Aanan Khurma is the Founder and CEO of Wellversed – a technology enabled platform for creation and growth of Wellness Brands. Aanan has pursued a Bachelor’s Degree in Electronics and Communication Engineering from Punjab Engineering College. Later to that, he indulged in a Healthcare Innovation Program from Massey University. This led him to pursue Stanford Biodesign Program from Stanford University where he specialized in Innovation, Design Thinking, Business Strategy, Medical Device Innovation, and Healthcare Innovation.
With a CAGR of more than 40%, the growth of D2C sellers in India has been phenomenal. India is set to have over 2,50,000+ e-retail brands with a combined GMV of more than USD 350 Billion. This will make India the third largest in the world as an eComemrce market.
According to RedSeer, by 2030, more Tier-II and Tier-III locations will contribute more than 80% of the online shoppers from modern day consumer brands. Even in the present day, over 50% brands being onboarded on popular eCommerce marketplaces come from Tier-II and Tier-III locations.
Improved economic growth, infrastructural development, enhanced connectivity, lower cost of living, and attractive real estate prices have transformed Tier-II and Tier-II cities into robust destinations for the D2C players to expand their reach. Small towns, are growing faster than the larger metropolitan cities across diverse categories such as packaged foods, beauty, personal care and lifestyle products.
Here are the top reasons why smaller cities are booming as hubs for modern consumer brands
- Power Of Community: It is true that audience of consumer brands in smaller cities is more reluctant to try new brands. It is also highly sensitive to even the smallest differences in prices and features. However, if a brand is able to meet the checklist of the audience of smaller cities it can result in a large influx of new customers through word-of-mouth recommendation.
- Disposable Time: Whether online or offline, audience of consumer brands has much more disposable time than the audience in larger cities where majority of free time is taken up by commute. This means that people in smaller cities will go much deeper in analysis of different offerings in terms of features and prices. They may even delay their decision to buy a particular product by days to gather information about the best products in that category. Such information gathering typically happens through friends, family, and online research.
- Disposable Income & Cost Of Living:
- Aspiration To Match Lifestyle: The youth in Tier 2, Tier 3 and even Tier 4 markets are very aspirational. They are constantly getting updates (actively and passively) about gadgets and trends their friends are adopting in metro and international cities. They want new gadgets and want to sport the latest fashion trends. Such aspirations have skyrocketed with mass adoption of social media featuring realtime access to videos of their peers and friends in metro and international cities.
- Adoption Of Online Payment: It is a no brainer that the eCommerce has seen a tremendous adoption with trust on online payments. Prior to 2020, even people aware of online mode of payments were reluctant to use it for one reason or the other. COVID, coerced these fence sitters to adopt and trust online modes of payments. Most of the adoption of online brands in smaller cities has been fueled by this trust.
- Rise Of Creator Economy: Influencer marketing shall become 2200 Crore per year industry by 2025 and continue to grow at a 25% CAGR. Out of the half a billion internet users in India, 210 Million people consumer content in vernacular language. There is a bustling cohort of influencers collaborating with consumer brands and creating content in vernacular language. Personal care (25 percent), F&B (20 percent), Fashion & Jewelry (15 percent) and Mobile and electronics (10 percent) contribute 70 percent volume of influencer marketing.
After the global economic crisis witnessed during the various supply chain disruptions because of the rising Covid-19 pandemic, the Indian economy has recovered itself from the turmoil presented on its path. The country’s stable economic condition comes mostly from the resilience built due to the growth of Tier 2 and Tier 3 cities because of their development centers and promise socio-economic growth. A major part of our Indian population sees these cities as the best place to reside rather than over-populated metro cities which are full of population. Cities such as Noida, Lucknow, Chandigarh, Jaipur, Kochi, etc are amongst the others.
India’s direct-to-consumer (D2C) market is likely to reach a size of $100 Bn by 2025 which means there is plenty of space for new brands to emerge in different smaller D2C spaces which are still uncovered by others. As early as 2025, consumer brands can expect about 50% of their sales coming from smaller cities.