The big fat online shopping frenzy

For homemaker Aditi Sinha, who lives in Berhampore in West Bengal, shopping during the festive season is an elaborate affair. Sinha, 40, had a long shopping list for gifting to her extended family for the Durga Puja festival earlier this month.

Sinha typically prefers shopping for clothes in person at her usual local apparel store but this year she decided to shop online. For her, what really matters is convenience, variety, quality, and price. “I desperately wanted to avoid the last-minute rush at the stores and traffic on the road during the festive season. Also, it is hard to resist discounts and offers online. As a homemaker, I always look for the best deal and the best product. It doesn’t matter which online platform I’m shopping from,” says Sinha, who shopped from Flipkart during the September-end festive sales. “Initially I was a bit hesitant about the return and exchange issues so I stayed away from online shopping especially for apparel which might have size and fit issues. But today refunds happen within a day. Also sitting in Berhampore I have the option to select from an exhaustive catalogue which local stores can’t offer.”

Sinha is not alone in her online shopping frenzy. With promotions, schemes and discounts geared towards luring the fickle online customer—who is typically vendor-agnostic and seeks the best product at the lowest price—online retailers are seeing a substantial rise in sales from India’s tier 2 and tier 3 cities during the festive season. Reason: Improved vernacular interface of platforms, attractive deals, and easier credit availability, which broke the affordability barrier for consumers who reside in India’s non-metros.

Today e-commence platforms are hunting grounds for the best deals, with players such as Flipkart, Amazon, and Snapdeal jostling to offer the best prices (at the cost of margins) to get more customers on board.

Online festive season sales are now a regular shopping extravaganza for Indian consumers including shoppers from tier 2 cities and beyond.

India’s largest online retailer Flipkart believes that the next phase of growth in the e-commerce industry is set to come from tier 2 and tier 3 cities fuelled by cheaper data and increased mobile penetration across the country.

During Flipkart’s recently concluded festive season sales, ‘The Big Billion Days’, the online retailer saw a 100% year-on-year increase in demand from tier 3 cities alone across categories such as fashion and large appliances. “Understanding the need to offer a non-English interface to users whose first language is not English, we launched our app in Hindi. Concepts such as ‘Flipkart Ideas’ are designed to guide customers through curated content and information,” says a Flipkart spokesperson.

RedSeer Consulting, a research and advisory firm focussed on the consumer internet market noted in its October report that e-tailers (such as Amazon, Flipkart, and Snapdeal) are estimated to have sold about $3 billion or Rs 19,000 crore of goods during the first phase of the festive sale (September 29 to October 4) up 30% from last year. The report further added that for the whole festive month (September 29-October 28), online retailers could touch $6 billion or ₹39,000 crore in sales.

Smartphone brands such as OnePlus, Samsung, and Apple made record sales worth about ₹750 crore during the first 36 hours of Amazon’s ‘Great Indian Festival’ 2019 sale, while large appliances and televisions showed a growth of nearly 10X over an average business day, Amazon India said in a release dated September 29.

Despite India being a strong touch and feel market, experts say online retailers score high on variety and authenticity of the product compared to physical stores. “Online solves these two issues and with the facility of returning products, it solves the touch and feel problem to some extent,” says Harish H.V., managing partner, ECube Investment Advisors, an environmental, social, and governance fund.

Online fashion retailer Myntra points out that from a fashion e-commerce perspective, tier 2 and tier 3 markets are key regions that continue to grow at a fast pace. “We kick-started the festive season this year with Big Fashion Days, registering 60% growth over the last edition and recorded 56% sales from tier 2 and tier 3 cities. So clearly, the next cohort of fashion forward shoppers are coming from these markets,” Amar Nagaram, head, Myntra Jabong, told Fortune India.

“An interesting buying behaviour that we have observed over the years from tier 2 and tier 3 markets is the growing demand for international brands. With brands such as H&M, Under Armour, Mango among others on our platform, we have witnessed over 65% growth year-on-year for international brands from these markets. We are also seeing a healthy demand for sportswear, beauty, and kidswear from these cities,” added Nagaram.

Myntra has also tied up with payments platforms, including unified payments interface (UPI) for online shoppers in non-metros, besides providing EMI facilities.

According to online marketplace Snapdeal, nearly 90% of the orders received so far were from non-metro cities such as Nagpur, Surat, Vijayawada, Chandigarh, Panaji, Jamshedpur, Shimla, Guwahati, Roorkee, Hazaribagh, Khammam, and Tezpur. While first-time users surged across cities like Nashik, Surat, Chandigarh, Panaji, and Guwahati, the overall growth in first-time users was 2.3 times year-on-year. Snapdeal said that it witnessed a 50% growth over last year from the recently concluded first two festive sale events this year. During Amazon’s ‘Great Indian Festival’ 2019 sale last month, the e-commerce giant saw 91% of its new customers coming from tier 2 and tier 3 markets.

“We have seen the surges in tier 1 over the past years and with a lag we are now seeing the tier 2 and tier 3 markets move as there is a constant traffic of people between markets and adaption follows with a lag. This is coupled with better mobile internet penetration and lower data cost which encourages people to shop online,” says Harish.