Cities that are not megacities are becoming the main growth engine for Amazon India. According to Saurabh Srivastava, Vice President of Amazon India, about 70–80 percent of the company's new customers come from these regions. Furthermore, there is a growing demand for more expensive goods in smaller towns, and the Amazon Now fast delivery service is expanding its presence.
Saurabh Srivastava noted that almost 70–80 percent of new buyers come from cities outside megacities. Moreover, about 70 percent of new Prime customers come from second and third-tier cities. He added that Prime customers make purchases five to ten times more often than non-Prime subscribers.
Details on Growth and Premiumization
This shift in customer growth structure is accompanied by an increasing trend towards premiumization in smaller settlements. Amazon observes that consumers outside large cities are increasingly choosing higher quality and higher price category products across all product groups. Srivastava emphasized that the center of gravity of purchasing activity has shifted towards second and third-tier cities, which is reflected in the company's new growth.
The company also sees customers in these markets moving up the value chain within product categories. For example, in the smartphone segment, more than half of sold devices now cost 30,000 rupees or more, whereas previously the 15,000–20,000 rupee price category predominated. This trend is not limited to expensive electronics; Srivastava cited examples of consumers switching from 200 rupee moisturizers to Korean beauty products costing 600–800 rupees, and from 200 rupee sheets to items costing around 1,200 rupees.
The transition to more expensive goods occurs despite higher prices in some consumer categories. Amazon helps consumers purchase higher-priced items through affordability offers such as Amazon Pay Later, cashback, and low monthly installments (EMI). According to Srivastava, the use of such affordability mechanisms is growing, allowing buyers to acquire items they might have previously considered unaffordable.
During the festive season, Amazon expects customers to expand their range of purchases. The company tracks the number of categories from which a customer makes purchases as an indicator of engagement, alongside the number of Prime customers. In terms of units sold, daily necessities and fashion remain the mainstays, while electronics, mobile phones, and major home appliances account for a larger share of the total value.
In preparation for sales, Amazon launched 20 new fulfillment centers, six new sorting centers, and 150 new last-mile delivery stations in 118 cities. This expansion increases warehouse capacity by 50 percent, reaching 64 million cubic feet. Additionally, seven new fulfillment centers and all new sorting centers are located in cities outside megacities. This is part of investments exceeding 280 billion rupees in Amazon's operations network in India by 2026.
The company has also introduced zero commission for sellers in certain categories, including lifestyle goods, apparel, footwear, beauty, home goods, and daily necessities.
Simultaneously, Amazon is scaling up its Amazon Now quick commerce service, which currently operates in 120 cities, including Amritsar, Abohar, Jalandhar, Ambala, Mangalore, Manipur, Vizag, Kochi, Chengannur, Bhubaneswar, and Karwar, among others. Srivastava reported that Amazon Now is the fastest-growing e-commerce division in Amazon India's history, as orders double every quarter since launch, and it reached an annual revenue of $1 billion in India in the last three months. The company is investing in local and regional assortment, sourcing city-specific fresh produce, and its micro-fulfillment system, operating nearly 800 micro-fulfillment centers and city fulfillment centers.
Srivastava added that the average order value of Amazon Now has exceeded the 500 rupee level recorded at the service's launch, currently standing at around 550 rupees. The company expects this figure to increase significantly during the festive period. In terms of unit volume, daily necessities remain the largest category in Amazon Now, while the company is adding categories such as home goods, kitchenware, and electronics to broaden its assortment.