Flipkart’s fashion problem: Can Gen Z save its fading style empire?

But by 2020, the familiar listings on Flipkart started to feel limited. The prices, once appealing, seemed less so as her children started rapidly outgrowing their clothes. For a short while, she switched back to purchasing apparel from the local market in Lucknow.

Then came Meesho. Suddenly, Garima found herself once again scrolling through a wide array of options, often from local sellers, at prices that made her budget-conscious heart sing. “To be frank, I don’t care if it’s a big brand or not," Garima says over a phone call. “My kids are growing so fast. I just need cheaper clothes of decent quality. Why pay more for a name they’ll outgrow in six months?"

Garima’s pivot is more than just a personal shopping preference—it’s a symbol of a seismic shift in online purchase patterns occurring across India’s metro and non-metro markets. For years now, Flipkart has been dominating the online shopping landscape, transforming the shopping habits of millions across categories, especially fashion. But now, as customers like Garima prioritize affordability and variety over brand names, Flipkart finds its grip on the fashion category slipping.

The Walmart-backed company’s market share (without subsidiary Myntra) in the online lifestyle category, which includes clothing, footwear, jewellery, bags, and other accessories, contracted from 27.3% in 2021 to 22.4% in 2024, per estimates by market research firm Datum Intelligence. In the same period, Meesho has maintained its share in the 14% range, while Reliance Retail’s Ajio has climbed to 9.3% in 2025 from 4.4% three years ago.

Vijay Sharma, senior director at Flipkart Fashion, declined to comment on the market share data, but said that the segment continues to be among the fast-evolving levers of the Flipkart ecosystem.

“Flipkart Fashion continues to be one of the most vibrant and fast-evolving parts of the Flipkart ecosystem, driving deep engagement as Indian shoppers shift from brand-led searches to trend-led discovery," Sharma said in a detailed interview with Mint. Electronics and fashion now stand among Flipkart’s largest segments in terms of sales.

Meesho’s meteoric rise and the volatile dynamics of India’s fashion landscape have resulted in the market leader feeling the heat in recent years, prompting it to shift focus to Gen Z audiences and hope that the emerging cohort will give it a new identity. Moreover, the performance of the fashion segment—still its top engine for new customer acquisition—now shoulders the pressure of determining investor confidence and the eventual valuation of Flipkart’s anticipated 2026 initial public offering, said a growth-stage investor tracking the e-commerce businesses, who asked not to be identified.

“For an e-commerce business, the performance of its high frequency-purchase categories is a crucial metric," the investor said. “The market is likely to look into finer details like customer acquisition costs and lifetime value to determine the valuation multiple, and that’s where the performance of its top categories will matter. But with the listing still at least a year away, Flipkart has the time to fix the broken parts," the investor added.

‘Fashion ka Capital’

Following books and electronics, Flipkart made a measured entry into fashion in 2012 under the leadership of co-founders Binny Bansal and Sachin Bansal, starting with a handful of fast-moving products such as basic T-shirts, shoes, and bags.

The e-commerce giant quickly discovered that lifestyle wasn’t just a new vertical, but an unexpected and critical growth engine, thanks to high-purchase frequency and the sizeable ticket sizes of apparel. In May 2014, Flipkart acquired rival fashion retailer Myntra in a cash-and-stock transaction, one that was at the time considered the largest deal in the fast-growing online commerce ecosystem. The deal valued Myntra at around $330 million and was expected to help the company compete better with Amazon India, Snapdeal, and other rival e-commerce players.

Two years later, Flipkart acquired Jabong through Myntra in a cut-price deal that valued the online fashion store at $70 million. While the deal was a distress sale, it gave Flipkart access to Jabong’s 1,500 international high-street brands, sports labels, Indian ethnic and designer labels and over 150,000 styles from more than 1,000 sellers.

Myntra and Jabong together generated $1.2 billion in gross merchandise value (GMV) in the financial year ended March 2018. When Walmart bought a majority stake in May 2018, Myntra is said to have comprised $5.5-6.5 billion of the $21 billion value at which the Flipkart group was bought.

By the end of 2018, Flipkart’s own fashion vertical along with Myntra and Jabong held close to 70% of the online fashion market. But competition in the fashion industry was picking up fast, necessitating a strategy shift. It was then decided that Myntra would serve premium customers and Flipkart would focus on affordable apparel.

Flipkart next rolled out a marketing campaign titled ‘India Ka Fashion Capital’ to position the e-commerce platform as a go-to destination for all things fashion, especially in tier-II cities and beyond.

“The marketing campaign created quite the buzz. The tagline as well as endorsement by Bollywood celebrities Ranbir Kapoor and Alia Bhatt helped generate immense recall," said a former Flipkart employee, on condition of anonymity.

The campaign contributed to a 1.8x increase in the number of monthly average users as well as a 49% increase in new customers who visited the platform, according to a 2019 blog post by the e-tailer.

Fashion and grocery became the cornerstones of the company’s growth vision. Back in October 2020, chief executive officer (CEO) Kalyan Krishnamurthy, in an interview with Mint, identified both sectors as largely underpenetrated.

Broken metrics

However, a lot has changed since. In grocery, Flipkart is desperately trying to catch up in the quick commerce arena, lagging behind nimble rivals such as Zomato-owned Blinkit, Swiggy Instamart, and Zepto. Fashion, on the other hand, is seeing the downsides of a crowded market as well as the broader consumption slowdown.

Flipkart Internet, which runs the core marketplace, posted a 14% increase in revenue for 2024-25 to ₹20,493 crore, while its net loss fell 37% to ₹1,494 crore. The growth rate, however, was slower than the 21% jump a year earlier, reflecting the broader weakness in consumer spending online. Flipkart did not reveal its category-wise revenue breakup.

“Fashion is an easy category to enter, but hard to scale," said Satish Meena, analyst at Datum Intelligence.

The fashion segment accounts for nearly three-quarters of India’s $130 billion e-lifestyle market, according to a 2024 report by Bain & Co, making it a crucial category to chase.

Apparel brings margins in the range of 40-60% for sellers, with luxury products offering as much as 80%, according to Meena. Most other categories like home furnishings and electronics typically offer margins of 30-35% with food and grocery ranking last at 15-20%.

However, the category is plagued by the highest return rates, constant changes in seasonal inventory, and complex sizing issues—a dangerous blend that makes building a reliable, scalable supply chain exceedingly difficult.

Flipkart’s Sharma declined to comment on the composition of its user base. But in small-town India, where analysts estimate the bulk of Flipkart’s user base sits, Meesho has changed the game. “Meesho built an entirely different value proposition. With its no-commission model and portfolio of local sellers pushing unbranded and high-demand products, it created a market that didn’t exist online," said Kushal Bhatnagar, associate partner at Redseer Strategy Consultants.

Within a decade, Meesho won the online value retail game on the back of its small and medium seller base.

Meesho’s updated IPO draft papers (a public offering is expected in December-January) showed that its annual transacting user base has grown 45% in the last two years alone, from 136 million in FY23 to 198 million in FY25, with every user transacting nearly nine times a year compared to 7.5 times two years ago. Its seller base grew to 515,000 in FY25, from 440,000 in FY23. During this period, the company’s operating revenue rose as much as 63% to ₹9,389 crore in FY25.

Sharma did not disclose similar numbers for Flipkart, beyond saying that the company’s fashion marketplace seller base grew 16% in FY25 over the previous year, without indicating the base. Sharma also said the company’s customer base in metro cities grew 34% over the same period, again without providing any base.

Flipkart’s fashion conundrum also highlights a larger problem of an absent identity, according to Datum Intelligence’s Meena. “Flipkart and Amazon used to be the platforms people went to when they wanted unbranded, basic apparel. Myntra and Ajio have always been for premium and luxury brands. Now, with Zudio and Westside, Trent is offering an affordable selection and quick commerce platforms are serving basic fashion within minutes. Where does Flipkart really stand?" he wondered.

Sharma, however, emphasized that Flipkart operates across price points with most of its new customers coming from the value segment. “We are uniquely positioned to serve both premium and value-conscious customers with equal ease," he said.

While competitive intensity is on the rise, Sharma insists that Flipkart’s fashion segment has held steady. “Nearly 1.5 million new people are shopping on Flipkart Fashion every month. We are seeing very healthy double-digit growth in terms of new customers," he said.

But the tough macroeconomic conditions in the last 12 months have presented challenges for the online fashion industry. Beauty retailer Nykaa’s fashion arm has been a drag on the company’s bottomline for more than four quarters now, reporting marginal increases in operating revenue.

Simultaneously, traditional apparel behemoth Aditya Birla Fashion and Retail (ABFRL) is experiencing a marked growth slowdown, while Shoppers Stop reported a fall in quarterly profits in the July-September period.

Meanwhile, hyper-affordable physical rivals such as Zudio are successfully undercutting online players on price, proving that the digital-first model may not be the best model in India’s price-sensitive, volatile fashion landscape.

Chasing trendsetters

With IPO preparations underway, Flipkart is now executing a high-stakes strategy shift, betting the firm on the notoriously fickle Gen Z consumer (those born between 1997 and 2012) to build a new trend-led identity. This pivot aims to replace the value-conscious customers it has lost with a high-engagement, albeit high-churn, young demographic.

In August 2024, the company rolled out a new offering named Spoyl, which it said was aimed at GenZ users. It is available within the main Flipkart app as an ‘app-in-app’.

About a quarter of Flipkart shoppers are GenZ users, the company said in a statement. Spoyl offers more than 40,000 products in categories such as western wear, accessories and footwear.

Nearly 50% of Flipkart Fashion customers today are Gen Z, Sharma said. “Over the past year, we’ve leaned into this shift by building Gen Z-focused programmes, enhancing trend freshness in search, and bringing video and creator-led content directly into the shopping journey, creating a truly immersive fashion experience," he explained.

In September, Flipkart acquired a majority stake in infotainment platform Pinkvilla, aiming to benefit from its robust reach in the entertainment (mainly Bollywood) world, building on trends that millennials and tech-savvy Gen Z shoppers are chasing.

This cohort has increasingly become a focus area for consumer-facing brands over the last few years. Bain & Co’s 2024 report noted that the age group accounts for 25% share of GMV for the e-lifestyle segment, valued at around $4 billion in gross merchandise value.

Flipkart is also increasing its focus on video commerce, a format that lends itself well to a visual category like fashion.

While effective for driving traffic, the pivot to Gen Z can be volatile and expensive. This cohort, defined by their digital fluency and anti-loyalty, is notoriously high-churn.

“They demand constant novelty driven by the relentless cycle of global fast fashion and its hyper-affordable aesthetic. Gen Z consumers are experts at navigating platforms to find the lowest price for the current micro-trend, whether it’s on Flipkart, Ajio, or a newer disruptor," said Datum’s Meena. “This forces platforms to engage in a costly arms race of flash sales and aggressive customer acquisition costs. This is Flipkart’s way of gaining temporary attention from the fastest-moving, least-committed segment, making the long-term profitability of this strategy a major gamble," he added.

But Flipkart’s Sharma said sales are picking up. “We’re seeing clear momentum across the board: value-led fashion continues to grow strongly, led by women customers from emerging cities," he said.

Flipkart may be signalling clear momentum in value-led fashion and Gen Z adoption, but the market must weigh these gains against an uncomfortable strategic trade-off. It is replacing a loyal, predictable customer base (like Garima) with a high-turnover demographic that necessitates costly investment in video, influencers, and constantly refreshed inventory.

For a company attempting an initial public offering in the next two years, the challenge is not just in increasing gross sales, but also in convincing sceptical investors that the 50% Gen Z base is driving growth. The coming quarters will determine if Flipkart has truly found its new fashion identity or if the cost of chasing the trend-driven, anti-loyal youth proves too high to secure its anticipated 2026 IPO valuation.