Rural India emerges as a goldmine for e-com companies during festive season

Despite logistical challenges, e-commerce firms are ramping up their infrastructure and technology to meet the diverse customer needs in small towns and hinterlands

India’s e-commerce companies are scaling up efforts to expand in India’s Tier-II and Tier-III towns and hinterlands as they witness significant demand for services from these regions during the festive season.

 

Despite logistical challenges due to vast terrain, unpredictable weather, and limited connectivity in rural India, e-commerce firms are ramping up their infrastructure and technology there.

 

E-commerce firm Flipkart continues to observe significant shifts in shopper behaviour, particularly in Tier-II and Tier-III regions, which are emerging as key growth drivers alongside metro cities.

 

During Flipkart’s recently concluded ‘The Big Billion Days’ (TBBD) sale event, the company’s value-commerce platform Shopsy saw strong participation from over 2,800 small towns, including Tier-IV cities like Kamalapuram, Vadar, Sihor, Bansatar Kheda, Vairengte, and Bhota. An increasing number of shoppers in these regions are seeking affordable options with quality products to meet their unique needs.

 

 

“While the top metro cities continued to witness growing demand during the first 24 hours of TBBD 2024, the shopping festival also saw demand from customers from Tier-II+ cities such as Medinipur, Hisar, Berhampore, Bankura, and Agartala, to name a few,” said Harsh Chaudhary, vice president, growth, Flipkart. “Our efforts to enhance the customer experience through faster deliveries via a robust supply chain network and tailored on-app offerings have played a pivotal role in meeting the evolving needs of customers, not just from metros but nationwide.” 

 

Several categories have emerged as top preferences from rural India. These include electronics, large appliances, fashion, mobiles, beauty, grooming, and home products.

 

The demand for e-commerce services in small towns and cities is also creating job opportunities for locals who don’t have to move to metros in search of livelihoods. Among them is Hardeep Raj, a sorter executive for Flipkart’s delivery hub in Bishnah, Jammu.

 

“As someone with a disability, finding the right opportunities was always a challenge, but Flipkart changed that,” said Raj. “My role at Flipkart as a sorter executive has empowered me to live a life of dignity and independence.”

 

During this festive season, Flipkart launched 11 new ‘fulfilment centres’ (FCs) across nine cities, generating over 100,000 jobs across more than 40 regions. These FCs not only enhance operational efficiency but also significantly contribute to the economic upliftment of local communities. They drive growth in related sectors such as transportation, packaging, and retail.

 

“The Big Billion Days event provided incredible exposure to a wide customer base across the country, giving my business a significant boost,” said Krisna Dayma, owner of Gosriki and a seller on Flipkart.

 

Vishal Sisodiya, owner of clothing firm Klosia Empire, said participating in TBBD helped him see a 10-times growth increase in sales as he gained exposure to customers across the country. 

Flipkart Wishmaster - Remote delivery in Dehradun

 

Logistical challenges

 

During the initial portion of the month-long Amazon Great Indian Festival (AGIF) 2024 sale event, which started on September 27, significant demand came from Tier-II and Tier-III cities. This demand was seen in key categories including appliances, fashion and beauty, smartphones, and furniture from popular brands. It was facilitated by affordability and easy access to credit. Amazon also witnessed more than 40 per cent growth in ‘no-cost EMI’ transactions. Most of these purchases were for products like mobiles, washing machines, TVs, refrigerators, air-conditioners, and video games. Over 75 per cent of all smartphone sales came from Tier-II and Tier-III towns, with almost 70 per cent of all premium smartphone sales (above Rs 30,000) being from these places. Also, nearly 80 per cent of all television orders came from these locations, with 50 per cent of customers opting for EMI.

 

E-commerce firm Amazon has ramped up its delivery infrastructure and technology to create a fast, secure, and robust network to meet diverse customer needs. This is enabling it to reach some of the remotest areas of the country, ranging from hilly towns in the Himalayas to hamlets along India’s vast shores.

 

With nearly 2,000 Amazon-owned and partner delivery stations, the company said it has direct reach in many remote areas.

 

“Our ability to deliver across 100 per cent deliverable pincodes in a timely and trustworthy manner sets us apart from others,” said the firm.

 

For instance, Amazon said it is delivering packages in remote villages in Uttarakhand. Situated 4,500 feet above sea level in the upper Himalayas, Maharishi Ashram in Gajoli faced significant challenges in accessing daily essentials due to its remote location. Amazon said it became the first and only e-commerce platform to deliver to the ashram, transforming access for its meditation practitioners by bringing essential goods directly to their doorstep despite the difficult terrain.

 

The scarcity of daily essentials is a constant struggle for the people in the Andaman and Nicobar Islands. The people there often rely on shopping from the mainland or local markets, where prices can fluctuate. In July 2015, Amazon piloted a delivery service partner station in Port Blair and introduced cash-on-delivery services.

 

“Today, the partnership covers Port Blair and Havelock Island, a popular tourist destination. What started with a few daily deliveries has now grown to thousands of deliveries per day, given the influx of tourists into Havelock Island,” said the company.

 

Amazon said that it has also set up a delivery station in Leh. To navigate the rocky roads that do not appear on digital maps, Amazon’s delivery partners rely on skilled motorcycle riders who possess invaluable local knowledge of the region’s unique roadways.

 

To meet the festive demand this year, Amazon India has added three new fulfilment centres to its existing pan-India operations network, which includes over 43 million cubic feet of storage space and sort centres in 19 states. It also has Amazon Air service and partnerships with Indian Railways and India Post.

 

Tier-IV cities have also given a big boost to e-commerce firm Meesho's festive sale. The firm recently reported over 40 per cent spike in sales on its platform during the 10-day-long ‘Meesho Mega Blockbuster Sale 2024’ compared to the previous year, with shoppers in small Tier-IV cities like Ranaghat in West Bengal and Bhadohi in Uttar Pradesh leading the charge. The firm said it achieved 145 crore customer visits, with about 45 per cent of shoppers hailing from Tier-IV cities during the sale period, which started on September 27 and ended on October 6. There were over 30 million app downloads.

 

India’s festival season is set to ignite a major boost for the country’s e-commerce sector, with sales expected to reach Rs 100,000-120,000 crore in Gross Merchandise Value (GMV), according to an analysis by Redseer Strategy Consultants. The latest analysis forecasts 20 per cent Y-o-Y growth, fuelled by high pent-up demand and a premiumisation wave.