BENGALURU: Amazon is selling nearly as many items as Flipkart even as India's largest online retailer outpaces the American company on the total value of goods sold in a market where Alibaba-backed Paytm Mall and Shop-Clues are jostling for third position. Snapdeal , backed by Japan's SoftBank , which was India’s third-largest online retailer, has slipped to fifth place in terms of volumes, signalling the tumultuous change underway in one of the world's fastest-growing markets for digital commerce.In March, market leader Flipkart — which also owns fashion portals Myntra and Jabong — recorded an average of 5 lakh shipments every day while Amazon closed in with about 4.5 lakh daily shipments, according to multiple executives in the ecommerce and logistics industries interviewed by ET. Snapdeal saw its volumes dip significantly to 30,000 a day from a high of 1.5 lakh daily shipments in March 2016, the sources said.Shipments denote the total number of orders processed and dispatched by online retailers, including returns."Flipkart continues to remain ahead of Amazon India in terms of gross sales," the people cited above told ET.While investors and analysts estimate that Flipkart's annualised gross merchandise value or GMV — which is a measure of the total value of products sold on the platform – is at a little over $4 billion, sources close to the company said the Tiger Global-backed company clocked gross sales of $6 billion at the end of March 2017.Amazon's annualised GMV is expected to be over $3.2 billion, according to sources familiar with the growth of the company. Online marketplaces typically earn a commission of 5-15% on each item sold depending on the category."We continue to see tremendous momentum despite our scale, growing at about 85% in Q1 this year. We cannot offer comment on any other financial details," said a representative for Amazon India in an emailed response.Flipkart COO Nitin Seth said the group's GMV went up by over 45% in March. He declined to share specific numbers. Snapdeal and Paytm declined comment.This fierce battle for top honours in the $16-billion Indian online retail industry comes at a time when intense parleys are underway to redefine the contours of the industry, led primarily by a proposed buyout of Snapdeal by Flipkart.Separately, Paytm and Flipkart are looking to snap up FreeCharge, the digital payments arm of the Delhi-based company.These moves to consolidate forces have also been occasioned by slowing growth –mainly due to reduced discounts by marketplaces as well as the impact of demonetisation on an industry that relies heavily on cash-on-delivery.The overall market is expected to grow just by 15-20% in 2017 in terms of gross sales, said senior executives and investors.Meanwhile, the total items sold remained flat at 100-110 million items during the first quarter of 2017, according to market research firm Red-Seer Consulting. Data from global consulting firm Alvarez & Marsal also paints a similar picture.Experts are of the view that even as they joust for market share, the biggest online retailers will have to focus on improving unit economics as market size will not continue to double like it did in 2014 and 2015. Growth is expected to range up to 40% at the higher end for the next few years, analysts said."Marketplaces will look to increase the commissions earned from merchants as well as from chargeable services to consumers, reducing operational costs (including manpower), and rationalising marketing expenditure whose efficacy isn't really being monitored," said Devangshu Dutta, chief executive at consulting firm Third Eyesight who expects 2017 to be a year of consolidation.Flipkart's strong gains in terms of the value of sales in fiscal 2017 was led by its dominance in key categories such as fashion -- where it claims a 65-70% marketshare -- and an impressive comeback in the smartphone segment after the relatively flat sales in 2015 and till mid-2016. In the first quarter of 2017, Flipkart increased its share in the smartphone category to 57% while Amazon India had a 27% share, according to data from Counterpoint Research. In the whole of 2016, Amazon increased its share to 31% in this category while Flipkart slipped to 44%, the research firm said.Amazon India's surge in sales volume comes from its focus on daily essentials, or fast-moving consumer goods category, a low average sale price (ASP) category which has driven volume growth for it over the last 12 months."While higher GMV means more sales, higher orders mean more customers or more orders from the same customers, both are desirable for the sizeable growth of the industry," said Krishna Choudhury, senior business analyst at RedSeer Consulting."The growth of orders is highly crucial for the overall long-term sustainability of the market," he said.Grocery will drive this rivalry deeper in 2017 as Flipkart is also looking to enter this space and is likely to drive volume growth.Flipkart and Amazon India, who have between themselves raised or committed $10 billion to the online retail market, will need to innovate and work harder to find growth.While the Indian internet user base is pegged at 300-350 million, only a small fraction of this has started purchasing online retail products, said Flipkart CEO Kalyan Krishnamurthy at an industry event earlier this month. "The unique user base which buys products in a month is still in single digit millions," said Krishnamurthy, indicating that the number is less than 10 million."Solving for unbranded low ASP categories is very difficult. All of us have to up the ante for this. This is where the difference between playing in the business versus solving for the business come in."