E-commerce trio Flipkart, Amazon, Myntra growth slows to 17% as profitability improves

The combined sales of Flipkart, Amazon and Myntra (FAM) rose around 17% between FY23 and FY25, a sharp moderation from over 50% CAGR during FY15–20 and nearly 30% in FY20–23. Of this 17% growth, about 7.8% was led by higher user penetration, while the remaining mirrored nominal GDP expansion, according to a report by Elara Securities.

“In India’s e-commerce space, incremental growth is now becoming GDP-elastic,” said Karan Taurani, EVP, Elara Securities. “User penetration is at 230 million, or just 17% of the population, compared with China’s 60%, leaving ample headroom for expansion.”

In FY25, FAM’s revenue stood at ₹56,700 crore, up 17% year-on-year and 12 times higher than a decade ago, reflecting a 37.3% CAGR. The decadal shift from unorganised to organised retail supported this expansion, though growth momentum has cooled.

Competition is now intensifying from vertical platforms such as quick commerce, beauty and personal care players, and fashion-led brands. “Quick commerce has already captured 5% of e-commerce, and expansion into non-food categories could further weigh on FAM’s growth,” Taurani said. The three platforms’ efforts to accelerate delivery, through initiatives such as Flipkart Minutes, Amazon Now and M-Now, are attempts to defend share in metros.

Profitability gains ahead of IPOs

Discussions on potential IPOs for Flipkart and Amazon are coinciding with a focus on cutting burn rates. In FY25, FAM’s bottom-line losses narrowed 77% year-on-year to ₹1,300 crore, compared with an average of ₹8,100 crore in the past five years. Cumulatively, the trio has lost Rs 71,400 crore between FY16–25 on revenues of ₹2.6 lakh crore.

On the operating front, Amazon and Myntra reported EBITDA margins of 9.2% and 7.4% respectively in FY25, while Flipkart cut its losses by 37%. “Amazon and Myntra’s margins potentially answer questions around the viability of e-commerce in India,” Taurani said.

One persistent cost burden is returns, which range from 18–30%, and are higher in fashion. Platforms have sought to lower this through shorter return windows (10–15 days versus over 20 earlier), better reviews, product authentication and size standardisation. Inspired by food delivery and quick commerce, Flipkart and Myntra have also introduced platform fees of ₹7–20 per order.

Ads emerge as profit lever

Advertising has become a crucial profitability driver for e-commerce. In FY25, FAM’s ad revenue reached ₹156 billion, up 26% compared with 17% overall revenue growth. Ads now account for 30.8% of Flipkart’s revenue, 27.7% of Amazon’s and 15.1% of Myntra’s, versus 10–15% six years ago.

“Ad income formed 21% of India’s digital advertising share last year, making e-commerce one of the largest contributors,” Taurani said. “This has been fuelled by intense competition among brands for visibility.”

With ample penetration headroom and a low starting base, quick commerce’s ad revenues could grow at 50–60% annually, compared with 26% for FAM. This trend, Taurani pointed out, “bodes well for programmatic ad firms such as Affle, which stand to benefit from the rising digital ad intensity.”

Challenge from vertical commerce

While India’s long-term e-commerce outlook remains bright, with penetration still at 17% of the population, the rise of vertical platforms poses a structural challenge to horizontal leaders. Quick commerce (5% of e-commerce) is emerging as a credible threat not just in groceries but increasingly in categories such as beauty and personal care, where incumbents like Nykaa may also face pressure. Although, FAM’s steps to serve in 10 minutes may protect share loss in metros. 

At the same time, the broadening assortment in quick commerce could weigh on traditional beauty and personal care players. “Quick commerce players like Zepto and Swiggy are favourably placed versus Nykaa, given the frequency of purchase and convenience-led adoption in categories beyond food,” Taurani said.

“We retain our positive stance on quick commerce due to the low base of ad income and the salience potential it carries, with focus on category expansion,” he added.