Online retail platforms have emerged as a unifying force in the Indian retail space. There is a certain homogeneity in customer behaviour as shoppers from smaller towns have begun displaying the same traits when it comes to shopping for fashion, accessories, electronics or daily essentials.
A fascinating new survey by IIM Ahmedabad (IIMA) titled ‘Digital Retail Platforms and Consumer Emotions: An Indian Perspective,’ undertaken post Covid, unveils online shopping patterns. A striking finding is that shoppers from tier 3-4 towns spent more on fashion and clothing than electronics vis-a-vis their counterparts in metros.
“The items with a long tail (A category having a large variety of products) such as fashion and clothing have more traction in smaller cities,” says Professor Pankaj Setia, Chairperson of the Centre for Digital Transformation (CDT) at IIMA. Setia led the survey that revealed that consumers in Tier 2 to Tier 4 cities spent up to 77 per cent more than those in Tier 1 cities. This, according to Setia, was fuelled by the Covid-induced digital push across India.
Retail consultant and author V Rajesh believes that online retailing has undergone a significant change over the past three years. More than the Covid-led push, it was the emergence of influencer marketing that saw embedded marketing content on social media platforms such as Instagram, Facebook etc. “Shopping is not just now limited to the Amazons of the online world. There are now a lot of niche players who are catering to a small segment and yet doing very well,” he says.
No wonder, in 2020, Ahmedabad-based fashion curating platform Ciceroni decided to move up the chain from being a mere discovery platform and start e-retailing of hyperlocal fashion and affordable lifestyle products to smaller towns like Raipur, Indore, Kochi, Siliguri, Patna, and Coimbatore.
Neha Sheth — Founder and CEO, Ciceroni describes, “We witnessed a surge of small businesses starting from a small room with just an Instagram page and then growing bigger over the years. On the other hand, market demand also increased as there was no longer geographical barrier restricting a purchase decision. We diversified and expanded in curated e-commerce business in Fashion and Lifestyle in 2020, from being just a hyperlocal discovery platform in Gujarat.”
Categories such as beauty and personal care too remain strong across brands. For example, listed e-commerce major Nykaa recorded sustained strong demand for this category during in the last quarter of FY23. “In Q4 FY23, against the backdrop of subdued industry growth, Tier 1 consumers have demonstrated sustained consumption. This has led to stronger revenue growth on the Nykaa platforms,” the survey had found.
The IIM-A survey covered 35,860 individual consumers across Tier-1 to Tier-4 towns and rural areas, across age groups and across income classifications.
Sharing the survey findings, Setia points at a large younger base joining online shopping post Covid. Also, females and individuals with income less than ₹3.6 lakh per annum is a sizable user base now.
Factors behind online surge
The topmost motivation, according to Setia, is the convenience and ease of access to a marketplace for products of their choice.
Second is the convenience of payment options such as cash on delivery, buy now and pay later (BNPL) besides affordability, discounts and coupons.
The third key motivation turns out to be return and refund policies. “Interestingly, we found that women buyers were driven by the interface of the website, returns and refund policies, whereas male buyers were more driven by the payment options, EMI, etc. So there were different factors influencing different constituents,” said Setia adding that online shopping has turned out to be a story of digital natives (young generation), digital immigrants (elder population) and the market they create in a virtual world.
Contrary to perception, the survey found that the older population — those over 50 years of age — are actively making purchases online with a median spending level of ₹1,500.
A continuous activity
From the era of window shopping at shop-in-shop format and multi-brand malls, the consumer behaviour has moved a step further with online browsing behaviour.
Online shopping involves a lot of research about a product, reviewing the feedback and browsing multiple websites before making a purchase.
“The mindset for shopping has changed. Every purchase now involves significant research, which means buyers visit reviews, ratings, they will listen to comments, videos etc. People fundamentally think differently when they buy. They would put the items in a cart and eventually remove them and choose a different one. This hints that shopping might be a continuous activity over a longer term and not just a short single transaction,” says Setia, adding that online shopping has provided the space and freedom for consumers to do research, choose, reject, purchase, use the suitable payment option, and return, and get a refund.