Priyambada Sarangi, a 55-year-old home-maker from Angul, a small industrial town in Odisha, is a happy grandmother.
She is not worried about what to gift her grandchildren, who live in Pune, on their birthdays or festivals. Sarangi, who had never heard of e-commerce sites such as Flipkart, Jabong, or even Amazon, is now spoilt for choice.
Thanks to the growing smartphone market and penetration of broadband, these small towns are creating a revolution in India’s e-commerce industry.
“Forget malls. We do not have any big shopping centres here. I find online shopping is not only convenient, but it also provides value for money. I have a range of products to choose from and can easily browse on my phone,” says Sarangi.
That is perhaps why online firms have launched mobile apps over the past year. More than 20 per cent of traffic for e-commerce sites is through mobile phones.
Market shift
For many online players, the potential market has shifted to Tier 2, 3 and 4 towns, with over 50 per cent of sales coming from these areas.
Sandeep Komaravelly, Vice-President (Marketing) at Snapdeal, says the sales growth is an indication that the consumer base has expanded.
“We are seeing a trend of premiumisation among consumers in these towns. While most are aware of big brands via Facebook, magazines, movies or television, the challenge is in finding these brands at a nearby shopping complex,” says Komaravelly. It is here that online retailers have an edge over the brick-and-mortar players.”
Fashion e-tailer fashionandyou, which started operations three years ago essentially in the metros, has realised the huge opportunity in cities such as Bellary and Tiruchi, where consumers tend to spend around Rs 3,000-6,000 per buy.
Aasheesh Mediratta, CEO, Fashionandyou, says that what started as a premium site was soon offering products at various price points. The company also started widening its product range from Western wear to ethnic-chic.
“We saw that 60 per cent of our customers were women, who bought for themselves, kids and family, so we started selling functional home decor too,’’ he says.
Offline marketing
E-tailers are also tuning into offline marketing strategies to woo customers. Myntra advertises in multiplexes across cities such as Kochi, Bhubaneswar, Jaipur, Lucknow and Chandigarh.
“We are also reaching out to every state capital with delivery centres and tie-ups with local couriers, for fast delivery,” says Ashutosh Lawania of Myntra.
According to Kumar Goursundar Das, Research Manager at IDC Retail Insights, e-commerce in India is showing a lot of traction with spending expected to grow at 49 per cent annually till 2017.
This is expected to be driven by growth in internet and smartphone users, unavailability of brands and the limited reach of offline retailers such as Shoppers Stop and Future Group.
Das also says that the investment focus of online players will shift to smaller towns.