Flipkart, which owns Walmart, Amazon is squeezing Indian startups fast

India’s fast-moving consumer goods market is growing, and the demand is more than any other player. But a quick push by Flipkart and Amazon is raising prices in a crowded space where profits remain under pressure.

Flipkart, one of India’s largest e-commerce players has seen faster sales of late than local rivals like Blinkit, Swiggy, and Zepto. But now it has passed more than 800 dark shops (online shopping centers) this week, TechCrunch has learned, and it is looking to double by the end of 2026, according to UBS.

The growth comes as India’s retail sector enters an increasingly competitive market. The stress is evident in recent events, including leaving the co-founder of Swiggy this week, as companies are reassessing the path between increased competition and cost.

The Walmart company first appearance for fast trading with Flipkart Minutes in August 2024, offering delivery in batches of less than 10 minutes. Since then, the segment has grown rapidly. More than 6,000 black shops are now in operation, creating greater connections between players in major cities and increasing competition, Bernstein said in a report earlier this week.

Beyond the big cities

Flipkart’s network in India is still smaller than that of market leader Blinkit, which has more than 2,200 dark stores, according to Bernstein. However, Flipkart is betting on expanding beyond the big cities to grow. This is different from Blinkit, which plans to expand to 3,000 stores by 2027 looking at its top 10 cities.

“Flipkart has this Walmart DNA,” said Satish Meena, founder of Gurugram-based consumer insights firm Datum Intelligence. “Walmart’s DNA has always been about maximizing opportunities to dominate the market.”

Flipkart is already seeing growth beyond the big cities, with 25-30% of its fast-paced sales now coming from small towns, a source familiar with the matter told TechCrunch. Orders on the darkroom also grew by about 25% in the month, the person said.

However, the growth of fast food is still concentrated in the big cities. Much of the demand, Bernstein said, continues to be driven by large cities, where population growth enables fast delivery and efficient use of darkrooms, even as the growth of smaller towns continues to grow.

That power also contributes to profitability. The top eight cities in India have more than 3,800 darkrooms operated by five major players, and about 3,600 of them are profitable, according to Bernstein.

“Metro markets tend to be better in terms of returns, better returns because of more leverage,” said Karan Taurani, vice president at Elara Capital, a London-based investment bank and investment firm. “This business is very high, and right now, it’s coming from the metro markets.”

However, some experts see long-term opportunities beyond the big cities. “Non-metro cities (smaller towns) can grow if companies expand beyond buying and delivering more products quickly,” said Datum’s Satish Meena. “Flipkart is betting on this.”

However, developing large cities will take time. E-commerce currently operates in about 125 cities, while dark stores typically take six to 12 months to mature and become profitable, said Aditya Soman, senior analyst at CLSA, a Hong Kong-based business. Many new retail outlets in smaller towns are still in the expansion phase, he added.

Amazon, where he entered India’s e-commerce market is booming by the end of 2024 with the launch of Flipkart, which is also expanding its presence. The e-commerce giant has sold about 450-500 dark stores so far, and about 330-370 are currently operating, according to UBS, because they seem to be growing the need for fast delivery.

Failure is rising for those in power

Flipkart is not only relying on expanding the black market to compete but also aggressive pricing. The company is offering some of the biggest discounts in the sector – about 23-24% across the board, based on a basket sample analyzed by Jefferies last month – as it looks to attract users in a market where price and convenience remain key drivers.

The pressure of such methods seems to be working. Brokerage firm JM Financial recently warned that Swiggy’s fast-paced business is caught in “growth-versus-profits” and risks that erode shareholder value, adding that a takeover by a larger, more successful player may be the best outcome for investors.

Shares of Muaya, which owns Blinkit, are down nearly 15% so far this year, while Swiggy has fallen 29%, as has Zepto. preparing to go public on the Indian market later this year.

The entry and expansion of major players such as Flipkart and Amazon are reshaping the competitive landscape. “Active marketing is no longer at the start-up stage – it has now become a game for big players,” said Ankur Bisen, senior partner at marketing firm Technopak Advisors.

He added that the economy of the sector and the limited diversity can lead to synergy, as companies compete for the same customers in the low-cost market.

Amazon, Flipkart, and Swiggy did not respond to requests for comment. Last declined to comment, while Zepto said it could not comment due to the quiet period following its IPO filing.