We all shop online and we often, thank our stars for not having to step out in the hot sun or during torrential rains to shop as our heart desires. Online shopping has been a blessing devoid of disguise to the shopper of the twenty first century. But in a developing country like India, is e-retail everything it is made out to be? Is it still a playground for residents of tier I cities or has e-commerce actually penetrated the hinterlands?
If the numbers are to be believed then tier II and tier III cities are taking to online shopping in a way that wasn’t envisioned. Google India’s recent study revealed that 51% of the traffic it saw during its Great Online Shopping Festival in December 2013 came from outside the top four metros and 25% of the traffic came from cities other than the top 20. (The Pioneer) Reports chronicling online players talk about how 50% of sales for top online retailers come from tier II, III, and IV cities. (Business Standard) And this number is only set to increase.
According to research firm Forrester, the e-retail market in India is set to touch USD 8.8 billion by 2016. (ETRetail.com)With only 20 million of the country’s 200 million internet users transacting online, some analysts claim that thanks to increasing awareness and growing reach, the figure could even touch USD 16 billion by 2018. (Business Lounge)
What has brought about this expansion of customer base? One factor is the growth in mobile usage. The Google study reported that almost 30% of shopping queries in India come from mobile phones. (The Pioneer)With an increase in brand awareness of big labels, a growth in the spending power that people have and the ability to pay for the product on delivery (which allays any fear of online banking), and you have a formula for success.
Online retailers at their end are doing their very best to ensure that customers return to their site. They are using social media marketing and online advertising to market their sites to users. With demographic targeting, they are reaching out to potential customers. In fact that is not all. Several online stores are taking to the offline world by opening up kiosks and pop-up stores to educate customers about online shopping. And all these branding exercises are working their charm.
With the tier II and III cities embracing the online shopping movement with such enthusiasm, does this signal the end of the mall culture in these cities even before it started or does it just mean more avenues for more players? Only time will tell. But with online retail taking off, I am siding with the former. What do you think?
Sources: Business Lounge - eBay Pours More Money into India, 3rd March 2014, Business Standard - 50% of business coming from tier II & III cities, 26th March 2014, ETRetail.com - Flipkart sales run rate hits USD 1 bn, 10th March 2014, The Pioneer - Tier II and Tier III cities driving E-commerce in India, 13th April 2014