Changing Consumer Behaviour: A tale of metro versus small town buyer

India's e-commerce landscape is witnessing a significant shift driven by the growing importance of online shoppers from Tier II, III, and IV cities. While urban consumers were early adopters, recent data reveals a new wave of online buyers from smaller cities and towns. This trend highlights the evolving consumer behavior across the nation, presenting both challenges and opportunities for brands and retailers. The study reveals a fascinating contrast in online shopping behavior between India's metro cities and Tier II & III cities. While both segments are embracing e-commerce, their motivations and preferences differ significantly, presenting unique opportunities for businesses.
Metro vs small town consumers, a study in contrast
Metro consumers prioritize convenience, speed and access to wider variety. They are frustrated by crowded malls, limited product variety, and pushy sales staff in physical stores. Consequently, they flock to online platforms seeking instant gratification and are willing to pay a premium for express delivery. For them, limited product variety in physical stores, excessive crowds during weekends, lack of knowledge among store staff is a challenge. They prefer browsing the net for express delivery options and are willing to pay premium), focus on categories like electronics, fashion, and groceries. Their payment methods are mostly UPI gaining but concerns regarding online fraud persist among some segments.
In contrast, consumers in smaller towns and cities face a different set of challenges. Limited access to brands and products restricts their choices. Additionally, the absence of attractive offers and discounts drives them online. Interestingly, homemakers play a significant role in influencing purchase decisions even though men might handle the final transaction. Lack of awareness about e-commerce platforms, concerns regarding online fraud and product quality, limited internet connectivity are a concern for small town consumers. They prefer mobile apps for shopping, focus on categories like sports and fitness, home and kitchen, and health and wellness.
The rise of online shopping in small cities
A sharp increase in first-time online shoppers, primarily from Tier II, III, IV cities, has been observed. This segment differs from urban dwellers in terms of digital literacy, infrastructure, and socio-cultural aspects. Online shopping platforms offer a lifeline for these consumers, providing access to the latest trends and a wider variety of products often unavailable in physical stores. This trend is evident in festive season sales, with smaller cities contributing over 80 per cent sales for some major e-commerce platforms, highlighting the immense potential of these markets.
Despite geographical differences, both segments share a preference for apps over websites for online shopping. However, this trend changes for high-value purchases. Interestingly, social media plays a crucial role in influencing buying decisions across the board. Nearly 62 per cent users have tried products after seeing them on platforms like Facebook and Instagram. This trend is particularly prominent in Rier II & III cities, where social media replaces traditional media like TV and radio as the primary platform for product discovery.
While fashion remains a key driver for both segments, metro consumers focus more on electronics and groceries, while Tier II & III cities lead in sports and fitness, home & kitchen, and health & wellness categories.
The study highlights the need for e-commerce players to tailor their strategies to each segment. Building trust is crucial, especially in Tier II & III cities. Brands can leverage social media to educate and guide these new online users, fostering a sense of security. Moreover, understanding the importance of value perception beyond just price is essential. Delivering a comprehensive service package encompassing delivery, returns, and loyalty programs can significantly enhance customer satisfaction.
The moot point is Indian e-commerce landscape is rapidly evolving, and understanding the nuances of customer behavior across different regions is critical for success. By adopting a localized approach and focusing on the unique needs and aspirations of each segment, businesses can unlock the immense potential of this diverse and rapidly growing market.