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This trend is likely to continue and tier-II cities alone will make up for nearly half the gross merchandising value (GMV, or the total value of goods sold through a marketplace) of online retailing in India by 2020, according to RedSeer . Currently, tier-II towns best online shopping websites make for 35% of India’s total e-commerce GMV. With the number of shoppers from non-metro cities increasing, e-commerce companies have been preparing themselves for these new markets. For one, they online clothes shopping websites are investing heavily in logistics and their supply chains. With online discounting nearly going away, customers are now picking their trusted shopping portals based on delivery and post-delivery services such as return pickups, according to RedSeer. So, rather than depending on third-party players for the last-mile delivery of products, e-commerce players are taking control of their delivery processes. “Both Flipkart and Amazon get nearly 70% to 80% of their deliveries done through captive arms, ekart and ATS (Amazon Transportation Services). And now with Alibaba putting in money on Xpressbees, it has become kind of a captive arm for Paytm,” Arora pointed out. Last month, Alibaba invested $35 million (Rs224 crore) in Pune-based logistics company XpressBees. However, to milk more revenue from tier-II cities, e-commerce players will have to start building trust in the minds of these new consumers and ensure that they shop for a wider range of products. Currently, a majority of purchases from smaller towns are limited to branded low-margin products like mobile phones and other electronic items.
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