India’s e-commerce market is showing a meaningful evolution — from explosive, discount-led spikes to steadier, efficiency-driven growth. Fynd’s Festive Season Report 2025 shows that e-commerce penetration is set to exceed 11% of total retail sales in 2025, backed by stronger omni-channel fulfilment, rising adoption in Tier-2 and Tier-3 markets, and more disciplined pricing. Fynd+1

From discounts to operational strength

The festive cycle of Sept–Oct 2025 (Onam, Navratri, Dussehra, Karwa Chauth, Diwali) was less about deeper markdowns and more about availability, speed and value. Average discounts moderated (reported to fall to ≈34%), returns and RTOs improved, and brands emphasised placing inventory closer to demand rather than relying solely on promotions. These shifts point to an industry optimising for margin and reliability rather than purely volume. afaqs!+1

Tier 2 & 3 cities are the new growth engine

A striking takeaway: Tier-2 and Tier-3 cities together drove ~65% of orders, with Tier-3 alone contributing ~46% — a clear signal that digital retail is penetrating deeper into India’s hinterlands. Brands that tune assortments, pricing and fulfilment to regional realities will capture the next wave of scale. The Times of India+1

Category dynamics — footwear leaps forward

Footwear’s contribution jumped dramatically — from ~7% to ~33% of festive fashion sales — indicating growing consumer comfort buying fashion items (beyond apparel) online, and signalling opportunity for focused assortment and size/fit strategies. Fibre2Fashion+1

Market concentration and payments

Marketplaces remain concentrated: Myntra + Flipkart accounted for ~89% of order volumes in the fashion/footwear segment for the sample brands. Digital payments are now mainstream — ≈53% of festive transactions were prepaid — though COD still matters in smaller towns, creating a hybrid payment landscape. afaqs!+1

Omnichannel fulfilment — stores as micro-warehouses

For the first time in the dataset, store-based fulfilment levels matched warehouse fulfilment, underscoring how physical retail networks are being repurposed as fulfilment hubs to improve speed and proximity. This model reduces last-mile cost and improves delivery SLAs for regional demand spikes. Fynd+1

What this means for brands & retailers

1. Operational excellence beats promotions — invest in inventory placement, returns management and last-mile efficiency. Fynd

2. Regional-first assortment — design SKUs and pricing for Tier-2/3 preferences (colors, comfort, price bands). SocialSamosa

3. Payments strategy — build trust for prepaid (offers, simple refunds) while keeping COD viable where needed. Business of Food

4. Partner smartly with marketplaces while building brand D2C channels and leveraging stores as fulfilment nodes. Fynd+1

Conclusion

Fynd’s Festive Season Report 2025 shows an e-commerce market maturing from headline discounts to durable capabilities: deeper reach into smaller cities, category shifts (notably footwear), stronger payments adoption, and omnichannel fulfilment that turns stores into competitive assets. With national e-commerce penetration projected to cross 11% of retail sales in 2025, the winners will be retailers who prioritise operational agility, regional relevance, and trust-building over one-time promotional spikes. The playbook for scalable, profitable growth in India is now operational — not just promotional. Fynd+1