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Tier 2 and Tier 3 Hold a Major Scope for an E-commerce Sector

Tier 2 and Tier 3 Hold a Major Scope for an E-commerce Sector
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You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

With everything is just a click away, e-commerce has transformed the way we shop and do business. E-commerce is one of those sectors which is rapidly growing in all spheres. In India, the e-commerce division has arrived as a boon for the Indian consumers. The growth graph can be seen easily with the launch of new startups every other day. This article throws the necessary insight on how and why tier-II and tier-III cities and towns hold a major scope for an e-commerce sectors.

Tier-2 and Tier-3 cities are now the most targeted areas of the e-commerce industry.The big e-commerce portals have fully captured the urban market, leaving no space for small or new startups. For future growth opportunities, the new players have especially focused in tier 2 and tier 3 cities to step outside the existing market and target the other potential and untapped market.

People who live in smaller towns usually do not get access to the famous or big physical stores to fulfil their daily necessities. They often travel all the way to urban cities to purchase good quality products.

Hence, there is a radical shift witnessed in the consumption patterns in smaller towns. Now, they prefer to buy products from various online portals.  

Internet penetration in India is rising rapidly. With an increase of internet penetration in these cities, purchasing products from online has become easy. Though not-to-mention, we are living in a multi-device world, where people spend more time on a phone or tablet than in front of a computer or PC. When we talk about technology, then the mobile tech has created a buzz in tier 2 and 3 markets. Half of the potential customers in these cities are already using smart phones with internet facility as compared to the one-third populations in the tier-1 city or urban areas. Hence, it is giving a wider market opportunity to the e-commerce sector. Nevertheless, the future of e-commerce is ‘multi-channel marketing’.

It’s worth noting that, these cities are also witnessing a subsequent change in people’s perception and their culture. The educated youth and the advancement in technology are playing a crucial role here. People are educating themselves, changing their thinking towards technology, searching for better and new ways of everything. So it is important to have a proper and a faster delivery mechanism in these cities. Keeping the trends and people’s perception in mind, e-commerce players are partnering with the hyper-local delivery networks and local logistics companies.  E-commerce companies themselves are planning or coming up with their own logistic carriers to meet the demand and supply of the goods and services they wish to deliver or delivering.

Since years, we have seen numerous improvements in the e-commerce industry. The most popular change is in the ‘virtual payment system’ that is widely known as Cash On Delivery (COD). COD is the most preferred online payment method, wherein customers don’t pay until the product reaches their doorstep.

Roughly 50 to 55 percent of the e-commerce business come from tier II and tier III cities. The increase in the disposable income of the potential consumers in these markets has led to the increase in the people directing toward this medium.

Concurrently, e-commerce has also grown unprecedentedly in India, but it has not touched the rural lives in a big way. The majority of Indian population still lives in rural areas, in Tier 2 and Tier3 cities and the real potential of India’s online shopping will be unlocked, if Indian retailers can figure out the ways to reach out to these areas.

 

 
Edition: April 2017

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