e-Commerce growth gravitating towards India’s tier cities

The pandemic changed the way we Indians shop, with research showing more than half i.e. 53% of the consumers from non-metros now prefer online shopping, and 80% of Indian consumers prefer to shop from their smartphones. This shift means that the first time a consumer discovers or interacts with a brand it is almost certainly online.

India’s direct-to-consumer e-commerce market is expected to reach $100 billion-plus by 2025, a 32-times growth over 2023.

The focus will shift from Tier 1 cities to Tier 2 and Tier 3 cities with online shopping going deeper – it still has a lot of juice left. eCommerce growth is primarily going to be led by shoppers from Tier 2 and Tier 3 cities. This will be with continued online migration of key categories, including fashion and grocery.

Vernacular Voice searches, Social Commerce, Direct-to-Consumer brands, Conversational Commerce and Digital payments will play a pivotal role in e-Commerce growth.

Voice will be stronger in vernacular

To facilitate growth beyond metros, many e-commerce companies have enabled voice-based shopping, providing language options to make ‘Bharat’ shop online with as much ease as their metro and urban counterparts.

Video content, voice search, and localization will take precedence in 2023 and beyond. Localization through the use of vernacular and visual content will be the key to winning over customers in Bharat, beyond the metro. The adoption of languages will be beyond English and Hindi to Tamil, Telugu, Malayalam, Kannada, Bangla, and Marathi.

1. Social Commerce

Social media users in India are expected to grow to around 448 million in 2023. A direct beneficiary of this rapid rise of social media users of course is social commerce. Social commerce or buy-sell via social media has been steadily gaining popularity in India.

• Building a brand around communities: Social commerce is not like any other sales where buy-sell is more transactional. Social commerce is developed around building a community – a dedicated base of followers or ‘fans’ who admire the brand, comment and talk about it, and even share and promote them. Because social commerce mostly uses influence marketing, a strong base of the community is built around a brand within a span of time.

• Authentic feedback: Because the products are present on social media and there is a community connect, the feedback system is strong and usually authentic. Social commerce also leads to a much more engaged shopping.

• Growing along: Artificial Intelligence-driven sales are here to stay. As social commerce grows, industries that are directly linked with it including logistics, warehousing, and other sales channels of storage and delivery too will continue to grow.

2. D2C

The Indian D2C industry continues to grow, buoyed by rising awareness and consumers’ willingness to experiment. Projected to grow by 21 per cent, the D2C industry size in 2023 is all set to cross the $66 billion mark.

• Bharat - A focus is on fashion brands: According to reports that looked at sales over the 2022 Diwali season in India, Tier 2 and Tier 3 cities are the main driving forces behind these purchases, accounting for 64 per cent of all consumers who made transactions. During this phase, almost 125 million customers placed orders across platforms, helped by Tier 2 cities, and growth was driven by fashion in these markets. One of every five orders placed here was for ethnic wear like a Kurti or saree. Meesho’s recent sales saw nearly 60 percent of sales coming from Tier IV cities. Demand from ‘Bharat’ will only rise and D2C brands will play an important role in fulfilling this demand

• Marketplaces - Attract International Brands: The beauty and personal care sector saw a declining trend in 2022, with the market contracting by almost 11 percent year over year as a result of lower expenditure after the pandemic. However, online stores like Nykaa attracted at least 30 foreign brands to India, which currently accounts for 15-20 percent of its total income. At least 60 percent of sales were recorded from Tier 2 and Tier 3 cities in the beauty and personal care market

• In 2023, the BPC segment is expected to grow to $27 billion, D2C brands can plan ahead and benefit from this surge

• Bargaining Tools – Increase Engagement and Conversion: Shoppers love to bargain. Earlier, it was possible only when selling offline, but with the latest tools, you can let your shoppers bargain online too! Kari by Kriti uses this selling technique efficiently. Brands are also adopting gamification tools to increase engagement and sales. Tools like a discount spin wheel can be used to surprise users with an instant discount and further improve sales

3. Conversational Commerce

Conversational commerce is about using messaging apps and platforms to connect with customers and promote products and services. It’s big on convenience because it’s about reaching shoppers on their favored communication platforms, this will be via:

• Live chat: Live Chat Service allows brands to reach and help customers while they browse the retailer’s website. By using live chat apps, customer support agents will assist multiple customers simultaneously, offering highly personalized advice and support

• Messaging apps: Instant messaging platforms like WhatsApp and Messenger are a kind of live chat, except they don’t have to take place on your website. By allowing users to share rich content formats like videos and gifs, they make for more natural, engaging conversations

• Chatbots: A piece of software used to answer consumers’ questions via text-based messages, typically through on-site chat portals. Capable of handling multiple consumers at once, 24/7

• Voice assistants: Tools like Alexa and Google Assistant will be leveraged to provide consumers with immediate answers or direct them to your website

Whatever platform you use, the benefits to customers are clear. After all, wouldn’t you rather wait a few minutes for a reply on WhatsApp than spend 10 minutes listening to hold music?

4. Digital Wallets

• Rise in adoption of QR codes: QR code payment users are expected to grow beyond 2.2 billion in the next two-three years. Cash was leading in-store payment up until 2021, at around 38 percent of value, digital wallets were at 25 percent, and credit/debit cards were at 18 percent. This equation will change with the mass adoption of QR codes at the point of sales

• Buy now pay later: The Buy Now Pay Later (BNPL) financing option has been a win-win at both ends. Buyers can purchase expensive items without breaking the bank while brands can count on higher conversions by asking for lower initial payments. As per the industry report, the growth of BNPL payments is expected at a CAGR of 28.9% during 2021-28.

(The views expressed here are solely those of the authors and do not in any way represent the views of exchange4media.com)