04 March 2025, Mumbai
As the e-commerce revolution continues in India, Tier II and Tier III cities have emerged as powerful growth engines, particularly for premium and luxury brands.
Once confined to the bustling metros, the allure of high-quality goods and aspirational lifestyles now finds fertile ground in smaller towns and cities, with internet penetration and evolving consumer behaviour working as growth catalysts.
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The changing landscape
Gone are the days when internet connectivity and smartphone ownership were luxuries limited to the urban elite. Today, with over 70 per cent of smartphone sales occurring in Tier II and III cities, and a boost by initiatives like Reliance Jio's expansive data networks, digital access has become ubiquitous. This democratization has not only empowered consumers but has also catalyzed a change in shopping habits, driving the rise of online luxury consumption.
What’s more, rising disposable incomes across non-metros have helped the market grow. Economic growth has not only boosted purchasing power but also imbued consumers with a penchant for premium products that signify status and quality.
This growing prosperity has unlocked a new wave of demand for luxury footwear, watches, apparel, and accessories, once considered the exclusive domain of metro elites.
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The role of digital influence
In the digital age, consumer awareness transcends geographical boundaries. Social media platforms wield considerable influence, with a Meta study revealing that 68 per cent of shoppers in Tier II and III cities discover new products through these channels. From fashion to niche categories like sportswear and wellness, online influencers and peer reviews shape purchasing decisions, amplifying the reach and impact of luxury brands.
Meanwhile e-commerce platforms have invested heavily in expanding their logistics and delivery networks, ensuring seamless delivery to even remote locations. Companies such as Amazon and Flipkart have expanded their fulfillment centers and delivery networks into smaller cities.
Also, the proliferation of digital payment options, such as UPI, has facilitated convenient and secure online transactions. As highlighted by a Tata Cliq Luxury report, e-commerce has "democratised access to luxury," with consumers in towns like Botad in Gujarat and Asansol in West Bengal purchasing luxury footwear, watches, apparel, and accessories.
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The rise of informed consumerism
Far from impulsive buyers, consumers in smaller cities are meticulous researchers, leveraging social media and customer reviews to make informed choices. This informed consumerism underscores a fundamental shift where authenticity, value, and brand ethos play pivotal roles in purchase decisions.
Tata Cliq Luxury report states customers browse multiple brands before purchasing, reflecting a discerning approach to luxury consumption. The Meta study also showed that GenZ is leading the adoption of quick commerce with 87 per cent of Gen Z respondents saying they have discovered new products or brands via Meta platforms. “Gen Z is also leading adoption of niche categories such as sportswear, wellness, and pet supplies," the Meta study says.
Alongside affluent consumers, the ‘HENRY’ (High Earners, Not Rich Yet) cohort drives demand. This working population, earning well, actively seeks luxury experiences and goods, points out Gopal Asthana, CEO, Tata Cliq Luxury. Tata Cliq Luxury reports that 55 per cent of its sales originate from non-metro areas like Panchkula and Mysore. Asthan says, "These consumers have propelled big jumps in the sales of beauty, accessories, apparel and footwear, and their order value is comparable to those of metro consumers."
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Market dynamics and prospects
India's e-commerce market tells a compelling story of growth and opportunity. Projections indicate that by 2035, the market could touch $550 billion, driven significantly by Tier II and III cities. Anuj Kejriwal, CEO of Anarock Retail, forecasts a steady rise in online shoppers from these regions, underscoring their pivotal role in shaping the retail landscape of tomorrow.
The growth of prepaid orders in e-commerce, within Tier II, III cities, is also rising. This is shown by the increase of prepaid orders in the fashion and accessories, and health and pharma categories, that occurred during the 2025 Republic Day sale, as reported by reports on ET brand equity.
No wonder, global luxury brands like Bvlgari are establishing an online presence in India to reach these customers, bypassing the limitations of physical retail. Online platforms like Ajio Luxe are further enabling brand expansion. The expansion is not limited to traditional luxury such as fashion and jewelry, but also expands into areas such as art.
Despite its promise, the path to success in non-metro e-commerce is not without challenges. Logistics hurdles in remote areas, concerns over product authenticity, and the imperative to build trust loom large. Moreover, adapting to diverse linguistic and cultural nuances remains paramount for brands aiming to resonate deeply with regional consumers.
As global luxury giants like Bvlgari expand their online footprint and platforms like Ajio Luxe democratize access, the opportunities for brands to forge enduring connections with non-metro consumers have never been greater. By embracing digital innovation, personalized experiences, and localized marketing strategies, brands can not only capture market share but also foster brand loyalty in India's evolving retail landscape.
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