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The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

Tier II and III Cities driving e-commerce in India

ST Team
Monday, January 2, 2012
ST Team
Buying branded products are just like a day dream for Gurpreet Sandhu who resides in Chandigardh. But with access to internet through her smartphone, Gurpreet does her jewellery shopping online regularly to keep herself updated with the latest model. This is not the case in Chandigarh alone. Several other small towns and cities have become the hub of e-commerce in India. Chandigarh, Coimbatore, Vadodara, Jamshedpur from North, South, East and West respectively are the top four small cities when it comes to buying online. India has over 2,471 e-commerce hubs that are the cities, towns, villages and smaller towns covering the entire length and breadth of the country. So what is it that is making the e-commerce grow in such a faster pace? What is the driving force behind it?

The industry estimates that the e-commerce market is growing at 30-40 percent and the overall e-commerce market that includes e-ticketing, travel, entertainment and utility is estimated at `20,000 crore. There are a lot of investments made by venture capital fund in the e-commerce companies and these companies are putting the maximum share of fund to get a robust delivery for consumers. This has created a positive word of mouth thus resulting in more online purchases. Another factor for the growth of e-commerce in India is the increasing time women spent online. According to a research group Juxt, there are more than 65 million people logging onto the web in India. This has also resulted in the uptake of internet shopping.

Irrespective of their income level, small towns are also logging to shop online. The order placed by people in small towns might not be the movie tickets, but these are basically the daily use products such as mixer grinder, jewellery, branded clothes that are not available in their small towns or cities. The latest census consisting of 50 hubs by Caratlane.com, an online jewellery shop, 44 are rural towns excluding tier I cities. Last year's census saw 29 locations, including 23 rural towns. These 50 hubs were the centres that witnessed e-commerce transactions on the company's online site.

It is surprising to know that somewhere in the thinner corners of India, there are many towns and cities where online purchasing is surprising. Places where computers would be aliens, most of the jewellery, diamond, solitaires purchases are made online. Tier II and III cities like Kodungalur, Bhatinda, Bilaspur, Dakshin Dinjapur, Panchkula, Nalasapora, Karamsad, Bemetara, Rudrapur, Margao, Ponnamaravathy and many others are regular with e-tailing specially when it comes to jewellery purchase.

Anisha Singh, CEO, mydala.com, says, "28-30 percent of our sales come from outside metro, i.e., small towns and cities, which is quite surprising. What has initiated this trend is the use of mobile and quick access to internet through mobile. This made people bullish about purchasing online."

A probable reason for such rising trend in these small cities might be the aspirations of the buyers in metros and small towns in India are similar, but due to fashion access being limited in small towns, online buying options become attractive. With better lifestyle and increasing buying capacity of people in smaller cities, what matters to them is the choice and availability of products online.

Brands are also playing a vital role in this change. They are now moving to re-define consumerism. Trends are graduating and bigger brands are finding new destinations in smaller cities through innovative channels. Demand and supply has far-gone the demographic limits and the new and easiest retail destinations are found online. Discounts are also another factor accelerating this growth. People get up to 90 percent discount on deals. This has made possible the rural people to buy the respected and big brands online and become the proud owner of it. Payments through credit or debit cards, and cash on delivery have provided them additional thrust to shop online.

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