E-com fireworks in rural India this festival season

India’s e-commerce giants, led by Flipkart, Amazon, and Meesho, are making a strategic push into Tier-II and —III cities and rural regions, where demand for online shopping is surging during the festival season.

This expansion into less urbanised areas comes with its own set of logistical challenges, from vast terrains and unpredictable weather to limited internet and road connectivity.

But with smaller towns becoming a major growth driver, e-commerce companies are scaling up infrastructure, technology, and personnel to navigate India’s vast, complex geography.

Flipkart, for instance, has observed major changes in consumer behaviour beyond metro cities.

Smaller towns are emerging as drivers of growth, especially during sales events like ‘The Big Billion Days’ (TBBD).

Shopsy, Flipkart’s value-commerce platform, reported engagement from over 2,800 small towns during TBBD, including from Tier-IV centres like Kamalapuram, Vadar, and Bhota.

Consumers in these regions are increasingly seeking quality, affordable products that suit their specific needs.

According to Harsh Chaudhary, Flipkart’s vice-president of growth, “The top metro cities saw strong demand in the first 24 hours of TBBD 2024, but so did tier-2 and beyond cities, including Medinipur, Hisar, Berhampore, and Bankura.”

He credits enhanced customer experiences, including faster delivery through an expanded supply chain and tailored in-app offerings, for helping meet these diverse consumer demands.

Among categories, electronics, large appliances, fashion, mobiles, beauty, grooming, and home products are the most sought-after in rural India.

The e-commerce boom in small towns is not only boosting sales but also generating local employment. Many rural residents no longer need to migrate to cities for jobs, with companies like Flipkart providing work close to home.

“As someone with a disability, finding the right opportunities was a challenge… My role at Flipkart as a sorter executive has empowered me,” Hardeep Raj from the company’s delivery hub in Bishnah, Jammu.

Flipkart has added 11 new fulfillment centers across nine cities this festival season, claiming to have generated over 100,000 jobs in more than 40 regions, supporting both e-commerce operations and the broader economic uplift of local communities.

They drive growth in related sectors, such as transportation, packaging, and retail.

During TBBD, Flipkart sellers have seen a major sales uptick.

“The 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 seller on Flipkart.

Vishal Sisodiya, owner of clothing firm Klosia Empire, said he witnessed a 10x growth in sales during TBBD.

Meanwhile, Amazon’s Great Indian Festival (AGIF) event, which began in late September, saw similarly strong demand from smaller cities, particularly in categories like electronics, fashion, and beauty.

Key factors driving this surge included affordability and easy access to credit, which were instrumental in meeting consumer demand in tier-2 and tier-3 cities.

Notably, Amazon reported that over 75 per cent of smartphone sales originated from these smaller towns, as did nearly 80 per cent of all television orders.

Around 50 per cent of customers opted for EMI payment.

Amazon has expanded its logistics infrastructure to support this growing demand.

With nearly 2,000 delivery stations, the company now has direct reach into some of India’s remotest areas.

One notable example is Uttarakhand’s Maharishi Ashram in Gajoli, a village 1,372 metre above sea level in the upper Himalayas, where Amazon became the first e-commerce platform to deliver essential goods.

The company’s local delivery efforts extend as far as the Andaman and Nicobar Islands, where fluctuating prices and limited product availability have historically complicated access to essentials.

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.

To meet festival demand this year, Amazon India has added three new fulfilment centres to its existing pan-Indian 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.

Meesho, another player in the market, also reported a notable surge in rural engagement during its recent Mega Blockbuster Sale.

The event saw a 40 per cent increase in sales, fuelled largely by shoppers in tier-4 centres, such as Ranaghat in West Bengal and Bhadohi in Uttar Pradesh.

Approximately 45 per cent of buyers during this period came from tier-4 towns, and the platform registered over 30 million app downloads during the sale.

These figures underscore the rising demand for e-commerce in rural India, where access to a wide array of products and competitive prices has driven increased online shopping activity.

As the festival season unfolds, the country’s e-commerce sector is expected to experience substantial growth, with sales projected to reach Rs 100,000-120,000 crore in gross merchandise value (GMV), according to Redseer Strategy Consultants.

This represents a 20 per cent year-over-year growth, driven by high consumer demand, an increased appetite for premium products, and pent-up demand following the post-pandemic economic recovery.