With value offerings and easy credit schemes, e-commerce players are trying every trick to rope small town customers, who are growing 40% y-o-y.
Readying for the festive season, e-commerce biggies Flipkart and Amazon have come up with initiatives to attract shoppers from tier-II cities. Ranging from a wide product assortment to easy EMI options, instant credit lines and better logistics infrastructure for speedier delivery, the competition between Flipkart and Amazon is expected to be even fiercer this year.
After all, the festive season is the best time to acquire new customers, with over 20 million shoppers expected to shop during the five-day festive sales next month, as per a RedSeer Consulting report. “Of the 500 million internet users, only 100 million shop online. This number is expected to grow to 185 million by 2020. A majority of the growth is driven by tier-II and tier-III shoppers, which is growing by 40% y-o-y,” says Ujjwal Chaudhry, engagement manager, RedSeer Consulting. “So far, the online story was dominated by the 3Ms—male, money and metro cities.”
But that is changing fast. “By 2020, tier-II and tier-III markets, and women customers are going to drive consumption. We expect 100% growth in new customers from these markets, 50% of which is expected to be propelled by fashion,” says Smrithi Ravichandran, senior director, Flipkart.
Fashion is a major growth driver for Flipkart, and it has helped reposition Flipkart as a value platform with offerings both in the private label and branded space. “We have addressed Big Billion Days from all three ends — service, assortment and capabilities —to make customers buy more,” adds Ravichandran.
Last year, 55-60% of orders during Big Billion Days came from tier-II and tier-III cities. This year, Flipkart is looking at a 67% share, with a focus on affordability and services. Apart from fashion, it is looking at furniture (Perfect Homes) refurbished goods (through its 2GUD platform), recharges, and new launches on mobile, TV and electronics categories to drive growth.
In addition, to boost digital payments and affordability quotient, Flipkart has just launched cardless credit—an instant credit of Rs 60,000, based on scores derived from customer behaviour on the platform. This is in addition to easy EMI options on credit and debit cards.
As per the RedSeer report, affordability and vernacular access are the key levers e-commerce players will be working on this festive season. Consider how Amazon is launching its festive campaign — India ke khushion ke beech mein budget nahin aayega — this week, which will run till Diwali.
“We have signed up with banks for easy debit and credit card EMIs, as well as cardless EMIs on Amazon Pay for those who do not own credit cards or cannot access installments on debit cards,” says Ravi Desai, director, mass and brand marketing, Amazon India. In addition, Amazon has also launched a Hindi app in order to lure first-time users. “New customers typically either buy low-value items or smartphones. No access to selection and right affordability has held back demand in markets beyond tier-I cities. We are addressing that with a focus on higher AOV (average order value) items and making them affordable through easy EMIs,” adds Desai.
In fact, over 65% orders at Amazon come from tier-II and III cities and towns, with over 50% of sellers hailing from such places. “Last year during Diwali, 86% of new customers came from beyond tier-II cities,” said an Amazon spokesperson.