Smaller ticket sizes make returns less attractive. Strategies like discounts and online advertising that typically work for a big city don't work as well in a small town.Small towns in India are increasingly"> Smaller ticket sizes make returns less attractive. Strategies like discounts and online advertising that typically work for a big city don't work as well in a small town.Small towns in India are increasingly">

Small Ticket Size Makes Online Selling In Small Indian Towns Much More Difficult

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Smaller ticket sizes make returns less attractive. Strategies like discounts and online advertising that typically work for a big city don’t work as well in a small town.

Small towns in India are increasingly turning to online shopping, fueling the growth of e-commerce. But e-commerce in these parts of the country is not going to take off any time soon. Considering the relatively small size of the banknotes, the unit economy is less favorable. If businesses want to reach consumers here, they need to come up with differentiated strategies. Influencers, for example, are increasingly part of the buying process.

As Kearney partner Arpit Mathur points out, there are differences in ticket sizes, language and behavior that need to be addressed and all of which require alternative strategies.

At present, online retailing in these parts of the country is limited to a few key categories such as clothing and electronics. On a 20-25% share, small towns could account for a 30-40% share of the clothing and electronics segment in about three to four years. Other categories where a bump is expected include personal care; today, online sales of products in this space are almost negligible but could reach 15% in the next few years.

Smaller ticket sizes make returns less attractive. Strategies like discounts and online advertising that typically work for a big city don’t work as well in a small town. “Such methods become uneconomical when you travel to a city of level three and beyond, because the return on your investment will not be the same. A consumer in a metropolitan city will spend enough money for a business to recoup the cost of acquiring customers, ”Mathur explained.

So models like social commerce come into play. For example, Flipkart recently made a foray into space with Shopsy, an app that allows small sellers in the fashion, grocery and home categories to sell online. Shopsy users can share the product catalog on social networks and other communication applications. Almost 70% of Flipkart customers come from tier two cities.

Again, e-merchants use the vernacular, voice assistance, and videos to help consumers navigate the app. “Physical retail has its limits in terms of offering a wider selection of products. Online retailing offers more options. In a small Indian town, there are a significant number of people who have the aspiration and the ability to buy, ”said Shyam Unnikrishnan, Partner at Bain & Company.

Flipkart has already rolled out language support in over 10 Indian languages, added video content to the app in addition to launching voice search and a voice assistant for the grocery store. Amazon Prime Day 2021 saw over 70% of new member signups in tier two, three, and four cities.

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