With farm sector seen as a key support to growth against the mayhem triggered by the pandemic, these companies sense an opportunity to increase sales betting on rural and small town India. “While our overall ticket sizes have gone down, the huge number of new consumers that have come on board from Bharat have made up for that loss. As a result, our sales have doubled compared to pre-Covid,” said a senior executive at one of India’s leading ecommerce companies, who did not wish to be quoted.
Sample this: Around 65% of Amazon India’s orders currently come from small cities and towns. And more than 50% sellers on the US-headquartered retail giant’s marketplace are from tier-2-and-below markets such as Aligarh in UP, Idukki in Kerala, Angul in Odisha and Rajpipla in Gujarat.
Similarly, during the lockdown till August, Amazon’s rival, Walmart-backed Flipkart onboarded 8,000 sellers, with more than 70% of them coming from smaller towns.
“As a homegrown e-commerce marketplace, we are committed to bringing the next 200 million consumers online. ‘Solving for Bharat’ isn’t a strategy for us, it is ‘the business’ for us at Flipkart,” said Rajneesh Kumar, chief corporate affairs officer at the Flipkart Group, which also operates online fashion marketplace Myntra.
The strong push into rural and semi-urban markets was made possible by several initiatives specific to the Indian market such as voice, video and vernaculars launched by these companies.
“Hundreds of thousands of Amazon customers from tier-1, -2 and -3 cities across Uttar Pradesh, Bihar, Maharashtra, Rajasthan, Punjab, Chhattisgarh, Jharkhand, Telangana and Himachal Pradesh have switched to the Hindi shopping experience,” said an Amazon India spokesperson. “In the past five months, the adoption of the Hindi shopping experience has grown by 3X.”
The bumper crop estimates have also added to the attraction of the rural and small town markets. According to an estimate by Care Ratings, if all goes well, there could be over Rs 26,000 crore of income that would be spent across various commodities and services after adjusting for investment, inputs and savings.
Using the spending pattern in the National Sample Survey Office (NSSO) surveys, the ratings agency estimates that a little over 45% of Rs 26,600 crore could be spent on clothing & footwear (25%) and on durable goods (over 20% on automobiles, electronics, etc) ahead of the festive season. This would be a result of the increased spending due to the robust kharif crop.
That may be a huge boost to the economy, which is expected to post a sharp contraction in the current fiscal year due to the impact of the strict lockdown. Most economists expect the contraction to be in the range of 5-15%. Brick-and-mortar retailers, too, have turned their attention to the hinterlands.
“There has not only been a reverse migration of blue collar workers. Thousands of white collar workers too have gone home to live with their parents because of work from home,” said Arvind Mediratta, MD & CEO at Metro Cash & Carry, one of India’s leading B2B wholesalers. “They, too, are now adding to the demand.”