Taking advantage of huge discounts available on online retail portals
Products, especially those that are not available in these cities, are a major draw. The businessmen buy these products from various e-commerce sites and sell it to consumers through physical shops.
“Whether it is a carton of shampoo or facial cream, these customers are ordering in bulk to set up their shops. So we are creating a market place for those vendors for products that are not available in those cities or towns and also with better offers (discounts),” Sanjay Sethi, co-founder and Chief Executive Officer, ShopClues, told BusinessLine.
Another advantage is that they do not have to travel to wholesale markets like Chandni Chowk or Nehru Place in Delhi to buy the required products as they are available at the click of a button. “We have more than 70,000 merchants listing for their products on our site and by end of this year we will probably reach around 1.50 lakh merchants. We are selling more than one million products (excluding books) and we will do around 1.50 million products by the year-end,” Sethi said.
Similarly, HomeShop18 said that the emerging cities in India are on a high growth trajectory and the future demand drivers for virtual retail in India.
With increasing adoption of TV and Internet, the small towns and cities are collectively consuming more than the metros when it comes to virtual shopping, the company said.
“These are exciting times and we are seeing the industry evolve rapidly. Most of our audiences live in tier-II and tier-III cities. HomeShop18 has seen a boom in demand for a wide range of brands that might be unavailable in these cities due to a lack of physical retail presence,” Sundeep Malhotra, Founder and CEO, HomeShop18, said.
To cater to this demand, traders and merchants in small towns place bulk orders for products across categories, he said, adding that some of the most popular categories in terms of bulk purchase are mobiles and tablets, apparel, and home and kitchen.
HomeShop18 is seeing demand from small towns in Guwahati, Jammu, Lucknow, Patna, Bhubaneswar, Surat, Nagpur, Darbanga, Agartala and Chandrapur.
“Customers from tier-II and -III cities form 40-45 per cent of our total customer base,” Malhotra added.
According to analysts, this is a trend that has a lot of potential and e-commerce companies should milk the opportunity.
“Everything is available on their (e-commerce) portals for the same price in any given location in India. The advantage in buying products in bulk for shops in smaller towns and cities is quick delivery and availability of the product for tier-2 and -3 cities,” Sanchit Vir Gogia, Chief Analyst and CEO, Greyhound Research, said.
However, he also said that it is a given fact that a major chunk of targeted customer base for e-commerce industry is still not equipped to purchase online.
According to a recent joint study done by Assocham and PWC, the Indian e-commerce industry is expected to spend an additional $500-1000 million on infrastructure, logistics and warehousing, leading to a cumulative spend of $950-1900 million till 2017-20.
The e-commerce is expected to reach anywhere $10-20 billion by 2017-20.
Source: The Hindu Business Line