What Makes Online Selling Tick in Small Towns?
By: Sandeep Varaganti
Even as recently as five years ago, sellers of consumer goods in small town India were almost entirely dependent on festivals and holidays. Local craftsmen, weavers, small and medium businesses in non-metro India waited for migrant workers to return to their towns during sowing and harvest seasons. They waited for families to come home during vacations and festivals, and for tourists to visit during the tourist season, for sales to pick up. In the ‘non-seasonal’ months of the year, sales were minimal.
In coastal India, it was the rainy season that spelt a slowdown, in central India it was the fiery hot summer that kept footfalls low and in the hilly regions, the winter winds and snow kept brick and mortar shop-shutters down.
Ecommerce has changed all of that, bringing buyers and sellers together on e-commerce platforms that enable a marketplace throughout the year. Now, even in the smallest of Indian towns, sellers can make a sale to a buyer who is living on an island in the Andamans, or on the mountains in Ladakh, any time of the year!
Increased E-Commerce Activity from smaller towns
Simply because it opens up millions of opportunities, more and more sellers from cities like Jaipur, Kolhapur, Bhubaneshwar, Madurai, Goa, Thiruvananthapuram, Nalgonda, Gangtok and other Tier II and Tier III cities are getting onto ecommerce platforms. With sales now made possible not only in season, but through the year, businesses in small towns are experiencing wider reach and enhanced convenience more than ever before! In 2017, the value of online sales in India was US 38.5 billion. By 2020, this figure is expected to go up to US 120 billion and US 200 billion by 2026.
Mobile connectivity in India’s Tier II, Tier III cities and towns, where the bulk of India’s upwardly mobile population live and work, is a major reason for this surge in online buying. According to IBEF, India which is the world’s fastest growing e-commerce market is expanding by 51 per cent each year.
The country currently has 147.8 million ecommerce users. Rapid growth will see an additional 210.46 million users shopping online by 2020. Of the 50 million registered small businesses in India, only about 1 million of them are online. By 2020, 10 million of these businesses are expected to go online.
This phenomenal growth will be driven by non-metro towns in the country and it is important to take cognizance of e-commerce’s potential and growth in such areas.
What makes online selling tick in small towns?
The e-commerce channel has many benefits over brick-and-mortar stores for merchants in Tier II and Tier III cities. Sellers are not dependent on expensive real estate that adds to overhead. Instead, they are able to use more cost-effective warehousing solutions offered by e-commerce companies to hold stocks.
Today, many startups are propelling India’s ecommerce boom by enabling small businesses in small towns to go online. They manage everything, from sourcing products across domestic and overseas markets, to ensuring last-mile delivery.
The single biggest opportunity is that merchants can expand their reach through the huge customer base or traffic established by ecommerce companies.
To make it easier for sellers to attract customers, online market place platforms have taken numerous steps, such as marketing efforts to increase awareness among customers, advertising support for products sold on the platform to entice customers, and enabling digital payments.
On the other side, they have pushed resources into building a service provider network to support sellers in small towns with listing, advertising and other operational work.
This not only increases customer experience with each purchase, but it also has the buyer coming back more often. Small businesses would not have found it easy to achieve these benefits on their own.
The large investments made by Amazon and Flipkart in advertising and supply chain expansion makes it much easier for sellers to ride on the back of these initiatives without having to dip into their own pockets. A recent study reflects that customers make faster decisions while making online purchases, thereby reducing transaction time and allowing merchants to manage more customers simultaneously.
Another reason why sellers in smaller cities and towns are getting on to the ecommerce bandwagon is the hassle-free transaction option. With increasing number of transactions through UPI – 755 million in June 2019, sellers are saved the hassle of long bank queues or managing bundles of currency notes.
It has also allowed them to manage their finances at their fingertips, ensuring that business is not affected.
According to industry reports — thanks to internet penetration in India’s non-metro cities, increasing income levels, technology and fast-increasing data consumption, improvement in logistics and the plethora of offers presented by e-commerce platforms, online sales will show massive growth in the days ahead. And, India’s Tier II and Tier III cities are slated to drive this massive upsurge in growth.
(The author is Managing Director and CEO at Prione Business Services Pvt Ltd, a joint venture between Catamaran and Amazon. The views expressed in this article is that of the authors)