By Indian e-commerce is witnessing not just growth but also a significant expansion across geographical regions and income segments. A recent report by BofA Securities highlights the increasing participation of mass consumers in the e-commerce ecosystem, presenting distinct preferences compared to affluent consumers.
Preferences and Shopping Behavior
According to the BofA report, mass consumers prioritize factors like prices, deals, and discounts over delivery speed and payment options. Their shopping journey is characterized by exploration rather than need-based purchases, in contrast to affluent customers.
Growth Trends in Tier-2 and Tier-3 Markets
Simultaneously, there is a noticeable surge in e-commerce activity among tier-2 and tier-3 customers. Meesho, one of India’s leading e-tailers, notes comparable volume growth between tier-1 and tier-2 markets, with tier-3 markets demonstrating even faster growth rates.
Shift in Purchasing Power
The purchasing power of tier-2 cities such as Chandigarh, Jaipur, Goa, Mangalore, and Kochi has been on the rise, attracting offline retailers. Reports suggest that 50% of online urban shoppers are now from tier-2 and tier-3 cities, a figure projected to rise to 60% by 2030.
Evolving E-commerce Habits
E-commerce purchase habits are evolving beyond one-time buys of electronics and home goods. Consumers are increasingly indulging in high-frequency categories like fashion, apparel, beauty, personal care products, jewelry, and accessories.
Impact on Pricing Dynamics
This shift in consumer behavior is also influencing the pricing dynamics of e-tailing. The average order value (AOV) for platforms like Meesho has decreased by 10% over the past year, primarily driven by a strategic pricing approach and a shift in category mix rather than downtrading.
As e-commerce continues to penetrate deeper into India’s heartland, the landscape is witnessing a transformation fueled by the aspirations and evolving preferences of mass consumers.
