Tier-2 customers driving the $14.5 billion e-commerce industry in India: RedSeer report

Online shoppers from India's Tier 2-3 cities and remote corners are now driving the growth of e-tailing industry, said Bangalore based research firm RedSeer in its year-end review.

According to the report, the population of online shoppers from India's Tier 2 and plus cities is growing over three times faster than its metros.

"The e-tailing industry saw a rapid increase in the number of shoppers in Tier 2 plus cities in 2017, contributing nearly 41 percent of the overall online shoppers in 2017. This is going to be a significant lever for the growth of e-tailers in the Indian market in 2018 as well," the report said.

It also attributed the growth to a sharp rise in affordable data offerings by the telecom operators. Overall, in 2017 the internet sector evolved with a clear value proposition in consumers mindset.

While sectors such as online cabs, hotel aggregation and online travel agencies have proven their value to customers, e-tailing is still considered a sector with large growth potential, the report highlighted.

"There are sectors which are showing clear signs of growth and hold a large potential but can still be driven by discounting. These are followed by sectors which have proven their value and might not be driven by heavy discounting. Then there are emerging sectors which are in nascent stages but can potentially grow large, and finally the sectors which are matured and might not show exceptional growth from here," the report said.

According to the report, India's e-tailing industry which has grown to over USD 14.5 billion in revenues annually still shows a large growth potential.

There was 34 percent year on year growth in the number of unique shoppers across Tier 2 and plus cities. India's Tier 1 and metro cities too reported decent growth of 18 percent and 11 percent in terms of addition of online shoppers, the report said.