3. Focus on middle-aged consumers, not just younger buyers
With growing competition, e-commerce players will also have to fight harder to attract new consumers. Despite its robust growth and rising popularity, e-commerce still remains limited to a section of the population.
Capture older consumers and retain younger ones
The internet user base in India is tilted toward the younger population, with 75% below 35 years old. However, consumers over 35, who are more financially independent and have higher spending power, are emerging to be just as important.
According to our survey, consumers in the age group between 31 and 54 years old are the highest spenders, while consumers below 30 buy more frequently.
Attract small-town shoppers
Although the internet user base is still largely urban, the rural user base is growing, with rising internet and smartphone penetration rates.
For all the major e-commerce players, the majority of orders come from small cities. One leading e-commerce player gets more than 50% of its orders from non-metro cities. It has set up dedicated rural distribution centers to deliver products received from small towns, and has partnered with the India Post to facilitate delivery.
Online shopping has so far been skewed toward male buyers, but changing lifestyles and the rising number of women in the workforce are changing this. The survey showed that women who shop online buy marginally more frequently than men. But they influence buying decisions much more than men.
4. Understand buying patterns to drive volume
Although different consumer segments often use the same e-commerce platform, differences in their buying behaviors continue to persist. And different product categories also display different characteristics, such as frequency of product purchases, ease of purchasing online and average purchase size.
Define targeted consumer segment
Online shopping carts for men and women tend to vary, as they prefer products in different categories, and consumers choices also vary across age groups.
Understand inherent characteristics of product offerings
Electronics, especially mobile phones and tablets, and lifestyle products (apparel, shoes and accessories) are among the most popular categories online. The popularity of electronic products can be attributed to factors such as attractive offers and discounts, plentiful options and low product differentiation. The popularity of lifestyle products can be attributed to their comparatively low price, the flexibility to use cash on delivery and the ease of returns.
In contrast, furniture and food are considered by both consumers and retailers as better categories for in-store purchasing, although this mindset seems to be changing.
5. Cashless transactions are crucial for sustainable growth
Another crucial factor for consumers is multiple payment options. Cash on delivery (CoD) has been instrumental in making online shopping popular in India. CoD transactions account for around 60% of overall sales in the Indian e-commerce market, much higher than in, for example, China, Brazil or the US.
However, our survey showed that middle-aged shoppers (31-54 years old) prefer cashless transactions (credit or debit cards or net banking). These shoppers are more financially independent and comfortable with cashless transactions. CoD shopping is popular with younger shoppers, who typically don’t have credit cards, and those older than 55, who are hesitant because of cybersecurity concerns.
6. Targeted media is needed for effective communication
Online retailers must customize communication and promotion strategies to fit targeted consumers’ patterns. An advertisement’s impact depends in part on the channel through which it is conveyed.
Top five influential modes of communication or promotion
- Family and friends
- Promotions and offers
- Social media
- Other (e.g., email, SMS)