In the last 10 years or so, online shopping has gone through various evolution cycles in India and has now reached the country’s hinterland, popularly known as Bharat. What started as an experiment with selling books online, for which customers paid through cash on delivery, is now slated to become a $99 billion industry by 2024.
Now, customers prefer paying digitally for online purchases and can buy almost anything online, which gets delivered within hours.
In the early days of online shopping, businesses mostly catered to the needs of customers from tier 1 and metro cities. This trend is changing now as many businesses have started setting up shops and delivering products in lower-tier cities.
According to Bain & Company, India’s e-retail market is estimated to reach $150–$170 billion by 2027. Over the next five years, the market penetration will double to reach about 9 to 10%. A large number of customers shopping online will come from lower-tier cities.
With an increasing number of customers from tier 2 and 3 cities exploring online shopping, merchants should learn how and what these customers want to purchase.
How Bharat and India Shop Differently
When one talks about India, it is quite common to say that people’s language and food habits change every few kilometres. Similarly, the shopping behaviour of people from lower-tier cities differs from the ones living in tier 1 cities.
Unlike shoppers from tier 1 cities, customers living in tier 2 and 3 cities, which is also known as Bharat, started their online shopping journey using smartphones instead of a laptop. This non-English-speaking set of consumers has distinct preferences, needs, and styles when it comes to online shopping.
Here are a few ways how shoppers from Bharat do online shopping:
- Audio search: Opposed to how consumers from metros search for products, customers from tier 2 and 3 cities use audio instead of typing to look for products. Even when they type and search, they prefer using a local language instead of English.
- Video description: Customers from smaller towns prefer to see a video of how the product works instead of reading lengthy text describing its usage. So, if an e-commerce website is selling vegetable choppers, an online buyer from tier 2 and 3 cities would like to see the chopper in action – cutting vegetables.
- Product discovery: Bharat users want to mirror their offline shopping behaviour while shopping online. Just like how they prefer products that are suggested by a friend or neighbour, Bharat consumers like products suggested by influencers or friends on social media platforms. This phenomenon has made social commerce in tier 2 and 3 cities big.
The online shopping trends of customers from tier 2 and 3 cities are continuously evolving. A large number of customers are now preferring to pay online instead of choosing cash on delivery. Moreover, now customers are ready to pay a little premium price for comfort and convenience such as food delivery, buying groceries online, subscribing to an online course, etc.
The Bain & Company report quoted above said in 2021, about 50 million new customers started shopping online.
“These new shoppers largely belong to tier-3 or smaller cities and include Gen Z—which will become a critical cohort in the future. They primarily purchase fashion as the first category online, and they typically start buying at entry price points,” the report said.
Learning what customers from tier 2 and 3 cities are comfortable purchasing online will go a long way for merchants who wish to make it big in these markets.
The massification of online shopping in tier 2 and 3 cities roughly began from 2015 onwards. Categories such as fashion and non-branded apparel started picking up.
To sell to customers in these cities, merchants should do thorough market research to find the category that’s most popular among customers.
Other factors that pushed online shopping in tier 2 and 3 cities include digital payment tools, simple credit options, and an increase in delivery networks.
How Paytm for Business Can Help Merchants in Tier 2 Cities
Succeeding in non-metro cities requires a deep understanding of the market and a strong bond with a partner that can accelerate merchants’ growth journey. Paytm for Business can be that partner as it understands tier 2 and 3 markets like no other.
Paytm for Business takes pride in assisting merchants in their journey irrespective of the sector they operate in. We understand the key requirements of a business when they are looking to expand in a new market.
Here are four ways merchants can leverage Paytm for Business to grow in smaller cities:
1. Paytm Payments Bank
Paytm Payments Bank is a new-age bank that understands the challenges businesses face in lower-tier cities. Merchants who are starting their entrepreneurial stint by setting up shop in tier 2 and 3 cities, can rely on the powerful business account that Paytm Payments Bank provides.
Benefits of Paytm Payments Bank
- Zero-balance account: Merchants need not maintain any minimum balance in their business accounts. This gives more flexibility to entrepreneurs to utilise the money as they see fit.
- Multiple access system: Paytm Payments Bank allows businesses to change access settings for employees so that others in the company can view and transact using the business account.
- Virtual payment account: Businesses can generate virtual account numbers to accept payments via NEFT, RTGS, and IMPS payment modes.
Paytm Payments Bank will take away all the challenges businesses face regarding money transfers, managing banking transactions, and other bank related legalese. This will ensure merchants concentrate on their most important task at hand.
2. Paytm Wallet
Paytm Wallet is an RBI-approved digital wallet, which is used by 30 crore Indians. Since it is one of the most widely used digital wallets in the country, businesses must add this payment mode on their checkout page to ensure customers experience seamless payment.
Letting customers pay using Paytm Wallet also means there are fewer chances of cart abandonment and payment failure. Payment Wallet also guarantees liquidity to businesses as they receive the money immediately in their Paytm Wallet.
3. Paytm Postpaid
To make a mark in tier 2 and 3 cities, businesses will have to think out of the box. Simply having the best products and fast home delivery services is not going to cut it anymore.
Now businesses have an added responsibility of ensuring streamlined buying experience to their customers. Merchants who enable online shoppers to get easy credit to purchase products will have a better chance of making it big than those who don’t.
Interesting Read: Paytm Postpaid – Enabling New to Credit Users to Shop Online
Adding Paytm Postpaid as a payment mode on the checkout page will allow customers to buy products that are out of their budget. With Paytm Postpaid customers can buy a product they like and pay for them later in the consecutive months in EMI. Since this is a zero-interest EMI credit payment tool, it will have a large impact on the business.
4. Paytm Ads
One of the simplest ways to ensure customers know about your business and remember to shop from your online store is through Paytm Ads.
Paytm Ads is one of the most iconic digital advertising platforms that offer businesses multiple digital assets to make their brand visible to customers who are already comfortable with online shopping.
With Paytm Ads, businesses can tailor their campaigns to cater to a niche audience based on their spending habits, geographic location, age, and other parameters. Brands advertising with Paytm Ads stand the chance to get seen by over 300 million Paytm users, of which 150 million are monthly active users. In simple terms, it means that the conversion rate for businesses is higher with Paytm Ads than other digital platforms.
Conclusion
It’s very important that merchants learn the difference between how India and Bharat shop online. Based on the learnings, merchants will have to tweak and strategise their business plan to succeed in tier 2 and 3 cities.
As a part of their strategy businesses should make use of different tools offered by Paytm for Business. These tools will help businesses have a strong foothold in lower-tier cities.
Frequently Asked Questions
Question 1: How can Paytm Ads help my business?
Answer: With Paytm Ads, your brand name will be broadcasted to more than 300 million consumers who use Paytm. With such huge brand visibility, there is a large possibility that you will start seeing an influx of customers to your shop. You can further customise by choosing which demography should see your ad. You can customise them based on customers’ age, financial background, city of residence, etc.
