Tier 2-4 cities spent up to 77% more than tier 1 on online shopping: IIMA Report

Male consumers spent 36% more money than female consumers online in their last online shopping transaction as per the Indian Institute of Management Ahmedabad (IIMA) survey

Mumbai: Tier 2 to tier 4 cities spent up to 77% more than tier 1 cities in their last online shopping transaction, revealed a survey report by the Indian Institute of Management Ahmedabad (IIMA) titled ‘Digital Retail Platforms and Consumer Emotions: An Indian Perspective.’

The report offers crucial insights into digital retail adoption across India and how it has transformed into a ubiquitous shopping option for many, both in urban and rural India. It also suggests that consumers visit multiple websites, comparing deals, refund policies, payment security, and the estimated time of arrival of products before deciding on a purchase. Fashion, clothing, and electronics are the major product categories in which consumers made their last online purchases.

Some of the key findings of the report are:

• Consumers from smaller cities (tier 2 to tier 4 cities) spent up to 77% more than those from tier 1 cities in their last online order.

• Browsing online has now become a favourite pastime for consumers, with one-third of consumers reported visiting digital retail platforms every two to three days,

• Doing these activities, consumers invested an average of 34 to 35 minutes in their last online shopping.

• Nearly 72% of consumers started shopping online in the last one to three years, hinting at a surge during the COVID-19 pandemic.

Spending on online shopping

• More than 90% of consumers reported spending less than ₹10,000 in their last online shopping transaction.

• Male consumers spent 36% more money than female consumers in their last online shopping transaction

• The median spending (of ₹1,500) is more by consumers over 50 years of age, indicating that older age groups are also actively purchasing online. On the other hand, consumers up to 35 years of age like to spend more, and a higher proportion of consumers in this age group spend over ₹10,000.

 

Preferences by gender, age and income groups

• Female consumers shopped more for clothing and fashion products, whereas men shopped for electronic products.

• Female consumers reported realizing greater convenience from online shopping than male consumers

• Females were keener on delivery time and return policies, while male consumers looked for better quality, equated monthly instalments (EMI) options, and online recommendations.

• Consumers under 24 years and those over 60 years reported realizing higher convenience scores from online shopping.

• Consumers under 35 years of age visited multiple websites before making a purchase and were more influenced by online recommendations. On the other hand, buyers over 60 years visited only one platform for their last online transaction.

• In comparison to low-income groups, high-income buyers (having annual household income >₹10 lakhs) have spent more in their last online shopping transaction and tend to spend more amount every month.

 

Motivators for increased online shopping

• Consumers prefer digital retail platforms due to the convenience of access and transaction, post-purchase experience, and value for money.

• Consumers from lower-income groups reported higher convenience and satisfaction scores.

• Overall, consumers reported an average score of 5 out of 7 when asked about the convenience derived from digital retail platforms. With a greater variety of services, products, and instant delivery time, Tier 1 city consumers reported having higher convenience and satisfaction scores than consumers of smaller cities.

The survey report titled ‘Digital Retail Platforms and Consumer Emotions: An Indian Perspective’ is authored by Professor Pankaj Setia, IIMA chair professor, professor of Information Systems and Strategy, and chairperson of the Centre for Digital Transformation (CDT), professor Swanand Deodhar, assistant professor (Information Systems), IIMA and Ujjwal Dadhich, research manager, CDT.

In addition to the consumer survey, IIMA also conducted a pilot enterprise survey to examine the impact of digital retail on business. The enterprise survey findings suggest that while most retailers switching to online retail platforms are reporting increased sales and added additional income, they are paying a huge chunk of fees to retail platforms in the form of commission, shipping fees, and transaction fees.

The Centre for Digital Transformation at IIMA, chaired by Prof. Setia, focuses on activities that enhance an understanding of the digital ecosystem and catalyse leadership, as it leverages its expertise in research and development to provide thought leadership for digital transformation. Through research, training programmes, workshops, and seminars, the Centre creates and shares insights that show the way forward through all the complexities that India presents.

IIMA was founded as an innovative initiative by the Government, industry and international academia in 1961. Since then, it has been consolidating its global footprint, and today it has a network with over 80 top international institutions and a presence in Dubai.

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