BENGALURU, May 25 -- Flipkart is betting that the next phase of Indian e-commerce growth will depend less on discounts and delivery speeds and more on getting millions of smaller-town consumers comfortable buying online.

That shift is reshaping Shopsy, the Walmart-owned company's hyper-value platform, into a feed-led app built around games, rewards and artificial intelligence (AI)-powered recommendations aimed at keeping users engaged even when they are not shopping.

The redesign reflects what Flipkart executives internally describe as a "penetration problem" in Indian e-commerce: much of Bharat is still not digitally native enough to habitually shop online.

"Pushing users to shop cannot be the strategy," Sakait Chaudhary, senior vice-...