India has been a frontrunner when it comes to tech innovation, especially around digital commerce. The country’s ecommerce market has grown massively over the last decade to $120 billion and is poised to grow to $400 billion-plus by 2030.
The next frontier of this ecommerce growth and penetration will be from Tier II cities, as more customers adopt ecommerce as one of their primary shopping channels.
However, ecommerce in small-town India remains an untapped opportunity since the country is still in the early stages of online commerce. Only 8% of Indians (~105 million) shop online for products, with an average spending of $286 per year—much lower than other markets.
But 80% of India’s approximate 650 million smartphone users are from Tier II cities and beyond, and two out of every three new ecommerce customers are from small towns.
The next big opportunity is in serving this set of customers, with very different needs and aspirations from their Tier I/metro counterparts.
Life is a very different experience in small towns in India as compared to larger cities, especially when it comes to commerce and shopping.
For customers in small towns, shopping has always been more than a transaction as the social experience matters more. The shopping dynamics are extremely different from India’s top 5-10% who live in large cities and metros.
Customers from low-mid income customer segments are extremely value conscious, prefer a social shopping experience, and need to have social trust in the transaction channel.
Digitally connected Indians spend an average of three hours per day online, of which more than two hours are consumed by messaging, social media networking, and watching videos. WhatsApp itself has approximately 500 million users in the country.
India’s retail market is rapidly evolving by finding innovative ways to sell directly to consumers through social networks and social media. This involves using a variety of formats, including conversational commerce, group buying, video commerce, and social resellers/agents.
Legacy ecommerce players optimise for efficiency, funnel conversion, and purchase rates, and don’t account for intrinsic social shopping behaviours of customers.
However, the levers are very different to serve the next 500 million customers. Social needs to be built in tightly to shopping experiences. These are some of the traditional challenges in making ecommerce a social experience:
● Building a product that really enables social sharing use cases. Companies need to focus on creating products and user experiences that delight customers and make the social experience seamless in the ecommerce transaction. Companies and startups need to focus on products that actually enable social sharing, and not just ecommerce transactions.
● Low customer trust in online shopping for customers in small towns: We need to build social trust in the shopping experience by exploring a variety of formats like community group buying, live commerce or reseller commerce.
● Building a feeling of community connection and trust: Replicating behaviours associated with offline commerce (e.g., sharing products or ideas with friends, browsing in a shopping mall with friends) in an online setting / ecommerce app.
● Focus on vernacular commerce platforms: Building customer journeys in regional languages which helps enable underserved customers to quickly adapt and start shopping online in a format and language that is comfortable for them.
● Gamification and personalisation: Building layers of gamification and user personalisation to augment shopping experiences and help in acquiring, retaining, and re-engaging customers.
● Building scalable AR/VR/metaverse commerce use cases as the ecommerce industry matures and shopping integrates with our physical and digital lives. Meta-commerce over the next few years will be a massive multibillion-dollar industry.
There is a big opportunity for ecommerce companies to weave social experiences into their commerce platforms and taker a chunk from transactional platforms and expand ecommerce’s overall share of spend in customer’s wallets.
By building sharing use cases and fun experiences that replicate the fun of real-world shopping, commerce’s offline-to-online transition will accelerate in India and other emerging markets.
There are exciting times ahead for India’s ecommerce ecosystem, and being social-first would define serving Bharat’s next billion customers.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)
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