3 trends driving the growth of eCommerce in India
1. Tier 2 and 3 cities to lead this growth
In the last two years, India’s eCommerce grew by 8% in 2020 and 30% in 2021. Data collected from the online fashion festivals show that even though tier 1 cities did show the strong demand for products sold online, the real stars of the show were tier 2 cities.
Tier 2 cities like Jaipur, Guwahati, Mysuru, Kochi and Bhubhaneshwar showed an 82% rise while Tier 3 cities showed a 91% rise from the previous period.
Not just buyers, there was a whopping 99% increase in people selling online from these regions during the online festival period. On Instamojo alone, there was a 170% Year over Year growth in sellers from Tier 2 and 3 cities.
This surge of sellers from tier 2 and tier 3 cities have been driving the eCommerce growth in India.
There are several factors that have led to a healthy eCommerce ecosystem even beyond the metro cities –
- Cheap and fast internet available even in the most remote areas of India
- Developing physical infrastructure like highways, railways and roads
- Workshops and training conducted for digital skilling
- Buying and selling primarily through social media platforms
- Adoption of vernacular languages on most tech-based platforms
- Acceleration of the DTC model of eCommerce
Government efforts to boost small online businesses in India through various initiatives and schemes have also encouraged sellers from tier 2 and tier 3 cities.
The current demand for online products coupled with government support and a healthy logistics infrastructure makes this a perfect time to start your own independent online store.
2. Digital advertising for eCommerce brands to be at its highest
The ‘This Year, Next Year’ report by GroupM projects that digital advertising will rise to 45% compared to 39% for advertising on television in 2022.
Online sellers are engaging in organic methods of driving traffic to their websites through their social media.
Apart from organic efforts, there has also been an upwards trend of utilising paid ads so that small businesses can expose their brand to targeted audiences all over India.
“The pandemic has pushed the envelope towards digital and has hence topped the pie, with advertisers keen to explore more of it. ” –Prasanth Kumar, CEO of GroupM’s South Asia branch
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3. Fashion and beauty to be leading the eCommerce growth in India
The growth of eCommerce in India has also largely been led by the fashion and beauty sectors. The pandemic saw a change in consumer preferences from electronic items to consumer goods like cosmetics, apparel and groceries.
According to the data collected from eCommerce platforms last year, there was 64% increase of sales in the beauty category and a 368% increase in fashion.
The rise in demand for affordable and quality products has resulted in sellers adopting the DTC model of eCommerce. They want to directly engage with customers to sell clothes and beauty products online.
We also saw similar trends playing out on Instamojo. There was a 36% growth in the sale of products in the beauty and personal care categories. The apparel and footwear categories saw a similar growth of 39%.
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