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'E-commerce growth in tier-2, 3 cities outpace tier-1 Indian cities'
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SME Times News Bureau | 11 Apr, 2021
The growth of e-commerce volumes in tier 2 and 3 cities
in India is outpacing that in tier-1 cities, according to a recent
report.
"Smaller Indian cities are now accounting for a bigger
volume of e-commerce sales. E-commerce growth in tier 2 and tier 3
cities in India is outpacing that of tier 1 cities," said an ICICI
Securities report.
Volume share of these smaller cities in
India's e-commerce market increased to 46 per cent in Q4CY20 from 32 per
cent YoY. Also, online spending per customer in tier 2 and tier 3
cities has also improved as these cities held a 43 per cent share of the
e-commerce sales value last quarter, up from 26 per cent YoY.
"This
has raised hopes of a sustainable last mile delivery economics emerging
for the industry - yet hyperlocal last mile small parcel deliveries
remain economically as challenging as ever," it said.
"We
continue to see emergence of end-to-end logistics contracts with Bajaj
Electricals and Flipkart with Mahindra Logistics," it said, adding that
the trend, while accreting value to the service provider, also gains
currency as emergence of multiple channels is increasing supply chain
challenge and risks.
This, in a way, is also augmenting demand for organised warehousing, the report said.
It
noted that post GST implementation, a gradual move towards organised
large format 'grade A+/grade A++' warehousing is leading to significant
business opportunities for sector participants.
ICICI Securities,
however, sees challenges with asset heavy road transportation players
and it said that many transportation models are at the risk of not
reinventing, especially as SME business environment recovers and new
star-tup ecosystem starts to aggressively target the same.
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