Ecom firms eye the next 500 million shoppers, chase Meesho's playbook

On a humid afternoon in Malleshwaram, a northwest Bengaluru neighbourhood bustling with local eateries and silk saree and jewellery shops, Jamil Ghani watched a shopper compare shoe prices on Amazon against local stores. The worldwide vice-president of Amazon Prime had flown in from Seattle to India to meet the teams here and understand consumer behaviour. Later that day, at Asha Sweets, Ghani experienced India’s digital payments revolution firsthand: he tapped Amazon Pay via UPI, and Amitabh Bachchan’s voice boomed from the speaker, “You have paid 110 rupees.” 

 

The moment captured the reasons India has become central to Amazon Prime’s global strategy.

 

Ghani’s visit signals India’s growing importance to Amazon Prime’s worldwide operations, particularly as 70 per cent of new Prime members now originate from Tier-II and Tier-III cities. Amazon India is evolving from being an “everything store” to an “everyday value store,” deploying hundreds of micro-fulfilment centres and hyperlocal content tailored to price-conscious Indian consumers. This shift mirrors a broader industry bet on “value commerce”— low-priced goods targeting millions of Indian shoppers. Walmart-owned Flipkart is making similar moves, while IPO-bound Meesho already leads this segment with an asset-light model reminiscent of China’s PDD and Southeast Asia’s Shopee.

 

“The Indian consumer is moving so quickly and they have so many options,” Ghani told Business Standard. “Our job is to listen to customers and evolve our proposition...It’s inspiring to hear directly from a homemaker just trying to live her life.”

 

Amazon now views 

 

India not only as a growth market for Prime but also as a source of product innovation. Executives say the country’s localised Prime programme—initially an experiment—has become a model for tailoring services in other markets such as Mexico. With offerings like Prime Lite alongside the full Prime bundle, the company says 70 per cent of new Prime members are now coming from Tier-II and Tier-III cities.

 

“Now there is a well-established aspect of serving not just the heterogeneous India but the entire country,” said Ghani.

 

The Indian consumers’ focus on value has pushed Amazon to develop tools such as value dashboards and gamified in-app experiences — innovations now being adopted in other markets. 

 

Last year Amazon India launched a special store called Bazaar, featuring low-priced, unbranded fashion and lifestyle products targeting price-conscious customers. In its first full year, Amazon Bazaar has scaled significantly as visits to the platform grew four-fold, while customers transacting on Bazaar grew eight-fold, reflecting strong adoption and repeat orders. Overall, total orders grew 11 times from FY 24 to FY 25. Over 65 per cent of all Bazaar orders come from Tier-II and Tier-III cities, according to the company.

 

During the company’s recent Great Indian Festival, Amazon Bazaar saw daily shoppers increase by 150 per cent during the festive season. New customers soared by more than 400 per cent, Amazon said.

 

Amazon India has invested about ₹2,000 crore this year — on top of years of prior spending — to build and expand its supply chain network especially in Tier-II and Tier-III cities. 

 

Indian opportunities

 

The opportunity is huge. Of India’s $1 trillion-plus retail market, e-commerce accounts for 9 per cent, quick commerce 2 per cent, and organised retail 12 per cent. The remaining 77-78 per cent is the unorganised market served by mom-and-pop kiranas, Bank of America (BofA) Global Research said.

 

Within e-commerce, BofA observes a clear dispersion, where premium users are mainly on Amazon, urban and Tier-I city users are on Flipkart, and mass-market, value-focused users are primarily on Meesho.

 

Satish Meena, founder of ecommerce consultancy Datum Intelligence, said the momentum in ‘value-led retail’ is accelerating across both online and offline channels. He said consumers are rapidly moving from unbranded offline markets to organised retail platforms. Offline retailers such as Zudio, Vishal Mega Mart and D-Mart have been expanding rapidly, opening stores in tier-3 towns and beyond.

 

Meena noted that this shift has prompted larger e-commerce firms to re-evaluate their approach and push into this space to capture the volume. Earlier, when Meesho was still in its infancy stage,  large e-commerce firms didn’t invest much in scaling up value commerce business because they didn’t want to spend on building such a niche category, he said. 

 

“Now everyone wants to see if they can take a slice of that market—tapping and retaining new consumers in Tier-II and Tier-III cities by offering the same types of value-focused items these customers were buying on Meesho.” 

 

In the six months ended September 30, 2025, Meesho reported 234 million annual transacting users, up from 175 million a year earlier. Orders rose to 1,261.14 million from 824.59 million over the same period in 2024. On the seller side, annual transacting sellers climbed to 706,000 in the 12 months through September 2025, compared with 440,000 a year earlier, with each seller averaging 3,214.5 orders — a sign of strong engagement and platform stickiness.

 

Sanjeev Kumar, Meesho’s cofounder, whole-time director and chief technology officer,  said the company’s rapid growth in annual transacting users — is not driven by subsidies or discounts, but by structural efficiencies in its marketplace model. These efficiencies, he said, are difficult for others to replicate — strengthened further by the scale the company has already achieved. This includes addressing concerns about customer loyalty and repeat usage in value commerce.

 

Indeed, Meesho leads India’s value commerce, driven by its cost-efficient, asset-light model, BofA Global Research report said. The e-commerce platform, which focuses on low-pricedgoods, mirrors models like PDD and Shopee in China and Southeast Asia, and continues to expand access for millions of price-conscious consumers across India.

 

The report states that platforms like PDD and Meesho do not charge commissions to merchants and instead monetise by charging a markup on logistics and through ads. To expand 

 

their market further, these platforms are looking to reduce logistics costs—either by negotiating well with third-party logistics (3PLs) or by in-sourcing more.

 

Everyday low prices

 

Reflecting this trend, Meesho is focused on providing ‘everyday low prices’ for consumers, enabling them to find low-priced products on the platform without having to rely on promotions. This is enabled by the zero-commission model for sellers, which reduces the average cost charged to sellers on Meesho. There is also low-cost order fulfillment enabled by the platform’s scale and Valmo, Meesho’s delivery arm. It also includes a technology-first operating model that enables the company to reduce costs and increase efficiency as it scales.

 

What is crucial is that Meesho uses artificial intelligence (AI) to personalise recommendations, improve seller tools and reimagine the shopping experience for consumers. 

 

Kumar of Meesho said that the firm has  built an in-house AI stack, the Bharat ML Stack, which allows engineers and data scientists to deploy new AI algorithms efficiently at scale. “On a daily basis, it processes about close to 2 petabytes of data,” he noted.

 

These efforts have paid off. Meesho, one of India’s first major ecommerce platforms preparing to go public in December, has turned free-cash-flow positive despite posting losses in FY26.  Kumar said Meesho generated about ₹1,010 crore in positive free cash flow in FY25, including interest income, as accelerating order growth and a low-cost logistics network offset continued losses.

 

The company is now betting big on AI, logistics efficiency and advertising to drive sustainable margins as it seeks to raise ₹5,421.05 crore through its initial public offering (IPO).

 

One of the crucial aspects behind Meesho’s rapid growth is its zero-commission model that lowers seller costs, enabling everyday low prices that drive massive seller onboarding, user growth, and order volume in price-sensitive tier-2 and tier-3 markets. Industry executives said this is compelling other large e-commerce firms to launch similar models.

 

For instance, Flipkart recently rolled out a revised seller rate-card that introduces a zero-commission model for all products priced below ₹1,000, a move the company says will simplify cost structures, encourage competitive pricing and reinforce its appeal to small and medium-business sellers.

 

The initiative also extends to its value-oriented platform Shopsy, where zero-commission has now been applied across all price tiers — a push to capture the hyper-value segment for both sellers and price-sensitive consumers.

 

“The introduction of the zero-commission model marks an important step toward removing entry barriers and enabling more regional, niche, and emerging brands to participate confidently in the digital economy,” said Sakait Chaudhary, senior vice-president and head of marketplace at Flipkart. 

 

As established players like Amazon and Flipkart adjust their strategies, investors are watching closely to see which models will capture different segments of India’s fragmented market.

 

Ashutosh Sharma, head of India ecosystem at Dutch technology investor Prosus  which counts Meesho among its portfolio firms, said India’s market is extremely diverse, unlike the largely homogeneous US market. Multiple languages, varied demographics, wide differences in discretionary spending and uneven digital maturity mean consumers behave very differently online. For some, shopping means searching and researching; for others, even typing is hard — and many simply browse. Because of this diversity, Sharma said, it’s hard to imagine a single product winning all of India. Instead, different models will find product-market fits with different segments. “Is it value-commerce, browsing-based commerce, audio commerce, social, or live? For all these innovations, we will find different product-market fits,” he said. Prosus, he added, is actively evaluating these various models. 

Low-price playbook

 

• Meesho leads India’s value-commerce segment with a cost-efficient, asset-light model
• India’s ecommerce penetration is 9% of retail; GMV expected to grow at 20%+ CAGR in FY26-29
• Growth driven by quick commerce for affluent users and value platforms like Meesho for the mass market
• India’s $1 trn retail market: 9% ecommerce, 2% quick commerce, 12% organised retail, 77-78% unorganised kiranas
• Value-commerce platforms (PDD, Shopee, Meesho) scale via cost efficiency, real-time consumer feedback, and merchant competition

 

Source: Bank of America Global Research, media reports