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First-time shoppers aid online buys, that too in small towns
The first phase of the online festival-season sale has just concluded, and the jury is out – more people, especially first-time buyers, took to online shopping in small towns, compared to the big cities.
The first phase of the online festival-season sale has just concluded, and the jury is out – more people, especially first-time buyers, took to online shopping in small towns, compared to the big cities.
E-tailers have posted stupendous growth in sales this year compared to the last, with more shoppers visiting portals and apps than ever before, thanks to the growing smartphone penetration in small towns and villages, cheaper data tariffs and free Wifi hotspots being set up by firms like Google.
After over two quarters of negligible growth, gross sales touched an all-time weekly high, crossing $1.2 billion; the month of October alone will add $2 billion to the revenue kitty of e-commerce firms according to Bangalore-based consultancy firm RedSeers.
The impact of first-time online shoppers was felt most on ShopClues’ balance sheet. The company focusses on unstructured goods, unlike Flipkart and Amazon, which sells more branded products. About half of ShopClues’ shoppers were first-time buyers, and 48% of the orders came from the digitally underserved markets, says co-founder Radhika Agarwal.
To put things in perspective, India had 112 million rural internet users, according to the Telecom Regulatory Authority of India –more than the population of Philippines. Many of them started watching videos and using Facebook only a little over a year ago. “We are starting to behave like China and the US – more customers are added during the holiday season,” says Agarwal.
China has over 600 million online shoppers. Before the festival season, India had 100 million of them, of which 60 million were active. During the festival season, the number went up to 75-80 million.
According to e-commerce firms, another 20 million first-time shoppers are waiting on the wings. “If we fast forward 10 years, this would be a big inflection point for us,” says Amit Agarwal, country manager of Amazon India.
There’s the aspiration angle also. The internet exposes people to big-town buys — goods mostly bought and sold in large towns and cities — which are unavailable in smaller markets.
For some, the festival season has opened up a new market. Amazon’s Agarwal calls it an “inflection point” in e-commerce.
The US-headquartered e-tailer, currently engaged in a battle with Flipkart for the pole position in India’s e-commerce market, saw 90% of the shoppers ordering from the 20,000-odd pin codes in the country that the company delivers to. “E-commerce was at its best display… The degree at which is happened is huge,” says Agarwal.
For Flipkart, more than 34% of its orders came from smaller towns and beyond. That’s a 42% growth over last year.
“During our campaigns we reached out to 30% more people than last year,” says Samardeep Subandh, head of marketing at Flipkart. “The first-time shopper is dabbling with products that they have not found in markets around them. Home and kitchen products, apparel, and electronics are some of the examples.
Snapdeal’s festival-season campaign, Unbox Zindag”, was all about fulfilling aspirations. Almost half of its orders came from smaller towns. “The percentage growth we are seeing from these places is much higher compared to last Diwali,” says Tony Navin, senior vice-president, partnerships and strategic initiatives at Snapdeal.
The order sizes in large cities and small towns were also significantly different — that difference was below 10% during the festival season sales, from nearly 30% a year-ago.
To cater to the buyers in these places, Snapdeal increased its coverage. It identified pin codes that were searching for products on Snapdeal, but couldn’t order because there was no logistics support, and then plugged those gaps.
Others, too, tried to deliver as far and wide as they could.
Amazon Prime, the membership for faster delivery, was one of the three most-sold items in small towns. Flipkart brought Assured for faster delivery, and offered better exchange and installment schemes to drive demand.
All these showed up in the books of e-commerce firms. During the first five days of the sale, Flipkart sold 15.5 million units, Amazon 15 million, Snapdeal 11 million and ShopClues 11 million.
