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Online shoppers from Tier 2 to Tier 4 cities spent up to 77% more than those from Tier 1 cities in their last online shopping transaction: IIMA Report

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Online shoppers from Tier 2 to Tier 4 cities spent up to 77% more than those from Tier 1 cities in their last online shopping transaction: IIMA Report

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• One third of consumers reported visiting digital retail platforms every two to three days
• Male consumers spent 36% more money than female consumers online in their last online shopping
transaction
March 27, 2023: The Indian Institute of Management Ahmedabad (IIMA), a premier global
management Institute, today launched a survey report titled ‘Digital Retail Platforms and Consumer
Emotions: An Indian Perspective,’ authored by Professor Pankaj Setia, IIMA Chair Professor,
Professor of Information Systems and Strategy, and Chairperson of the Centre for Digital
Transformation (CDT), Professor Swanand Deodhar, Assistant Professor (Information Systems), IIMA
and Mr. Ujjwal Dadhich, Research Manager, CDT. The report offers crucial insights about digital retail
adoption across India and how it has transformed into a ubiquitous shopping option for many, both in
urban and rural India.
Sharing his views on the survey outcomes, Professor Pankaj Setia said, “The use of technology for
retail is revolutionising how India consumes. We are very excited to share the emerging trends that will
help retailers, policymakers, and others to harness the power of technology for creating valuable retail
ecosystems.”
Some of the key findings of the report are-
• Consumers from smaller cities (Tier 2 to Tier 4 cities) spent up to 77% more than those from Tier
1 cities in their last online order.
• 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.
• Nearly 72% of consumers started shopping online in the last one to three years, hinting at a surge
during the COVID-19 pandemic.
Spending on online shopping
• More than 90% of consumers reported spending less than ₹10,000 in their last online shopping
transaction.
• Male consumers spent 36% more money than female consumers in their last online shopping
transaction
• The median spending (of ₹1,500) is more by consumers over 50 years of age, indicating that older
age groups are also actively purchasing online. On the other hand, consumers upto 35 years of age
like to spend more, and a higher proportion of consumers in this age group spend over ₹10,000.
Preferences by gender, age and income groups
• Female consumers shopped more for clothing and fashion products, whereas men shopped for
electronic products.
• Female consumers reported realizing greater convenience from online shopping than male
consumers
• Females were keener on delivery time and return policies, while male consumers looked for better
quality, equated monthly instalments (EMI) options, and online recommendations.
• Consumers under 24 years and those over 60 years reported realizing higher convenience scores
from online shopping.
• Consumers under 35 years of age visited multiple websites before making a purchase and were more
influenced by online recommendations. On the other hand, buyers over 60 years visited only one
platform for their last online transaction.
• In comparison to low-income groups, high-income buyers (having annual household income >₹10
lakhs) have spent more in their last online shopping transaction and tend to spend more amount
every month.
Motivators for increased online shopping
• Consumers prefer digital retail platforms due to the convenience of access and transaction, postpurchase experience, and value for money.
• Consumers from lower-income groups reported higher convenience and satisfaction scores.
• Overall, consumers reported an average score of 5 out of 7 when asked about
the convenience derived from digital retail platforms. With a greater variety
of services, products, and instant delivery time, Tier 1 city consumers reported having higher
convenience and satisfaction scores than consumers of smaller cities.
By using digital retail platforms, consumers are now better able to search for products and gain more
information through product images, descriptions, and reviews. Consumers visit multiple websites,
comparing deals, refund policies, payment security, and the estimated time of arrival (ETAs) of products
before deciding on a purchase. Fashion, clothing, and electronics are the major product categories in
which consumers made their last online purchases.
Pilot enterprise survey: In addition to the consumer survey, IIMA also conducted a pilot enterprise survey to
examine the impact of digital retail on business. The enterprise survey findings suggest that while most
retailers reported switching to online retail platforms has increased sales and added additional income,
they are paying a huge chunk of fees to retail platforms in the form of commission, shipping fees, and
transaction fees.
About the Centre for Digital Transformation at IIMA
The Centre for Digital Transformation at IIMA, chaired by Prof. Setia, focuses on activities that enhance
an understanding of the digital ecosystem and catalyse leadership, as it leverages its expertise in research
and development to provide thought leadership for digital transformation. Through research, training
programmes, workshops, and seminars, the Centre creates and shares insights that show the way
forward through all the complexities that India presents.
One of the initiatives that the Centre has been actively working on is the The Retail Tech. Consortium
(RTC). The consortium was set up in 2022 and aims to engage with Retail tech leaders and firms to
engage collaboratively on technology evolution and applications which can benefit both consumers and
firms.

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