Mass ecomm consumers rise as tier-2,3 markets shop more online

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Mass ecomm consumers rise as tier-2,3 markets shop more online
Source: Pixabay
  • Mass consumers focus on prices, deals and discounts as compared to delivery speed.
  • Apart from electronics, consumers are also purchasing apparel, BPC and more online.
  • More e-comm consumers are expected to reside in tier 2 towns by 2030, says CBRE.
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Indian e-commerce is not just growing, it’s spreading across the country far and wide. It’s spreading geographically and across income groups. As e-commerce is more widely accepted, mass consumers will enter the system whose preferences are much different than the affluent consumers, says a report by BofA Securities.

“Mass consumers have specific preferences which are different from premium and affluent consumers. They focus on prices, deals and discounts vs delivery speed, payment options, friendly consumer policies etc. This consumer cohort follows an explore-based shopping journey vs affluent customer base doing need-based shopping,” said the BofA report.

The growth in the mass e-com consumers is also happening parallelly to the boom seen in tier 2 customers. India’s top e-tailer Meesho says that tier 1 cities and tier 2 markets are seeing the same amount of volume growth.

“For Meesho, in pockets, tier 3 markets are growing faster than tier 1 and tier 2. There is also a mix shift happening in rural and semi urban India,” said the BofA report.

A recent report by CBRE too said that the purchasing power of tier 2 cities like Chandigarh, Jaipur, Goa, Mangalore, Kochi etc has been growing so much that offline retailers are making a beeline for them. As of 2021, 50% of online urban shoppers were from tier 2 and tier 3 cities. This number is projected to reach 60% by 2030.

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“These e-commerce dynamics point towards the presence of a high aspiration consumer base,” the report said.

Regular buying not just one-time buys

The e-commerce purchase habits are also evolving. Apart from one-time purchases like electronics, home and kitchen goods, consumers are also increasingly purchasing high-frequency categories like fashion,apparel, beauty and personal care products along with jewelry and accessories.

As per a Redseer consumer report released late 2023, 50% of festive season shoppers were looking to make purchases in fashion. “More than around 25% of these consumers are planning to purchase other low average selling prices like beauty and personal care and home and living,” the report said.

This is also bringing in a change in the pricing dynamics of e-tailing. The average order value (AOV) for Meesho’s customer cohort has dipped by 10% in the last one year to ₹300-310. “Only 2-3% of this change came because of downtrading and majority was led by Meesho’s ability to price a product lower and led by category mix shift,” said BofA.
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