Which Part of India is Contributing The Most to E-Commerce Growth?

E-commerce has seen a lot of firsts this year. New trends have come about; myths have been busted; new markets have emerged; but all of these point towards a brighter future for the e-commerce industry in general.

With no intentions of bursting any bubble, we analysed some data, that points to facts which may be surprising for some and yet useful when included in the business strategy planning.

We compared data from over 700,000 orders made across multiple marketplaces and various categories in 2014 and found some notable trends.

South India Buys More than the North

As would be expected, the 5 metros in the country are also the top 5 spenders in the country. And from this, you can see that the top amongst these is South India (Bangalore, Hyderabad and Chennai) as compared to the North.

Sno City State % of total orders
1 Bangalore Karnataka 14.12%
2 Delhi Delhi 11.65%
3 Mumbai Maharashtra 6.98%
4 Hyderabad Andhra Pradesh 5.73%
5 Chennai Tamil Nadu 4.12%

 Contribution to overall e-commerce sales are as below:

  • South India – 41%
  • North India – 32%
  • West India – 21%
  • East, North east – 6%

graph-2

According to eBay’s statistics, West India has the most active sellers at 46%, followed by North India at 28%.

Kolkata, the remaining metropolitan, was not in the top 10 and accounted to only about 1.32% of the total orders.

Tier 2 Cities with Satellites Vs Without Satellites, and Tier 3

In the top 15 cities, there were as many Tier 3 cities as Tier 2 (classified according to the Sixth Central Pay Commission classification of cities.)

Sno City State % of total orders
6 Pune Maharashtra 4.07%
7 Kanchipuram Tamilnadu 3.99%
8 Gurgaon Haryana 3.18%
9 Rangareddy district Andhra Pradesh 2.51%
10 Thane Maharashtra 2.14%
11 Gautam Buddh Nagar District Uttar Pradesh 2.09%
12 Ahmedabad Gujarat 1.63%
13 Ghaziabad Uttar Pradesh 1.52%
14 Kolkata West Bengal 1.32%
15 Jaipur Rajasthan 1.28%

Let’s drop the Government’s classification and look at these cities from a different perspective, as we can’t call most of these as tier 3:

  • Thane – just an extension of Mumbai
  • Noida, Gautam Buddh Nagar – part of Delhi NCR
  • Kanchipuram – part of greater Chennai region
  • Rangareddy district – part of greater Hyderabad

It is clear that tier 2 cities with satellites contribute more than those without satellites.

Tier 2 and 3 Cities collectively brought in more than 56% of the total orders

With more Internet connectivity and increase in DTH and pay TV penetration in India, exposure to new age gadgets and fashion is growing. Youngsters from less developed cities and districts with limited or no access to branded products are turning to online stores. COD has made it very convenient for people to pay for products even if they do not own a debit or credit card. All these factors could have played a role in this growth.

graph1

5 States to Cater to

While it’s a good idea to reach out to as large a consumer base as possible, if you had to focus your attention based on who spends more, these are the states to cater to:

  • Karnataka
  • Maharashtra
  • Tamil Nadu
  • Delhi
  • Andhra Pradesh

These make up for almost 65% of the e-commerce pie. The top 5 metros are part of these states and we have already seen the significant contribution they make to overall sales.

5 States You can Ignore

Despite the potential of these markets, certain bigger states like the below generate less than 1% online sales each, either due to connectivity issues, laws and restrictions, or even cheating customers:

  • Kerala
  • Bihar
  • Orissa
  • Madhya Pradesh
  • Assam

Although India Post is said to be sprucing up its operations to match up to the requirements of e-commerce, solutions to issues related to e-commerce regulations and cheating customers don’t seem to be round the corner yet.

This article of ours was published in iamwire.

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