How Technology Has Transformed the Way Commerce is Done in India’s Tier 2 Cities

Prior to the Internet and the spread of technology, major businesses and businesses were concentrated in metropolitan cities and major economic centers, resulting in a market division that excluded small and medium-sized businesses based in Tier 2 cities. from the triad of cheaper smartphones, faster internet, and reliable payment systems like UPI, the inequality of this balance of power has begun to normalize. This revolutionized the way Indians of tier 2 and above bought and sold through e-commerce. According to a report, the pandemic has facilitated a huge increase in e-commerce penetration in India, causing it to jump 12 months to around 4.6% in FY21. As a result, the e-commerce landscape between Business to Consumer (B2C) in India’s Untapped Tier 2 Cities has started to change rapidly.

The diversity of languages ​​and customs in Tier 2 cities creates market complexities as well as opportunities. To meet different consumer demands, e-commerce entities are harnessing digital technologies to deliver a personalized experience to their customers, resulting in increased traction and business growth. According to a recent report, due to the widespread use of disruptive technologies, Tier 2 locations and above could account for 88% of online shoppers between 2020 and 2030. India’s e-commerce market is expected to grow at a staggering rate 25-30% annual rate over the next five years, reaching $120-140 billion in market size by FY26. Indian small towns and cities will drive this expansion, accounting for 80% the growth of new customers. As more companies invest in digital solutions and technologies to optimize supply chains, improve turnaround times and better understand customer demand, let’s see how this has transformed the way commerce is done. done in Tier 2 cities in India:

Internet and digital technologies

The success rate of commerce in Tier 2 cities is directly related to the internet penetration in these areas. Mobile phone and Internet adoption in India has exploded; currently, 80% of the country’s 650 million smartphone owners live in small towns. To take advantage of this unique opportunity, retailers in Tier 2 cities are trying to complement traditional retail with digital commerce by partnering with large online retailers. AI algorithms and big data analytics help brands and retailers in Tier 2 cities decode various consumer behaviors through their purchasing inputs such as product preferences, browsing history, etc. . Automated technologies such as AI chatbots are quickly becoming the mainstay of customer satisfaction and retention rates like never before.

Social networking sites and the booming creator economy led by social media influencers continue to play an increasingly crucial role in the growth of e-commerce and enable many marketers and women entrepreneurs to deliver their products to potential customers across India.

Payment gateways

With cash being one of the most important aspects of running a business, the wide array of digital payment options has revolutionized the way commerce is conducted in Tier 2 cities. Payment gateways allow businesses to receive cash immediately rather than waiting for COD payments, reducing the risk of theft and fraud. Retailers are gradually turning to payment gateways to improve the security typically associated with financial transactions. To encourage customers to use card payments, banks and e-merchants offer various incentives such as cashback and easy monthly installment (EMI). On the consumer side, the rapid adoption of UPI and the easy availability of small loans via prepaid credits, Buy Now Pay Later (BNPL) cards and similar instruments mean that there are now more than one secure way to complete an online transaction. than was possible until a few years ago with limited options.

Logistic realization

The rise of e-commerce and digital payments in recent years has boosted last-mile logistics and warehousing infrastructure in Tier 2 cities. This has provided a hassle-free solution for consumers to shop and for retailers and brands to complete execution in record time. As consumer demand grows in Tier 2 cities, robust supply chains and logistics networks are expanding their services into markets to help support future businesses. Additionally, consumer-friendly return policies through logistics companies have played an important role in driving consumers in Tier 2 cities to opt for alternative commerce. This opportunity to connect to a vast logistics network with competitive pricing from new era logistics players has led to the boom of several hundred D2C brands launched from and targeting Tier 2 cities and beyond.

However, despite advances in technology, commerce in Tier 2 cities still requires rethinking traditional marketing strategies, to ensure a more customer-centric approach, which will require several confidence-building measures to enable Tier 2 city users to become real. online shoppers simply consumers of Internet bandwidth.

According to a report by Blume Ventures, out of approximately 700 million mobile internet users, only 150 million have actually purchased online. Less than half of these buyers belonged to level 2 and above. Therefore, while the foundations have been laid in terms of infrastructure, much remains to be done in terms of changing consumer behavior to be able to successfully meet the demands of a diverse clientele. In this scenario, companies able to build a reliable distribution network very close to the end consumer will be able to provide disproportionate value to existing and emerging consumer brands. Eventually, agility and the ability to deliver in an ever-changing landscape will separate the leaders from the pack, as it always has.

(The author is Mr. Vidyarthi Baddireddy, co-founder and CEO of PickMyWork and the opinions expressed in this article are his own)

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