E-commerce buying to see an uptick from Tier 2 & 3 cities; UPI to dominate digital payments: Report


The year 2020 witnessed interesting business developments, with the pandemic changing the way businesses operate and interact with their end users. In a country where more than 17% of the population is at an average age of 28 years, digital solutions and technology will define the year ahead. Instamojo, a full-stack solutions provider for MSMEs, conducted a study across its platform to understand the trends and developments in the e-commerce space. As part of the study, the company launched a report on the e-commerce Outlook for 2021 which draws the experiences of more than a million small businesses across the country including Instamojo’s merchants like LegalWiz, Syrow, Profitbooks, and MSMEx.

The outlook for online businesses is looking sharp. Today’s digital entrepreneur is more aware than they have ever been and with the right kind of tools and support from the Govt. and private sector, India is set to record massive business growth. The Indian e-commerce outlook for 2021 is as follows:

1. New “tech-powered” entrepreneurs emerge from Tier II and Tier III cities –

· Entrepreneurs today understand the power of online presence and digital operations. There has been a 3X growth in unique businesses creating online stores

· Businesses will come prepared with lean and flexible models that operate in an online-offline mix. The focus will be on selling directly to the consumer in 2021.

· Patna, Guwahati, Imphal were some of the many cities that topped the charts.

Speaking on the findings of the report, Akash Gehani COO & Co-founder, Instamojo said, “Small businesses in India are today evolving themselves as per the consumer and industry requirements. They are hungry for growth and much more resilient than we could’ve imagined. Merchants have come to understand the diverse nature of consumers and that innovation is the key differentiator. In fact, at Instamojo, we on-boarded 200,000+ small businesses from tier II and tier III cities during the lockdown period and more than 70% of these entrepreneurs had no prior online presence. Small businesses owners are making necessary changes to their brands, to the way they operate, and also the way they deal with their customers online in order to survive in the growing e-commerce space.”

2. Upskilling becomes a priority for business in 2021

Digitization will make small business owners invest in digital skilling programs

· Across 2020, MojoVersity, Instamojo’s e-learning platform for entrepreneurs saw a 9x growth in enrollments and a 11x growth in the number of merchants getting digitally certified

· Raniganj, Ratnagiri, and Kondotty all tier III cities – among the top 10 cities in terms of traffic on mojoVersity

3. Businesses to become funding ready with Govt. initiatives and positive investor outlook

As more entrepreneurs emerge from smaller towns and cities in India, accelerators and incubators are also expanding their services into markets to help nurture the upcoming businesses. Industry reports indicate that 40% of investors will come from Tier II and Tier III cities.

4. Omnichannel automation to take priority

· Online invoicing and single platform automation becomes mandatory for businesses

· Online accounting, invoicing, and inventory management will emerge as the first preference for the new age entrepreneur.

5. Customer support becomes hyperpersonalised

· For Tier II and Tier III cities, localised customer support in regional languages and dialects will help businesses and brands to gain competitive edge.

· Customer support will be tech driven with automated ticketing, live chatbots, advanced CRM and omnichannel support

6. Instagram becomes a major branding and acquisition channel for businesses

As a large number of businesses went online in 2020, they also recognised the importance of a wide social media presence. The number of businesses updating their social media handles on their Instamojo online store went up an average of 30% Quarter over Quarter.

7. Buyer patterns 2021

· Buying to increase from Tier II and Tier III cities

· UPI will dominate the payments space. On Instamojo, there was a 135% year over year growth

· More affluent buyers will purchase from local businesses



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