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Rediff.com  » Business » Smaller cities and towns go e-shopping

Smaller cities and towns go e-shopping

June 26, 2007 04:03 IST

Vijaya Marda, a housewife from a small industrial town in Maharashtra called Ichalkaranji, is busy juggling her time between managing her household, helping her son prepare for his upcoming entrance exams, and shopping for her daughter's wedding which is later this year.

A couple of years ago, a wedding in the family would have meant constant week-long trips to Mumbai to visit designer showrooms for jewellery and clothes shopping -- bringing the rest of the Marda household activities to a halt.

However, with e-commerce, the scene is changing and the Mumbai sojourns have reduced. Vijaya has been doing a lot of window-shopping online and even ordered some jewellery from cyberspace.

A look at jewellery brand Adora's online orders records speaks volumes for the growth of e-commerce in tier B and C towns. Of the current 13 orders pending in the firm's online orders register, nine are from Tier B and C towns like Phagwara in Punjab, Durgapur in West Bengal and Bhubaneshwar in Orrisa.

"Non metro or rural towns account for 35 per cent of our online sales," says Chetan Dhowan, CEO, Adora Jewellery, a brand owned by Concept Jewellery (India).

Manish Agarwal, vice-president-Marketing, rediff.com, attributes the growth to "organised retailers entering the e-commerce space, thus driving the credibility of the business".

He adds the introduction of multiple payment options like demand draft, cheques, net-banking cards and mobile payment gateways besides credit cards being offered by portals, have added to the growth.

According to the Associated Chambers of Commerce & Industry of India, the e-commerce space is estimated to grow at 150 per cent to touch Rs 5,500 crore in 2007-08 from Rs 2,200 crore in 2006-07. There are around 30 million Internet users in India, of which 20 million are online everyday, according to the India Online 2007 survey by Juxt Consult.

"Three-fourths of all regular online Indians (76 per cent) search for products and services online. This has shown a 60 per cent growth in the base of 'online shoppers' in the last one year -- from 11.5 million in 2006 to 19.1 million shoppers in 2007," the report further indicates.

Buying is not limited only to the metros (the top 10 cities) which account for 45 per cent of the overall shoppers' base. Urban uptowns, emerging uptowns and other towns -- with a population greater than 20,000 people -- account for 55 per cent.

The growth of e-commerce, the report notes, is coming from emerging towns at 59 per cent and other towns at 252 per cent. On the other hand, e-commerce in the top 10 cities grew at 48 per cent while it registered a negative 6 per cent in urban uptowns.

Deepa Thomas, manager-Corporate Communications, eBay, which has 2 million registered users spread across 670 towns, affirms the trend. "Around 50 per cent of our buyers come from the tier B and C towns like Agartala and Tripura," she says.

S P Shukla, president, Wireless Business, Reliance Communications -- which has an online presence for sales of its wireless data cards on eBay -- adds: "Around 20 per cent of our online sales come from tier B and C towns."

But despite the growth, the base of really 'active' online buyers (those who buy online at least once a month) is almost stagnant at 2.2 million, same as 2006.

"The proportion of 'active online buyers' among the 'active online users' (who use the net at least once a month) is abysmally low at 9 per cent," states the Juxt Consult report.

However industry players are optimistic the status will change with people like Vijaya from far-flung cities and towns acting as catalysts.
Sapna Agarwal in Pune
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