GST cut drives ecom infra push in smaller cities amid quick delivery boom

Platforms expand infrastructure to smaller cities as GST reforms and instant delivery reshape retail landscape.

Ziro, a remote valley-town in Arunachal Pradesh known for its annual rock festival, is not easy to get to. The nearest railway station, Naharlagun, is 100 km away. From there, it takes hours to reach the town through winding mountain roads, often blocked by rain-trig- gered landslides. 

 

So it was a surprise when a Flipkart delivery partner promptly transported large premium appliances to a customer's doorstep in Ziro during the company’s recent The Big Billion Days (TBBD) sale. The seamless delivery to the isolated region shows how ecom- merce firms are leveraging massive infrastructure investments and favourable tax policies to reach pre- viously untapped markets.

 

This transformation extends far beyond deliveries. India’s 2025 festi- val shopping season marks a structural shift as Amazon and Flipkart harness GST 2.0 reforms — which cut appliance taxes by 10 per- centage points — and deploy instant commerce capabilities to capture pre- mium demand in Tier-II and -III cities. 

 

The platforms have expanded warehous- ing capacity by millions of cubic feet, while premium electronics sales have doubled in smaller markets, signalling a permanent transformation that could reshape consumer behav- iour and supply-chain econ- omics for years to come. 

 

“Appliances this year are the fastest-growing category for us. People were waiting for the GST changes to kick in,” Pratik Shetty, vice presi- dent, growth and market- ing, Flipkart, told Business Standard. “This is probably the best we’ve had in the last three or four years.” 

 

Flipkart recorded a 21 per cent increase in user visits during the opening days of TBBD 2025, which started on September 22 midnight and ends this week. The Walmart-owned platform saw a 26 per cent year-on- year (Y-o-Y) growth in pre- mium product purchases across mobiles, televisions, and refrigerators. 

 

Cities beyond major metros, including Indore, Surat, and Varanasi, showed substan- tial growth in participation. Flipkart has set an ambi- tious tone for TBBD 2025, aiming to serve a billion people this festive season. The 2025 festive season opened with robust momentum for India’s online retail sector. 

 

Total festive sales are projected to grow 27 per cent Y-o-Y to cross ₹1.2 trillion, with the first week alone generating ₹60,700 crore in gross mer- chandise value (GMV), more than half the season’s expected total, according to Datum Intelligence report. It said the GST rate cuts announced in September — reducing taxes on several large appliances and mid- priced apparel — created an additional tailwind by making many products 6-8 per cent cheaper at checkout. 

 

Experts said the GST 2.0 reforms have streamlined India’s indirect tax system by rationalising multiple tax slabs into a simpler struc- ture, particularly easing the burden on high-value con- sumer electronics. 

 

Suresh Nair, tax partner, Consumer Products and Retail, EY India, said the trend of premiumisation, where consumers opt for high-end goods, looks like it’s here to stay. “Price reductions are fuelling demand for advanced products like larger-screen TVs and energy-efficient appliances, building on existing pat- terns of urbanisation and aspirational buying in Tier- II and -III cities,” said Nair. 

 

“Overall, GST 2.0 is acting as both a festive demand cata- lyst and a long-term enabler of greater household pen- etration of electronics.” Amazon’s Great Indian Festival (AGIF) sale attracted over 380 million customer visits in the first two days, with more than 70 per cent coming from beyond the top nine metros. 

 

Customers benefitted from GST savings, access to over 100,000 products at prom- ised low prices, and more than 30,000 new launches across smartphones, lap- tops, TVs, fashion, beauty, and appliances. AGIF began at midnight on September 22 and continues for almost a month. “The first 48 hours have been our biggest ever,” said Saurabh Srivastava, vice- president, Amazon India.

 

 “In the first few days of the AGIF, we have enabled sellers to pass on savings of over ₹100 crore in GST benefits to customers.” Prime members drove demand from Tier- II and -III cities across appliances, fashion, beauty, smartphones and furniture. 

 

The members also experi- enced faster deliveries, with over three million products delivered in metros within the same or next day, and more than five million products reaching Tier-II and -III cities within two days. From air-conditioners and kitchen appliances showing double-digit Y-o-Y growth to inverter batteries doubling sales, customers saw tangible benefits from reduced GST this AGIF. 

 

Kitchen appliances recorded a 50 per cent rise in eco-friendly units sold Y-o-Y. Customers are showing a strong preference for pre- mium products, including double-door refrigerators, advanced washing machines, energy-efficient split ACs, fans, and air fryers. 

 

Smartphones recorded robust double- digit growth, with the segment above ₹20,000 growing 50 per cent Y-o-Y, driven by premiumisation. Premium TVs also gained momentum showcasing Y-o-Y growth of 23 per cent to 27 per cent for various models. 

 

Some Amazon sellers reported seven-fold increases in daily sales volume across metros and small towns. Quick commerce has emerged as a key differenti- ator, with millions seeking not just deals but instant delivery. Flipkart’s ultra-fast delivery service recorded 4.5 million unique visitors and doubled order volumes during the opening hours, highlighting the country’s rapid shift towards instant commerce even for high- value purchases. 

 

Flipkart Minutes service delivered its fastest iPhone order — in under three min- utes — during the sale’s midnight launch, with pre- mium electronics emerging as unexpected drivers of quick-commerce growth alongside traditional cat- egories such as groceries and essentials. 

 

“For the first time, mil- lions of customers are cel- ebrating the country’s biggest shopping festival not just online, but instantly, with Flipkart Minutes delivering every- thing from ice-creams to iPhones in just 10 minutes,” said Hemant Badri, senior vice-president heading Minutes and supply chain at Flipkart.

 

 The GST cut drove a 2.6x jump in new customers during Early Access pro- grammes compared to the pre-festive period. The surge extended beyond major cities, with Tier-II markets including Pune and Chandigarh post- ing four-fold increases in orders compared with regu- lar days, while metros saw volumes double. New customer acquisition on the Minutes platform jumped 160 per cent during the sale’s Early Access period, signalling broader consumer acceptance of rapid delivery across product categories. 

 

“The momentum we are seeing across metros and Tier-II+ cities signals a cul- tural shift: Shopping today is about immediacy and trust,” said Badri. The iPhone 16 emerged as the highest-selling item during Flipkart’s Early Access programme. 

 

Tata-backed BigBasket, now an authorised Apple reseller, marked the iPhone 17 launch at record speed, delivering its first order within the first 10 minutes of sales going live. Last year, BigBasket introduced iPhone 16 deliveries in three cities.

 

 This year, the service has expanded to all Tier-I markets. Legacy players, too, have been forced to jump on to the quick commerce band- wagon. Sangeetha Gadgets, a 51-year-old retail chain, has introduced 17-minute delivery of the all-new iPhone 17. 

 

The firm said this is available across more than 300 towns and spans more pin codes than any other ecommerce player in India. Experts said that large investments in logistics infrastructure by major ecommerce platforms have transformed delivery net- works, enabling premium products like high-end smartphones and appliances to reach Tier-II and -III cities more effectively. Key initiat- ives include expanding fulfil- ment centres and last-mile hubs in smaller towns, sig- nificantly reducing the delivery time in non-metro areas and boosting orders for high-value goods from these regions. 

 

“This expansion is reshaping the competitive landscape, intensifying rivalry between established ecommerce giants and emerging quick commerce players,” said Nair of EY. “Traditional platforms maintain dominance through extensive product ranges and financing options, but quick commerce disruptors are gaining ground with ultra-fast delivery models, leveraging dense networks of dark stores.”

 

Dark stores are warehouses, big and small, designed to fulfil online orders that dot the retail network. To counter this, major platforms are launching their own hyperlocal services, blurring lines and pushing hybrid models. 

 

However, for traditional brick-and-mortar retail, the implications are challenging. “As logistics and financ- ing extend into smaller mar- kets, online platforms are increasingly substituting for local stores in both essential and discretionary cat- egories,” said Nair. 

 

The competition to get consumers in the cart is getting serious.