By value, however, electronic goods still account for a large portion of gross merchandise
Such trends in online shopping give Goldman Sachs the conviction that India’s e-commerce market could grow 15 times to $300 billion in 15 years. As e-commerce is relatively nascent in India, consumer behaviour is still evolving and this is helping virtual marketplaces introduce new categories and verticals.
Ankit Nagori, chief business officer, Flipkart, says online shopping is no longer limited to apparel, footwear, accessories or low-value items. So, while city dwellers are looking at high-value items such as mobile phones and laptops, consumers in Tier-II and Tier-III towns are still test-driving in the online universe with low-value items such as kitchenware and home decor.
By value, however, electronic goods still account for a large portion of gross merchandise, as bargain-hunting Indians are buying high-ticket items such as mobile phones and laptops online.
Today, one in every five mobile phones is sold online. Kiran Kumar of IDC believes the contribution of online commerce to overall smartphone sales has gradually risen to about 20 per cent. This is because of the advantages of time to market, scale, more control on the supply chain, and reduced costs, compared to physical distribution, he says.
India’s shopping habits also reveal the level of affluence, as well as brand preferences of consumers.
Delhi accounts for the highest online sales of expensive phones, while Punjab has a yen for iPhones.
But by volume, the story is quite different. The top-selling items on India’s largest shopping portals are what e-tailers refer to as test-drive products such as mobile accessories, glucometers, tummy trimmers, bed sheets and wall clocks. Radhika Aggarwal, co-founder and chief marketing officer of Shopclues.com, says, “Our surveys show 70 per cent of sales are impulse purchases. The Indian consumer is test-driving the e-commerce world. The first purchase is a test drive, not a planned purchase.”
E-commerce companies say the Indian consumer is looking for choice first, then convenience. This is why fashion merchandising is a big focus area for all the players, as this is the best impulse category. Vikrant Khanna, chief operating officer of HomeShop18, says he sees a steady rise in the demand for stylish women’s clothing in tier-II and tier-III markets, adding 60 per cent of sales come from these markets.
New categories are being introduced and that is helping drive traffic. Earlier this year, Flipkart, India’s largest online marketplace, launched a home category to offer end-to-end home solutions, seeing the demand for home/home improvement products. Flipkart’s Ankit Nagori says: “This has been one of our most successful categories since its launch.”
Through the past 10 months, six categories have grown 10 times for Snapdeal. These are home entertainment, appliances, kitchenware, home furnishing, hardware and furniture. Items such as bed sheets, towels and cell phone chargers are very popular among shoppers.
Aggarwal of Shopclues says the top-selling products for the company are wall clocks and tummy trimmers. For Snapdeal, the top categories are fashion, electronic goods and home products. Flipkart expects home decor, furnishing and kitchen appliances to become the fastest growing categories this year. The company is seeing a lot of demand for kitchen appliances from Tier-II & III cities.
Interestingly, it isn’t large metros driving the traffic, what’s driving traffic, but smaller towns. Most online portals claim tier-I cities account for 25-30 per cent of traffic and orders. For Shopclues, about 70 per cent of traffic and orders come from Tier-II and III towns, says Aggarwal.
Portals are also seeing rapid growth in demand from cities such as Nagpur, Itawah, Ahmednagar and Meerut. Nagori says Flipkart has seen an increase in app downloads from Tier-I & II cities and expects this to rise further. Not only from a consumer’s point of view, from a seller’s perspective, too, smaller towns such as Ahmedabad, Jaipur, Agra and Varanasi are becoming popular hubs.
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India’s e-commerce market could grow 15 times to $300 billion in 15 years
Snapdeal
Flipkart
Shopclues
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