E-commerce companies reported 50% sales in past three months from tier-II & III cities
Rural India has come to the fore this festive season, at least for e-commerce companies. Over 50% of the sales that happened online, from August till now, have come from tier-II and III cities, in a significant shift from the past two seasons. As per major e-commerce companies, there has been a 15% rise in sales from smaller towns and cities this year.
Flipkart told FE that almost 60% of its sales starting from independence day till Diwali came from smaller towns. Amazon said it saw an overall rise of 250% in festive season sales compared to last year, with smaller towns contributing 65% of that jump. The festive season registered sales of over $3 billion, according to estimates by leading e-commerce firms.
Ankit Nagori, chief business officer of Flipkart, said the Big Billion Day sale saw 50-60% of traffic from tier II and III cities. “With India opening up to online shopping, more and more customers across geographies are shopping with us. In fact, with increased adoption of smartphones and internet penetration, close to 50% of our traffic comes from smaller cities. Participation from places like Jaipur, Aurangabad, Guwahati, Indore, Nagpur, Coimbatore, etc, is on a constant rise,” Nagori said. Flipkart’s chief product officer Punit Soni, who had personally gone to deliver products to customers, found to his pleasant surprise that this year he was delivering stuff to construction workers and security guards.
Gartner, in its latest report on e-commerce, has said online business in the country is set to cross $6 billion in revenues in 2015, recording a 70% increase from a year ago. By 2016, the online shopper base will grow almost three times to 100 million, and over half of the new buyers would be from tier II and tier III cities. The report adds that of the around 71% who shop online from smaller cities, 30% of them use handheld devices.
This increased interest from smaller cities is translating into e-commerce companies modifying their models for customers and sellers alike. Amazon has started an assisted shopping programme with an organisation called Vakrangee that is designed to help customers, who do not have access to the internet, shop online. “Under the partnership, about 40 Vakrangee Kendras have been set up as assisted shopping points wherein customers can access Amazon, make a purchase, have the orders delivered to the same kiosk and pay in cash while picking up the package,” an official spokesperson of Amazon said.
Even for rural sellers, they have similar initiatives to get them on board through online and offline tools like self-service registration that allows anyone to log on to Amazon.in/sell, register and start selling. Then there is ‘Feet on Street’, wherein Amazon personnel personally connect with SMEs in various towns and educate them on selling online. “When they associate with Amazon.in, they do not need to worry about getting customers, marketing or even delivery of products. We offer delivery to over 19,000 pin codes on account of our partnership with Indian Postal Service; access to 21 fulfillment centres across 10 states with a storage capacity of over 5 million cubic feet,” added the spokesperson.
Flipkart has a similar initiative called Flipkart Connect — a campaign designed to educate and create awareness amongst customers about the benefits of online shopping. Focused on highlighting the ease of shopping, delivery options, payment modes, etc, this customer engagement initiative has been live across top 20 tier II and III cities. The company also has FlipStars — a seller initiative to celebrate and honour the success of the top performing sellers from smaller cities. Flipkart claims to have 60,000 sellers on its platform, of which 30-40% are from smaller cities and towns.
Apart from these e-commerce companies, many start-ups have also realised the potential and need to expand towards rural areas. Practo, a Bangalore-based doctor discovery platform, realised their demand in these areas and now aims to enter 100 small cities and towns. “We have already entered 35 cities and we see 25% of our traffic coming from smaller cities and towns. We have also ensured that our mobile application size is only 6MB on an Android device, to ensure that people with poor network issues and limited mobile data packages are able to download the mobile application without too much hassle,” says Shashank ND, founder and CEO of Practo.