A recent report shows that the lowest income groups are a key buyer base for e-commerce platforms.
According to a report titled ‘Assessing the Net Impact of E-commerce on Employment and Consumer Welfare in India’ by the Pahle India Foundation, e-commerce platforms are more popular among income groups below Rs 300,000 per annum. This group uses them more than other classes.
The report is based on a pan-India survey of 2,031 offline merchants, 2,062 online merchants and 8,209 e-commerce consumers across 35 cities in 20 states and union territories.
Flipkart has emerged as the most popular e-commerce platform among most income groups, while Amazon is on par in some categories.
As for the lowest income group, 22 percent of users used Flipkart for their shopping needs, especially in apparel and personal care. The other favorite platforms for this income group are Amazon at 20 percent, followed by Meesho at 16 percent, Myntra at 10 percent and Nykaa at 2 percent (Chart 1).
In a slightly higher income bracket – between Rs 6 lakh and Rs 9 lakh per annum – only 8 percent of respondents used Flipkart and Amazon.
The higher income brackets also do not seem to be using websites like Myntra, Snapdeal, Nykaa, Ajio, Reliance Digital and social media platforms.
The percentage decreases as we move up the ladder. Of those earning between Rs 12 lakh and Rs 15 lakh per annum, and of those earning Rs 15 lakh and above, only 1 percent reported using Amazon, Flipkart and Meesho, while none reported using any of the other platforms mentioned.
One reason for this low share could be that many people were unwilling to report their income in the non-profit think tank’s survey.
Tier 2 cities appear to be driving the bulk of sales for the top five platforms (Chart 2). Of the respondents in tier 2 cities, 83 percent used Flipkart, while it was 77 percent for tier 1 cities.
Flipkart and Amazon remain the most popular stores across all city categories.
E-commerce generated 15.8 million jobs, according to the report. On average, e-commerce created nine jobs per seller, while each offline seller employed about six people.
Online sellers employ almost twice as many female workers as offline sellers.
The report provides a comprehensive analysis of how e-commerce is transforming the Indian economy and its implications for employment and consumer welfare.
However, financing for business-to-consumer (B2C) e-commerce has declined in recent years. According to data from market intelligence platform Tracxn, it fell from $2.39 billion in 2019 to $0.29 billion in 2023. Although it increased moderately to $0.39 billion in 2024, it was still significantly lower than the 2019 level (Chart 3).
First publication: Aug 24, 2024 | 12:04 PM IST