Tier 3 demand hitting 46 per cent as store-led fulfilment overtakes warehouses for the first time
India’s festive ecommerce growth this year was driven more by smaller cities and operational efficiency than discounting, with tier 3 shoppers accounting for nearly half of all orders and store-led fulfilment overtaking warehouses for the first time, according to Fynd’s Festive Season Report 2025.
The unified commerce platform said tier 2 and 3 markets together contributed 65 per cent of festive-period orders in September–October, signalling a shift in consumption patterns as demand broadens beyond metros. Tier 3 alone made up 46 per cent of total orders.
In a key structural change, store fulfilment reached 51 per cent, matching warehouse dispatches and helping brands prevent an estimated 4 per cent in potential lost sales through faster routing and proximity-based inventory.
The report, based on data from over 60 brands across marketplaces including Myntra, Flipkart, Amazon, AJIO, Nykaa and Tata CLiQ, suggests India’s online retail is moving from a discount-led model to one anchored in logistics efficiency and value-led spending.
Overall digital payments rose to 53 per cent of transactions, led by southern states such as Karnataka, while cash-on-delivery remained strong in smaller cities. Delhi, Maharashtra and Uttar Pradesh posted the highest order volumes, with Gujarat emerging as a steady demand hub.
Footwear was the fastest-growing category, rising to 33 per cent of festive fashion sales from 7 per cent a year ago, indicating deeper consumer comfort with online shopping beyond apparel. Marketplace concentration remained high, with Myntra and Flipkart together capturing 89 per cent of total order volumes.
Discount levels moderated, with the average markdown falling to 34 per cent from 44 per cent last year as platforms sought to balance demand generation with margin discipline. Post-sale metrics also improved sharply with Amazon halving returns to 8 per cent and cutting RTO rates to 2 per cent.
India’s ecommerce story is unfolding on its own terms, built on speed, proximity, and precision. This festive season proved that the real levers of growth are operational, not promotional with stores doubling as micro-warehouses, networks placing inventory closer to demand, disciplined pricing anchored in everyday value, and trust-driven payments”, said Farooq Adam, Co-founder, Fynd.
With ecommerce penetration expected to cross 11 per cent of retail sales in 2025, the findings point to a market gradually shifting from festive spikes to year-round optimisation. Brands, the report notes, are increasingly investing in omnichannel capabilities, tighter inventory planning and sharper segmentation to keep pace with demand from smaller cities.
