In the railway station of Abdalipur ? a dusty village in West Bengal ? a station attendant struggles to keep his eyes open under the shade of a lonely tree. He fights a losing battle with a summer siesta as he restlessly waits for eBay to deliver his iPod shuffle. With internet penetration gradually increasing and new modes of payment such as cash-on-delivery coming into vogue, rural India, alongside tier II and tier III towns, are breathing life into the country?s R2,050-crore e-retailing market, growing at 32% annually.
Online retailing portals such as eBay.in, Snapdeal.com, and Naaptol.com are registering anywhere between 40 and 60% of their sales from rural areas such as Ambalapuzha in Kerala, Sajiyavadar and Adala in Gujarat, Abdalipur and Kangayampalayam in Tamil Nadu, apart from the tier II and III cities like Jaipur, Visakhapatnam, Kanpur, Lucknow, Vadodara, and Faridabad.
Industry experts point out that with people becoming more used to the convenience of the internet, online shopping is seeing higher growth in these places. Also there are very few avenues of spending money in these towns, so there is a significant amount of disposable income with the people. The benefits of variety, offers, discounted deals and convenience is driving the online shopping trend.
?A person in Amritsar or Ambala is exposed to the same media as a person in an urban area. He is aware of an iPhone 4 or an iPad 2, but traditional retailing has not brought it to his town yet. However, he can easily buy one off the net. Metros contribute about 50-55% of the transactions still but tier II & III cities are growing at a faster rate and will soon be larger than the metro contribution,? says Deepa Thomas, spokesperson, eBay India.
According to eBay India Census 2010, about 3,296 Indian cities shopped on eBay last year, of which 2,234 were tier II and tier III cities, and 1,045 were rural towns.
Snapdeal, which gets 15 lakh visitors a day, gets 25% of its business from tier II and III towns, is seeing a 35% month-on-month increase in this business. Naaptol, which gets 70,000 unique visitors and 5,000 transactions per day, says over 60% of its business is from tier II and tier III towns and 40% from urban centres; while the reverse was true just 18 months ago. Straightline.in, part of mjunction services limited, a 50:50 joint venture between Tata Steel and SAIL, says that 30% of its business comes from tier II and III markets.
Popular categories include mobile phones, cameras, DVD players, videogames and MP3 players, computer accessories like hard drives and pen drives, kitchenware, diamonds and jewellery, gift items, home decor and health accessories. According to some e-tailing companies, there is a surprising parity in the spending trends between tier II/III markets and urban centres.
?The average size of transactions from tier II and III markets is R3,000, which is the same as urban areas. When we started, we did not realise the potential that these places hold, and the spending potential of the people here. We were pleasantly surprised at the way things have gone.? says Manu Agarwal, chief executive, Naaptol.
However, the tier II & III and rural markets are yet to open up to the services offered on websites and are far from moving on from purchasing products. ?The share of revenues from such markets will continue to grow, but growth will majorly be in the products business. Urban markets continue to dominate in the lifestyle and services segment,? says Sandeep Komaravelley, head, marketing, Snapdeal.