Consumer behaviour shift: Small town buyers more inclined towards e-commerce in post-Covid world

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July 22, 2020 3:54 PM

Hygiene and safety concerns in physical stores have sparked growth for e-commerce sector during Covid as use cases multiplied with consumers fulfilling needs not just for apparel or electronics but also for food, grocery, medicines, personal care and more.

The development comes amid the Confederation of All India Traders (CAIT) requesting commerce minister Piyush Goyal to mandate e-commerce players to state the country of origin for products sold on their portals.Ssafety at store has been the deciding factor for consumers to purchase goods offline.

Even as Covid-induced shift in consumer behavior towards e-commerce or online buying, led by Flipkart and Amazon, is increasinly becoming apparent, the change is more striking among consumers living in Tier-II and III cities than Tier-I. The inclination towards online buying for consumers in Tier-II and III cities is almost 2x more currently vis-à-vis pre-Covid. According to a KPMG survey of 2,376 respondents based in Tier-I, II and III cities, while the willingness to adopt online channel among Tier-I consumers increased 19 per cent from 44 per cent pre-Covid to 63 per cent now, Tier-II and III consumers showed 27 per cent intent to online buying. From 29 per cent before Covid, 56 per cent Tier-II consumers were looking to buy goods online while the share for Tier-III consumers increased from 36 per cent to 63 per cent.

Post Covid, consumers have been making a beeline for e-commerce route for their consumption needs as the pandemic fear continued to loom large. Hygiene and safety concerns in physical stores or traditional channels of buying have sparked growth for e-commerce sector in India as use cases multiplied with consumers fulfilling their needs not just for apparel or electronics but also for food, grocery, medicines, personal care and more. “Consumer goods companies and retailers will need to identify ways to continue to build consumer trust and confidence going forward. As a consequence, companies will need to develop their online presence and last-mile logistics & delivery capabilities and manage supply chain hygiene across all levels,” said Harsha Razdan, Partner and Head – Consumer Markets and Internet Business, KPMG in India.

Also read: Amazon, Flipkart-led e-commerce recovery crosses pre-Covid level; sector’s penetration jumps 1.5%

Consumers have been stressing on the safety factor as the most important to affect their buying decision in the offline world in post-Covid scenario. While 68 per cent respondents claimed safety at store to be the deciding factor, pricing and promotions were still important for 59 per cent respondents, according to the survey titled Time to Open My Wallet or Not?. Interestingly, with respect to UPI or wallet-based payments also, consumers in Tier-II and III cities were relatively more inclined than those living in Tier-I cities. 54 per cent respondents in Tier-III cities, 48 per cent in Tier-II cities and 46 per cent in Tier-I cities were keen to adopt UPI or wallet-based payments now.

Meanwhile, e-commerce sector has already witnessed recovery to pre-Covid level. According to a RedSeer analysis, the monthly GMV (annualised) of the sector has recovered beyond pre-Covid level of around $30 billion during January 2020 that had declined to $3.5 billion in April. The GMV amount for June (annualized) for online retail stood at $36.5 billion – around 20 per cent up.

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