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Demand recovery: Tier 3 cities fire up e-commerce festive sales

Demand recovery: Tier 3 cities fire up e-commerce festive sales

The Tier-3 cities have accounted for nearly half of the orders during the sales across shopping portals, with television sets and laptops selling the fastest among large appliances and electronics category respectively.

The trends indicate improvement in income levels, as economic activity resumed after the second COVID-19 wave hit in the first quarter The trends indicate improvement in income levels, as economic activity resumed after the second COVID-19 wave hit in the first quarter

Dhanbad, Karimnagar, Gorakhpur, Chittor, Kurnool, Guntur, and Vizag are some of the key cities driving the festive sales orders at Snapdeal, Amazon, and Flipkart, signalling a broad-based demand revival in the economy.

The Tier-3 cities have accounted for nearly half of the orders during the sales across shopping portals, with television sets and laptops selling the fastest among large appliances and electronics category respectively. Meanwhile, one in five customers has chosen to exchange their smartphone for a new one.

"During the first few days, cities such as Patna, Lucknow and Vizag led the customer demand alongside top metros, with nearly half of all orders coming from tier-3 cities and beyond. Categories like mobiles, electronics, large appliances, lifestyle, general merchandise and home witness the highest demand," a Flipkart spokesperson told Business Today. Walmart-backed Flipkart is running its eighth edition of The Big Billion Day sale.

The trends indicate improvement in income levels, as economic activity resumed after the second COVID-19 wave hit in the first quarter. Besides, it can also point towards a wider acceptance of online shopping in smaller cities, with the COVID-19 lockdowns restricting movement and leading to the shutting of several local stores due to economic unviability during that period.

Jeff Bezos-led Amazon saw participation from local shops doubling at the Great Indian Festival compared to last year during the Prime Early Access on October 2.

"We also saw a 60 per cent increase in sellers who received their highest ever single day sales year-on-year on Amazon.in. The number of sellers receiving an order from Tier 2/3 cities jumped by 21 per cent, while 16 per cent more sellers received orders over last year," said Manish Tiwary, Vice President - Amazon India.

Prime subscription continues to be a customer favourite across India, with two out of three new Prime sign-ups coming from Tier-2/3 cities and customers shopping in eight Indian languages, added Tiwary.

Meanwhile, Snapdeal, an Indian e-commerce company saw approximately 43 per cent of orders coming from Tier-3 cities.

 "Sales in many Tier-3 cities like Dhanbad, Karimnagar, Gorakhpur, Chittor, Kurnool, Srinagar, Guntur, Alwar, etc. are trending higher than last year. The order volumes from bigger cities like Pune, Lucknow, Ahmedabad, Jaipur, and Trivandrum also continue to grow as the sale progresses," a Snapdeal spokesperson said.

"The pandemic has created faster adoption of digital channels by both buyers & sellers, including in the non-metro cities.  The e-commerce sector has also grown in terms of different business models, newer client segments like elderly, and rural consumers, and the types of products that are now available and being purchased online," the spokesperson added.

Flipkart's grocery category has witnessed customers from 200 new cities and towns making first-time purchases, with 50 per cent of them opting for an affordability construct.

"Fashion is another top choice during the Big Billion Days. Sales of sports shoes, outdoor wear, and men's clothing are currently spiking in the fashion category - an indicator of people's readiness to step out and indulge in outdoor activities after a year of restrictions," said the Flipkart spokesperson.

The second COVID-19 wave in the first quarter was seen to hit the rural section harder. A study by Motilal Oswal Financial Services showed that the consumption posted a 6.6 per cent growth compared to a nearly 16.4 per cent growth in the same quarter last year.  

Soumya Kanti Ghosh, chief economic adviser, State Bank of India said smaller cities may be ordering online with the lockdown due to the pandemic changing the buying trend.

"With restrictions on movement, more people would have taken to ordering goods online. Besides, some physical stores may have also closed down. As far as the demand is concerned, there is stagnation at the moment, after exceeding the pre-COVID levels some time back," Ghosh added.

According to National Accounts data released by the government, private final consumption expenditure, which denotes demand, grew by 19.3 per cent in Q1 year-on-year but is nearly 12 per cent lower than the levels in Q1 of 2019-20.

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