Surge in online shopping among small town consumers after pandemic: IIMA report

Authored by IIMA Chair Professor and Professor of Information Systems and Strategy and Chairperson of the Centre for Digital Transformation (CDT) Prof Pankaj Setia, Associate Professor (Information Systems) Prof Swanand Deodhar, and CDT Research Manager Ujjwal Dadhich, the report includes findings from a consumer survey that recorded inputs from more than 35,000 respondents across 25 states between May and September 2022.

The spending behaviour of consumers in their last online shopping transaction revealed that male consumers spent 36 per cent more money than female consumers in their last online shopping transaction.

More than 90 per cent of consumers reported spending less than Rs 10,000 in their last online shopping transaction, while nearly 65 per cent shopped products of only one product category in their last online shopping transaction.

Additionally, shopping exclusively, consumers spent a per capita spending of Rs 965 on fashion and clothing products, Rs 4,309 on electronic products, and Rs 1,848 on utility payments.
Nearly 65 per cent of consumers used cash-on-delivery (CoD) to make payments. The use of CoD was more prevalent to buy fashion and clothing products exclusively, the report revealed.

Further, while women shopped more for clothing and fashion products, men shopped for electronic products. Women reported realising greater convenience from online shopping than male consumers. Consumers under 24 years and those over 60 years reported realising higher convenience scores from online shopping.

“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,” the report highlights.

Convenience of access and transaction, post-purchase experience, and value for money are the motivators for increased online shopping as consumers prefer digital retail platforms.

Consumers from lower income groups reported higher convenience and satisfaction scores as overall. They reported an average score of five out of seven when asked about the convenience derived from digital retail platforms, the report stated.

Speaking about how technology is revolutionising the online retail shopping experience, Prof Setia said in the retail sector, consumer centricity is pivotal and digital channels have been instrumental in enhancing customer centricity by not only providing greater access to customers across geographies, but also by engendering and driving positive emotions.
The report also offers actionable recommendations for retailers to retain new online shoppers, engage customers through targeted strategies based on demographics, and enhance satisfaction in smaller cities.

Pilot enterprise survey

The report also includes findings from a pilot enterprise survey with a sample size of 68 enterprise representatives, most located in and around Ahmedabad. According to the survey, most enterprise representatives reported an annual turnover of less than Rs 5 crore and around 76 per cent enterprises reported doing both online and offline businesses, thus following an omnichannel strategy.

Also, while doing business online, enterprises reported using multiple channels, including social media and their own websites, to reach out to consumers to increase sales.

A majority of enterprise representatives reported paying a substantial component of fees to retail channels covering commission on sales, shipping fees, and transaction fees, among others as more than half of the enterprise representatives reported that registering on online retail channels had led to increased sales and additional income.