Why eCommerce in India Won’t Die
The Online Retail Game has Reached the Next Level
In contrast to many early views, eCommerce is India is here to stay. Brick and mortar retailers are not going to get rid of it and they should get used to this idea. The biggest proof of this is the unparalleled and unprecedented growth that eCommerce industry has witnessed in last 5 years. The growth of mobile market has added considerably to its rise. Mobiles being the leading doorway to online shopping, it has brought along mCommerce, which has proved an important proponent of the rise of eCommerce in India.
The urban market of tier 1 cities in India is crowded with the coming of new eCommerce players every day. But it is worth mentioning that only 8% of India’s population lives in these tier 1 cities. Figures since last year have revealed that almost 55% of the ecommerce business is coming in from tier 2 and 3 cities. The big players in this industry, needless to say, are now targeting people in these cities with aggressive marketing strategies. This has turned tier 2 and 3 cities as the biggest sales ground since tier 1 cities are reaching saturation levels.
With the confidence to shop online having grown to 71% among the tier I and tier II audience, and with more than 30% of traffic on eCommerce platform arising from handheld devices, the game has surely changed.
Engines of Growth
The major reasons for this growth include the rapid advancement in technology and increase in smartphone use. The affordable 4G/3G data plans add to the deep penetration abilities of these companies. With the spread of broadband and mobile data, the consumer base is continually increasing. Many citizens in tier 2 and 3 cities don’t have easy access to the branded brick and mortar stores. For such audience, online shopping is the next best thing to go for. Add to this the increasing proportions of disposable income, and you get the picture.
How Are Big Companies Faring
Amazon- As compared to its 36% growth last year, Amazon saw a whopping 50% growth in its business in tier 2 cities this year. It is also taking steps towards bringing down the delivery time in cities by opening up fulfilling centers in 12 big cities that include Bengaluru, Ahemdabad, Ludhiana and Pune.
Snapdeal- Going after the target audience in smaller cities and towns, Snapdeal has acquired a 40% stake in Gurgaon-based GoJavas, a tracking and delivery service. With this, the eCommerce player is ensuring a swift and effective delivery experience for its customers.
Clovia- This company! Now who would have expected an online lingerie player to enter the markets of tier 2 and 3 cities, and do well too? But the company is seeing a good number of customers pouring in from cities like Panchkula, Udaipur, Vellore, Bareilly, Siliguri, Dibrugarh, Alwar, Bhatinda, Agra and Nagpur. The company’s 60% sales are coming from such cities. PankajVermani, CEO of Clovia, has said that all this growth is due to the non-availability of variety among clothes in traditional shops. Also, buying online is an easy and private experience.
LogiNext-The $10 million funding round of this company is a proof thateCommerce is only going to grow further. LogiNext facilitates faster and last mile deliveries. Right now, it is present in more than 12 cities across India and handling over 50,000 shipments every day.
With increasing FDI and funding pouring in, eCommerce is far from slowing down. In fact, it is only starting now.
With increasing interest in smaller cities, will eCommerce turn a new page in online shopping? Share your thoughts in the comments section below.
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