Can Reverse Migration Spur Seller And Consumer Demand In Tier-II And III Markets?

India's e-retail market is projected to reach 300-350 million in terms of shoppers over the next five years propelling the GMV to $100-125 billion by 2025
Can Reverse Migration Spur Seller And Consumer Demand In Tier-II And III Markets?
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CEO and Co-Founder, Shiprocket
4 min read
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The pandemic, as we all know, has upended lives and livelihoods across the world almost overnight. For businesses, it is not a very different scenario. The outbreak of COVID-19 has created a tectonic shift in consumer trends and the way businesses in almost every industry operate. Businesses are beginning to revamp their structure and working models to suit the ‘new normal’ that requires us to adhere to social distancing norms and maintain impeccable hygiene and safety standards. The e-commerce logistics industry is no exception. 

With major disruptions in the supply chain, the continuously rising demand, and multiple lockdowns hindering free shipment of goods, the sector has faced a plethora of hurdles amidst the pandemic. There is yet another aspect that we need to consider while looking at the industry and the supply chain, that is, the concept of reverse migration.

The pandemic has been escalating since March in India, resulting in reverse migration. Several people who migrated to new cities in search of jobs have now gone back to their hometowns. While this may be seen as a downside, there are potential advantages as well especially for tier-II and tier-III cities in terms of an upsurge in seller and consumer demand. Let us take a look at whether this reverse migration will be able to spur the demand in these regions of the country. 

Emerging Hubs for Warehousing   

Owing to highly restricted movement throughout the nation, and metropolitan cities such as New Delhi, Mumbai, Chennai and Bengaluru turning into COVID hotspots, the focal point for warehousing has shifted to tier-II and tier-III cities. These cities are now emerging as mini warehousing hubs for brands in the logistics sector. Apart from being new geographies to explore, these places also offer a higher capacity for storage since there won’t be too many space constraints. The demand is also set to rise in 30-35 new cities across the country. These factors together are driving logistics brands to consider tier-II and tier-III cities for warehousing. 

Heightened Demand 

As mentioned earlier, reverse migration means that people are returning to their native places in tier-II and tier-III cities from urban areas due to the pandemic. This will automatically increase the demand for goods in these smaller cities. COVID-19 has ensured that we adhere to certain norms such as social distancing and best practices of hygiene to mitigate the risk which calls for robust and well-connected logistical networks and e-commerce models to be able to cater to consumers’ rising demands. As restrictions are being gradually eased, third-party e-commerce and logistics aggregators will undoubtedly witness greater demand from both sellers and consumers in the tier-II and tier-III markets. 

What Does the Future Hold For the Industry?

The economy has slowly but surely begun to reopen and businesses across verticals are restarting operations. For the e-commerce logistics sector, reverse migration has immense potential to hone Bharat commerce, i.e., home-grown businesses which will ultimately contribute to reviving the economy. Urban logistics is set to flourish with more and more innovative technology-driven aspects being infused into the way brands in the sector operate. These new-age technologies simplify the processes and optimize time and cost which will improve the prospects of sellers acquiring and retaining more customers.  

Considering the fact that brands will naturally drift towards places where they see potential progress for the business, tier-II, and tier-III markets will gain traction in the near future due to exponential rise in demand. This will be supplemented by further reverse migration as the pandemic continues to rage, logistical automation offered by third-party logistics and e-commerce platforms for highly efficient services. 

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