“It’s been a fairy tale,” says Ambareesh Murty, cofounder of Pepperfry<\/a>, a furniture e-tailer that claims sales are up 50% from a year earlier. Comeback kid Snapdeal<\/a> has witnessed 52% growth in demand this Diwali, driven largely by shoppers from non-metros.
“Snapdeal’s business volumes have more than doubled in 120 non-metro cities including Satara, Anand, Pali, Roorkee, Jhansi, Haridwar, Tezpur and Hassan,” a company spokesperson said. Nine of 10 orders on Snapdeal were from non-metros.
K Ganesh, serial entrepreneur and partner of Growthstory.in, a platform for startups, says the number of consumers has grown and its portfolio companies BigBasket and BlueStone have seen a 70-80% increase in transactions. Online jewellery e-tailer BlueStone says the spend per order per year has increased to Rs 50,000 to Rs 60,000 now from Rs 20,000 to Rs 40,000 over the past few years.
Chinese e-tailer Club Factory has seen a faster growth rate in tier 2 & 3 cities in West Bengal, Bihar and Telangana.
“Net increase in metro cities remains strong as people are more familiar with online shopping. Mobile phones, accessories, electronics and lifestyle items are seeing brisk sales,” says Vincent Lou, CEO of Club Factory.
Curated marketplace Qtrove, which sells non-GMO products, jewellery e-tailer Bluestone and even lingerie e-seller Clovia<\/a> have seen sales increase this festive season.
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“Thanks to Jio<\/a>, the market has expanded,” says Pankaj Vermani, CEO of Clovia, referring to the cheap data plans offered by telco Reliance Jio Infocomm. “Our average ticket size has gone up by 10% and this time we have seen a rise in demand for nightwear and high-end lingerie with a higher consumption in tier 2, 3 towns like Saharanpur and Meerut.”
Cheaper data plans have contributed to expanding mobile internet and getting more e-shoppers on board. According to the Snapdeal spokesperson, only 100 million of India's 440 million internet users have shopped online. However, the market is now expanding beyond the first 100 million e-commerce buyers.
“The trends we have seen from Diwali sales are an unequivocal confirmation that e-commerce is now a strong channel for buyers in smaller cities,” he added.
Snapdeal has noticed growth in the middle and lower ends of the market as more value-conscious customers came in.
“Unbranded merchandise from bazaars has started to move online to cater to this demand,” the spokesperson added.
At Pepperfry, its omnichannel strategy – it has 65 stores where people can see, experience and buy online – paid off and sales are up 50% from last season. The company is also looking at raising $20 million and going public in 2020.
A noticeable difference this time was the rise of the first time, nonmetro, online shopper who’s actually buying from her smartphone. According to Snapdeal, first-time users surged across cities such as Nashik, Surat, Chandigarh, Panaji and Guwahati and the overall growth in first-time users was 2.3 times year-on-year.
Ganesh of Growthstory attributed the surge in the tier 2 and 3 e-shopper to better internet services and almost free bandwidth, vernacular language enablement by e-commerce companies, ease of payments like scan and pay, and overall lower levels of penetration of e-commerce in smaller towns.
According to Harsha Razdan, partner and head for consumer markets, retail and internet business at KPMG India, “Regional localisation and fulfilment centres and festive season offers, catering particularly to regional customers, have helped.”
Razdan said the rural population, which makes up 60% of the country’s population, is yet to be tapped to its full potential.
“Tier 2 and 3 towns and rural areas will become the next battleground of growth for e-commerce companies,” he said.
The growth of smaller e-commerce companies during this festive season has shown that while the top two may have cornered the lion’s share of business, there is still potential for growth – less than 5% of retail is online – and there’s room for many more platforms.
However, the smaller companies still need sort out a few things. According to Razdan, these include product range, quality and trust, supply chain costs, and the cost of customer acquisition.
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