Preliminary Remarks
In the past few years, about 12.5 crore1 consumers in India shopped online for the first time and since then, they have continued to use e-commerce platforms. These consumers primarily from tier-2, 3 and 4 cities differ in digital literacy, infrastructure, social and cultural factors from the urban populace, who are accustomed to shopping online.
Online shopping is not just a convenience but a lifeline for millions of consumers in India, especially in tier-2 and 3 cities, where the availability of the latest and popular products in physical stores is limited. These consumers are the drivers of a retail revolution in the country. In the festive season of 2023, consumers from tier-2, 3 and 4 cities contributed to more than 80% of sales for Misho and Amazon2 highlighting a major opportunity for brands to tap into the growing aspirations and needs of consumers from these markets.
Organization’s which serve our vast, diverse nation know how India changes every 100 kilometers – not only in terms of language, dialect and culture but also in consumer behavior (motivations, pain points and preferences). However, there is a lack of comprehensive and reliable data and insights on the online shopping behavior of Indian consumers, and the challenges and opportunities across regions. This hinders the development of effective customer-centric strategies and offerings.
Consumers are not only influenced by online channels, but also by offline touchpoints such as word-of-mouth, influencers and their favorite local store(s). To meet these expectations, it is essential to offer a seamless experience by integrating customer support across multiple channels, implementing loyalty programmers and consistently improving the app using real-time inventory management, in-store Wi-Fi, mobile apps, and training the employees. This approach allows businesses to leverage the benefits of both online and offline channels, creating a cohesive and convenient experience for customers.
key findings include the following:
⦁ 50% of consumers in metros and tier-1 cities value quick delivery, while 54% of consumers in tier-2, 3 and 4 cities, deals and offers take precedence.
⦁ With increasing financial independence, women’s shopping behavior shifted from social to individualistic across geographies as per our survey.
⦁ Fake reviews of health and wellness products deter over 42% of tier-2, 3 and 4 cities’ shoppers from making purchases in this category. They also prefer buying these products online since there are concerns related to the authenticity of these products in brick-and-mortar stores.
⦁ More than 60% of our respondents preferred to shop using an app rather than using any website. There was a clear preference for marketplace apps since they cater to many categories.
⦁ YouTube emerged as a clear winner when it comes to a reliable platform (discovery, information, usage experience and unboxing videos) for making buying choices.
⦁ Interestingly, Gen Z prefers cash on delivery (COD) in tier-2, 3 and 4 cities.
Urban dwellers
Metro (population over 60 lakhs) and Tier 1 (population between 10–60 lakhs): Mumbai, Delhi, Bangalore, Chennai, Kolkata, Hyderabad, Surat, Nashik, Nagpur, Bhopal, Allahabad, Jaipur, Madurai, Mysore, Kochi, Bhubaneswar, Indore.
Rest of India
Tier 2/3/4: Aizawl, Sangli, Solapur, Jhansi, Ferozabad, Nellore, Kasaragod, Siliguri, Sagar, Darjeeling, Hingoli, Nagda, Bhatinda, Sohna, Thiruvallur, Idukki, Sahibganj.
We analysed how these consumers engage with categories such as fashion and accessories, grocery, electronics, sports and fitness, home and kitchen, beauty and personal care and health and wellness.
Having captured the voice of the consumer through our extensive survey, this report delves into key drivers and barriers shaping the online shopping behaviour of the rest of India vis-àvis urban dwellers:
⦁ What drives their motivation to shop online?
⦁ What advantages do they look for, and what obstacles do they encounter?
⦁ How do they view the experience of online shopping?
Understanding the Shopping Experience and Behavior of Urban Dwellers vs. Rural India
Beyond the urban landscape, a new trend is rapidly unfolding in India – tier-2, 3, and 4 cities – where aspirations have begun to surge, and shopping habits are undergoing a transformation. Today, consumers from rest of India are dedicating more time to shopping, with order volumes in tier-2 and 3 cities expanding by more than 0%3 compared to previous years. As India’s e-commerce narrative evolves, it is crucial to observe these behavioral changes.
Our study reveals a significant shift – regardless of location, the increasing financial independence of women is changing their shopping behaviors. For categories of home and kitchen and electronics, buying big ticket items online is primarily a household decision. As both urban dwellers and rest of India embrace e-commerce, spending four time more each day on digital retail platforms, our survey found fascinating insights that span beyond conveniences of 10-minute or same day deliveries which is driving consumers to shop online. In densely populated urban areas, consumers often come across excessive weekend crowds at malls and limited product variety within physical stores. The absence of premium brands and the persistent push given to some products by sales staff who often lack product knowledge has further fueled the migration of the consumers to online shopping platforms in rest of India consumers.
Frequent stockouts for specific brands has been an additional cause of frustration for consumers. In contrast, consumers from rest of India face another set of challenges, including limited access to a wide range of products and brands in local stores. This often restricts their choices. Furthermore, unavailability of attractive offers and discounts and other incentives has pushed price-conscious consumers in rest of India to explore digital avenues.
Influncer For Online Shopping Motivation
The absence of physical stores for premium brands, stockouts of certain products, and a lack of knowledgeable staff in offline stores are the main reasons why the rest of India consumers opt for online shopping. The lack of discounts and special offers in physical stores, along with large crowds in malls during weekends are some of the reasons why urban dwellers prefer to shop online. Browsing through online shopping platforms during free time also triggers online purchase in both urban dwellers and rest of India.
Role social media plays on trials:
Social media has amplified awareness and aspirations and 62% of respondents tried products after seeing them (perhaps repeatedly) on Facebook and Instagram. As the preferences of rest of India shifts from TV and radio to digital avenues, social media becomes the most preferred channel for encouraging trials of new products. Interestingly, amongst urban dwellers, online communities lead to more trial than TV. WhatsApp, YouTube and Instagram have a universal appeal and are the most preferred social media platforms for urban dwellers and rest of India.
What makes an app/platform gaining interest of shoppers’:
Urban dwellers, who prioritise speedin online shopping, are particularly drawn to prompt delivery services which meets their demand for instant gratification and are willing to pay a premium price for the same. But consumers in rest of India are keener on deals. These consumers are bargain and discount hunters.
Most purchased category/item : Interestingly, the rest of India appears to be leading the
purchases in the sports and fitness, home and kitchen, and health and wellness categories, whereas urban residents focus more on grocery, electronics and fashion. The rise of social media has played a significant role in increasing awareness of these products and with an increase in demand, the platforms introduced new and affordable products to these cities. As incomes in rest of India improved so did the spending on these categories.
Powerfull Impact of reviews:
Both urban dwellers and rest of India shoppers rely heavily on reviews, ratings and photos from other customers to be confident about their selections and to see the product in its natural environment. Knowing others have tried it and liked it makes a lot of difference in their shopping journey
Payment gateway preference:
Urban dwellers and rest of India consumers display comparable
acceptance levels of UPI payments, indicating a rise in adoption and familiarity with such
payment methods. However, it is worth noting that cash on delivery (CoD) remains the
preferred option among the rest of India consumers to minimise the risk of frauds. This
suggests that while there is growing acceptance of UPI payments due to its convenience,
speed and security, there are still concerns regarding online platforms and payment methods
particularly among rest of India. Generation X from rest of India prefer card transactions for
mid-high value purchases on well-known platforms due to their direct connection to bank
accounts, providing a trusted layer of transaction safety. Paytm is popular among urban
dwellers for its user-friendly wallet while PhonePe is preferred by rest of India because of its
intuitive interface. Google Pay ranks second nationwide.
Facinf Difficulties on online shopping:
As most urban women navigate shopping platforms like
seasoned pros, weighing their benefits and drawbacks, Gen X women in rest of India
tend to approach it with more cautious curiosity than others and are hesitant to shop
online due to concerns about payment fraud, credibility of unfamiliar websites and doubts
regarding product quality matching the images shown. They rely heavily on reviews and
recommendations from their family to gauge trustworthiness. Urban delivery faces
logistical overload, regulations, and access restrictions, causing inconsistent experiences
to the consumers. Frequently, the timing of deliveries clashes with the fast-paced nature of
urban lifestyles, creating obstacles and challenges for individuals. In contrast, rest of India
enjoys smoother deliveries due to less dense environments and familiar personnel.
Emergence of direct to customer (D2C) and Open Network for Digital
Commerce (ONDC):
D2C gained popularity after the COVID-19 pandemic due to exclusivity,
novelty and its potential to address the perceived lack of a ‘premium/luxury feel’ associated
with marketplaces where consumers choose marketplaces for product diversity and
discounts. While urban dwellers are more aware of ONDC, rest of India is gradually adopting
platforms like Paytm and Meesho, which offer appealing options for consumers to shop
through ONDC with lower prices and a variety of products.
Voice of the consumer
Application usage
It has been observed that apps are preferred over websites to shop online. This is common for all the respondents irrespective of their geographic location. The factors for this preference are ease of navigation, simplified user interface (that complies to global standards) and vernacular support. Marketplace apps often also get downloaded more since they cater to a wide range of categories. For customer service and assistance consumers prefer human interaction over interacting with chatbots. Specific triggers are crucial for businesses and acknowledging these diverse narratives are key to harnessing the vast potential of the evolving Indian retail market and fostering meaningful connections with customers. The online shopping journey transcends mere transactions and needs a profound understanding of the aspirations, challenges and unique motivations which are driving the masses towards e-commerce.
Bikini trends across Inida
The fashion and accessories category in the Indian e-commerce market stands out due
to its vast array of products and enticing deals. This category comprises national brands,
private labels, unbranded sellers and digital-native brands in the recent past. Affordable,
fast fashion with low entry barriers and high profitability is set to make this category more
popular and accessible among consumers.
The impact of social media and influencers: While social media influencers play a
significant role in the discovery of fashionable, trendy products, influencer-led promotions
are also being met with a lot of scepticism especially in the light of government guidelines7
which require clear disclosures of paid promotions. Fake reviews and paid ads on social
media have led older millennials and Gen X to rely on community groups on Meta/Telegram
and visual reviews besides word-of-mouth advice.
Platform & Customer loyalty:
Responsive customer service and clear return policies are crucial in this segment irrespective of geographical location highlighting a universal expectation for reliableand convenient shopping experience. Discounts and offers are crucial for driving loyalty among rest of India consumers highlighting a value-driven approach in this segment.
Long term: Parameters
: Ensure product legitimacy through partnerships with reputable
global brands known for quality and eco-friendliness and consider certifications like
organic or cruelty-free labels. Offer assurances such as money-back guarantees to
bolster confidence in product efficacy and safety. Implement authenticity verification
systems, utilising holograms, QR codes or digital e-verification methods to combat
counterfeit products.
1. Hyperpersonalisation: Facilitated by technological advancements,hyperpersonalisation will grow in the beauty and skincare industry, enhancing the customer experience.
2. India’s online health and wellness: Sector is booming due to evolving consumer preferences and technological progress. Offering tailored products, it caters to health-conscious consumers seeking holistic solutions that combine modern and ancient practices like Ayurveda and yoga. Dual urban dwellers and rest of India consumers are gravitating towards online health and wellness categories for their convenience, wide product range, and detailed information and reviews.
Conclusion
E-commerce is on the cusp of a revolution, having penetrated to the farthest corners of
our country and providing access to several new shoppers.22 This increased reach can be
attributed to social media penetration in the country which has heightened awareness about
e-commerce among Indian customers. However, accessibility and affordability of products
will remain key drivers. One must consider that the consumer base is constantly evolving
and that consumers often adopt new ways of shopping (enabled through new technologies/
designs/business models, etc.) quickly, especially when their unmet or unarticulated needs
are fulfilled through the rapid phase of innovations. Utilising the nuances of customer
behaviour and segment-specific insights brought out by this report, organisations can
expedite the crafting of e-commerce experiences that resonate with consumers in these
regions (rest of India).
While price sensitivity is a key decision-making factor in rest of India, it is crucial to
understand that customers’ value perception is based on the total service package (delivery,
return experience, loyalty, etc.) delivered by the brand. Newer online users warm up to
brands that offer to educate them and provide them guidance like a trusted advisor would.
The need of the hour is a well thought-out brand and social media strategy that focuses on
this group of users’ unique functional and emotional needs and engages them through their
preferred channel(s).