Small towns are powering e-commerce’s fastest-growing market, dominated by

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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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.”

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…