Driving Demand: Keeping it festive, small-town India is a big shopper online

With much of India still home-bound, a good part of the shopping for the festive season was expected to be done online. What wasn’t expected was that so many of the first-timers would hail from small towns. Going by reports from the major shopping platforms, small-town India seems to be playing a big part in this year’s festive sales. They’re seeing customers from Jhumri Telaiya, Cumbum Thottiyam, Tawang Jaunpur and Mokokchung transact on their marketplaces. While nearly 50% of the new customers who shopped on Flipkart on the first day of the ongoing sale hailed from tier-3 cities and beyond, and in case of Amazon, this share was over 90%.

Fashion retailer Cantabil that sells men’s apparel said tier-2 and tier-3 cities have contributed about 80% of the sales. Ravindra Singh Negi, president (electrical consumer durables) at Havells India, said a significant share of online revenues has been recorded in tier-2 and tier-3 cities.

That’s not surprising according to retail experts who point out that while customers in the smaller cities and towns may not be familiar with the English language, it is no longer a barrier since everything’s accessible in the vernacular. With ethnic apparel the flavour of the season, Fashion retailer Biba confirmed to FE that small towns are clocking higher online sales this year. While the penetration of smartphones has increased outside of the metros, there is a growing comfort with digital payments, even among the middle-aged. “The real reason for the increase in volumes is that people are now becoming comfortable with shopping online,” said Ankur Pahwa, partner at EY.

Analysts at Forrester Research estimate 55-60 million will shop online during the month-long festive sales ending November 15, up from about 40-45 million last year. What explains the general increase in online shopping this time around is that a sizeable part of the white-collar workforce is back home in the small towns. So, some of the demand for smartphones and electronic appliances has shifted to the interiors. Also, in these difficult times, when incomes are flat or have shrunk, there’s a scramble for discounts. Economists have drawn attention to the fact that demand in urban India has been very weak these past few months and the rural economy has been holding up better. While the job market is looking up – September saw a big jump in job openings and a big proportion of this was for full-time roles – there are several sectors that remain under pressure in the wake of the pandemic.