means to capitalize on this demand is through quick commerce, a model characterized by delivery times under 20 minutes. Eternal and Swiggy have pioneered this format, compelling larger players such as Flipkart and Amazon to adapt.
In larger urban environments, quick-commerce applications are primarily employed for essentials; in smaller locales, they increasingly serve as “premium outlets,” according to Dholakia.
Both Amazon and Flipkart are investing significantly in their delivery networks to facilitate ultra-rapid fulfillment.
In a recent address to shareholders, Amazon CEO Andy Jassy stated that the company is aggressively scaling its quick commerce delivery service, titled Amazon Now, within India.
“Orders via Amazon Now are increasing at a rate of 25% month over month, with Prime members tripling their shopping frequency once they start utilizing it,” Jassy noted.
Deloitte predicts that by 2030, the number of online shoppers in smaller cities will roughly double that of major urban centers, with monthly spending per user soaring from $25 to $45 by 2025.
Key Updates
U.S. blockade of the Strait of Hormuz intensifies India’s energy concerns
While India is aligning itself closer to the U.S., it is increasingly finding that Washington’s policies are counterproductive, particularly regarding energy security. The ongoing conflict with Iran has exacerbated these challenges.
Tata Consultancy Services CEO asserts AI will create jobs in India, not eliminate them
TCS’s chief executive, K. Krithivasan, conveyed to CNBC that advancements in artificial intelligence will transform India’s billion-dollar information technology sector, ushering in new opportunities rather than resulting in layoffs.
Eli Lilly’s market share declines, while Novo Nordisk maintains position amid influx of generic weight-loss drugs in India
Eli Lilly’s market share in the GLP-1 category for weight-loss medications fell to 56% in March from 61% a month prior, according to data from industry intelligence firm Pharmarack, while Novo Nordisk’s share remained steady at 25%.
Source link: Cnbc.com.
