Online stores see strong business from non-metros, villagesSeptember 15th, 2011 | Posted by in Articles and Opinions
Rural India is finally discovering the ease of shopping at the click of a mouse, much to the delight of e-commerce players in the country.
Take the case of mill owner Ram Kumar based in Vellakoil, a small town in Tirupur. Ecommerce has helped strengthen his business fundamentals. Kumar buys at least four management books a month from Jumadi, an online bookstore.
The 35-year-old mill owner is one of the many e-commerce novices in the country from Jaunpur to Surat to Itanagar and Behrampur who are buying online. Non availability of products is driving the trend. “I have never bought a book from Vellakoil. The closest town with a bookstore is Erode which is 60 km away. Even there, I do not get the sort of books I require,” says Kumar, who has been shopping for books and gifts online for almost a year now.
“Ten years ago, we had only one cyber cafe with a single computer. Now there are at least 10 cafes with 15 computers each. There has been exponential growth in the use of Internet and people are becoming aware of shopping online,” Kumar says. Even his friends subscribe to magazines like Reader’s Digest online. No wonder then that e-commerce players are seeing strong business growth emerging from non-metros. For online stores such as Jumadi, set up last November, approximately 10% of monthly revenue comes from cities such as Coimbatore, Vijayawada and Nashik amounting to around Rs 60,000.
“We are even tying up with schools and colleges in these cities. While they build their libraries, we build business,” Satish Balakrishnan, founder and former Amazon executive, said. Or take Flipkart co-founder and CEO, Sachin Bansal, for whom nearly half of its sales comes from non-metros. “The difference between buyers in metros and small towns is that while the former buy from online sites for convenience, the latter does it of non-availability,” says Bansal.
Flipkart plans to expand its cash-ondelivery offering to cities like Jaipur, Visakhapatnam, Lucknow, Hubli and Ooty this year. According to Bansal, at inception Flipkart mostly sold in metros, but from then on, it has seen a rise in demand from smaller towns. E-commerce refers to the buying and selling of products ranging from books to apparel to consumer durables online.
The transactions are either made by card or through cash-ondelivery option. There are about 40 sites like eBay, Myntra.com, 99labels, Bigshoebazaar.com and group buying sites like Snapdeal, Naaptol.com, Taggle.com, Timtara.com etc. These sites have about 50,000 unique users each month, according to Vizisense, an online audience measurement platform. According to eBay’s annual study on the Indian e-commerce landscape, 3,296 Indian cities shopped online last year. From this, 2, 234 were tier 2 and tier 3 cities including Ludhiana, Vadodhara, Faridabad and Surat.
“The e-commerce model bridges the supply and demand gap. The distribution of large brands is not as good hence it makes sense to buy it online,” said B Murali Krishnan, senior director, marketing and products at eBay. The non-availability of a cell phone store is what made Brijendra Pratap Singh, a farmer from Jaunpur in Uttar Pradesh, buy one from Tradus, Ibibo’s e-commerce arm. Singh was introduced to the concept of shopping online by a friend and wanted to try it.