Online sales see growth from Tier 2, 3 cities, UPI to rule payments: Report

The report said entrepreneurs understand the power of online presence and digital operations.
E-commerce buying is growing in Tier 2 and 3 cities. A new breed of “tech-powered” entrepreneurs is emerging from these cities in the country, according to fintech company Instamojo’s e-commerce outlook 2021 report.

The report said entrepreneurs understand the power of online presence and digital operations. There has been a 3X growth in unique businesses creating online stores.  Businesses will come prepared with lean and flexible models that operate in an online-offline mix. The focus will be on selling directly to the consumer in 2021. Patna, Guwahati, Imphal were some of the many cities that topped the charts.

“Small businesses in India are today evolving themselves as per the consumer and industry requirements. They are hungry for growth and much more resilient than we could’ve imagined,” said Akash Gehani, chief operating officer and co-founder, Instamojo. “Merchants have come to understand the diverse nature of consumers and that innovation is the key differentiator.”

He said Instamojo itself brought in more than 200,000  small businesses from tier II and tier III cities during the lockdown period. More than 70 per cent of these entrepreneurs had no prior online presence. He said small businesses owners are making necessary changes to their brands, to the way they operate, and also the way they deal with their customers online in order to survive in the growing e-commerce space.

UPI (unified payments interface) will dominate the payments space. On Instamojo, there was a 135 per cent year over year growth. Also, more affluent buyers will purchase from local businesses.

The report said upskilling has become a priority for business in 2021. Digitisation will make small business owners invest in digital skilling programmes. Across 2020, MojoVersity, Instamojo’s e-learning platform for entrepreneurs, saw a 9x growth in enrollments and an 11x growth in the number of merchants getting digitally certified. Raniganj, Ratnagiri, and Kondotty, all tier III cities, were among the top 10 cities in terms of traffic on MojoVersity.

Businesses are expected to become funding ready with government initiatives and positive investor outlook. As more entrepreneurs emerge from smaller towns and cities in India, accelerators and incubators are also expanding their services into markets to help nurture the upcoming businesses. Industry reports indicate that 40 per cent of investors will come from Tier II and Tier III cities.
There would be a priority on omnichannel automation. Online invoicing and single platform automation is expected to become mandatory for businesses. Also, online accounting, invoicing, and inventory management will emerge as the first preference for the new age entrepreneur.

According to the report, customer support would become hyper-personalised. For Tier II and Tier III cities, localised customer support in regional languages and dialects will help businesses and brands to gain a competitive edge. The customer support will be tech-driven with automated ticketing, live chatbots, advanced CRM (customer relationship management) and omnichannel support.

Photo and video-sharing social media platform Instagram is also becoming a major branding and acquisition channel for businesses. As a large number of businesses went online in 2020, they also recognised the importance of a wide social media presence. The number of businesses updating their social media handles on their Instamojo online store went up an average of 30 per cent quarter-over-quarter.


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