There are many inspiring stories of start-ups and entrepreneurs who have successfully scaled up and transformed their businesses by embracing e-commerce. For example, Dorje Teas was started by Sparsh and Ishaan in an effort to revive their family’s heritage, Selim Hill Tea Garden. Their offline business was going through a rough patch, and on the verge of collapse following the pandemic. Hence they explored e-commerce and established an online presence for their business, to sell their high-quality Darjeeling tea at affordable prices to customers across different parts of India. Due to this timely shift, they are back on their growth path again.
Dorje Teas’ success is not a standalone narrative. It’s a story echoed by countless entrepreneurs across small cities in India who are harnessing the benefits of e-commerce. However, despite rising adoption of online shopping, e-commerce currently accounts for only 5-7% of India’s total retail consumption. This is an indication of the massive untapped potential which can be unlocked through e-commerce.
Revolutionising business dynamics for tier 2 and 3 entrepreneursE-commerce has emerged as a catalyst, reshaping business dynamics for small businesses in tier 2 and 3 cities.
Amidst the complexities of the traditional business model, small business owners faced a labyrinth of challenges in understanding consumer needs, curating marketable products, ensuring seamless product availability, and managing overhead costs. Traditionally, understanding consumer needs involved tapping into intuition and word of mouth. Identifying products to sell and forecasting their demand required a balance between personal instincts and local buying behaviour, without comprehensive data. Driving availability in retail meant hefty investments in distribution infrastructure, from warehousing to transportation, with the financial burden often hindering small business owners and limiting their reach. For demand generation, small businesses relied on mass marketing and advertising. The high cost barrier to advertise and drive awareness for new brands or products often relegated small businesses to the shadows. Additionally, feedback from customers was gathered through personal interactions or sporadic surveys, providing insights but lacking the depth of a broader digital platform. The limited understanding of customer needs and trends was a stumbling block for innovation in the small business landscape.In the digital age of e-commerce, managing a business has become increasingly streamlined for entrepreneurs in tier 2 and 3 cities. As more consumers embrace online shopping, local businesses are gaining exposure beyond their immediate vicinity, leading to growth and diversification. Customer insights for launching new products and data-backed demand forecasting replace the guesswork, empowering sellers with valuable information. The financial shackles loosen as e-commerce platforms offer convenient self-serviceable solutions and require low capital for distribution, providing access to crores of customers and unlimited virtual shelf space. The digital stage offers low-cost, sharply targeted, and data-backed advertising, ensuring high product discovery. A major triumph lies in the opportunity for innovation, as analyzing customer reviews becomes not just a tool for improving one’s product but a window into the entire market, fostering a culture of continuous improvement and sparking new ideas. Thus, smaller businesses can operate with leaner infrastructure, channelling resources toward product quality and customer service.
Innovation, inclusion and impact
Leveraging their expansive reach across industries, sectors, stakeholders and communities, e-commerce companies are serving as facilitators of market access, especially for the underserved and underrepresented segments of society. This, in turn, creates opportunities for entrepreneurship, livelihood enhancement, skill development, and community growth – crucial elements in the context of nation-building, contributing significantly to both social development and economic progress. In essence, e-commerce platforms have become champions of democratizing entrepreneurship, with artisans, weavers, local shops and micro-entrepreneurs being able to compete on a national and global stage. This shift dismantles erstwhile barriers that hindered economic participation, empowering individuals and communities to contribute more actively to the economic fabric of the nation.
Today, small businesses, led by local entrepreneurs, have flexible options to leverage e-commerce to reach more customers. They can opt to manage their own warehouse, control inventory, and oversee product packaging and orders. They can also choose to utilize assisted shipping services from e-commerce companies to deliver their orders.
With the increasing prevalence of digital solutions, e-commerce has become a key driver of financial inclusion among entrepreneurs and small business owners in tier 2 and 3 cities of India. Simplified access to digital payment systems enables seamless transactions. Affordability has become a hallmark of e-commerce, thanks to the introduction of financial models like EMIs, Buy-Now-Pay-Later options, and enticing reward programs. The inclusion of widely accepted payment methods and platforms such as UPI and co-branded credit cards, alongside the customary cash on delivery, has contributed to making e-commerce more accessible and beneficial, for both sellers and buyers.
E-commerce has also significantly enhanced inclusivity for consumers, spanning diverse socio-economic backgrounds. This transformation is evident through user-friendly apps and interfaces, robust support for Indian languages, innovative features like voice-assisted navigation, and swift resolution of consumer complaints. Presently, e-commerce services are available in nearly all PIN codes in the country, effectively bridging geographical, linguistic and social gaps. It goes beyond merely facilitating orders – fulfilling the lifestyle aspirations of millions by offering an extensive array of products from both local and global brands.
Government initiatives paving the way
The success of e-commerce in connecting rural India to the broader national landscape owes much to the diverse government initiatives like Digital India, Skill India, Startup India, Make in India, and the JAM (Jan Dhan, Aadhar, and Mobile) trinity. In recent years, the government has proposed the establishment of modern warehousing zones through a public-private partnership model. These warehouses are poised to include cold-storage facilities, a pivotal element in the supply chain of e-commerce platforms across various products, ranging from food and beverages to medicines and healthcare items.
Government bodies, both at the central and state levels, including entities like the Directorate General of Foreign Trade, Inland Waterways Authority of India and India Post, have undertaken commendable initiatives. These efforts aim to fortify e-commerce exports, supply chain and logistics thereby opening new vistas of opportunity for local entrepreneurs.
The proliferation of e-commerce in tier 2 and 3 cities across India signifies a transformative phase in the Indian entrepreneurial landscape, by effectively dismantling traditional barriers. This tectonic shift has levelled the playing field, by prioritizing skills and ingenuity over gender and geographical constraints. The profitability of online businesses lies in their inherent flexibility and scalability, enabling entrepreneurs the autonomy to drive their ventures and navigate through ever-evolving market situations.
Furthermore, e-commerce fuels a culture of innovation and creativity, empowering sellers to customize products and services to meet the demands of a diverse global audience. As tier 2 and 3 cities continue to embrace e-commerce, it will further catalyze an unprecedented wave of entrepreneurial vigour, fostering growth, inclusivity and economic advancement across India.
The author is Director, Selling Partner Services, Amazon India.
