Small towns' growing desires drove D2C and e-commerce growth in 2024

In 2024, India's Tier-II and -III towns and the hinterland emerged as key growth drivers for e-commerce companies and direct-to-consumer brands, with strong demand for their products and services

In 2024, India’s Tier-II and Tier-III towns and other rural regions emerged as key growth drivers for e-commerce companies and direct-to-consumer brands, with strong demand for their products and services. 

E-commerce firm Meesho concluded 2024 with a 35 per cent year-on-year increase in orders, more than half of which were placed by buyers in small towns. The firm recently reached approximately 175 million annual transacting users this year despite challenging market conditions. Interestingly, about 50 per cent of its user base comes from Tier-4+ towns, among them Naidupeta in Andhra Pradesh, Sherghati in Bihar, and Harapanahalli in Karnataka. 

The platform also retained its position as the most downloaded shopping application for the fourth consecutive year, surpassing 210 million downloads. 

Ladakh, Uttar Pradesh, and Bihar emerged as frontrunners in e-commerce user growth, highlighting the untapped potential of Tier 2+ markets. 

This trend signals a broader shift in Indian consumer behaviour, with increasing demand for value-driven and high-quality products. This is driving a resurgence of consumption in smaller towns. 

Categories such as beauty and personal care (BPC), and home and kitchen (H&K) saw a cumulative 70 per cent year-on-year growth in orders for Meesho. Similar trends were observed on Meesho Mall, which experienced a 117 per cent increase in orders. Leading brands such as Lotus (6-times growth), Joy (5.5-times growth), Renee (3.5-times boost), and Dollar (1.8-times increase) benefited from this growing digital shift. 

Similarly, Amazon India, the e-commerce giant, recently said its month-long Amazon Great Indian Festival (AGIF) 2024 witnessed 1.4 billion customer visits, the highest ever, with more than 85 per cent of customers coming from non-metro cities.

The AGIF 2024 started on September 27, with 24 hours of Prime Early Access, giving customers access to more than 25,000 new launches from top brands across categories such as laptops, TVs, smartphones, fashion and beauty, home décor, appliances, furniture, and groceries, among others. Sellers from India's heartland took centrestage, with about 70 per cent of participating sellers hailing from Tier-II and below cities. 

“More than 50 per cent of TV purchases came from Tier-II and III locations. Tier-II and beyond contributed to more than 70 per cent of the premium smartphone sales. Over 60 per cent of new Amazon customers from Tier-II cities and below shopped for fashion and beauty items,” said Saurabh Srivastava, vice-president, categories, Amazon India, recently.

 

This demand surge is helping online suppliers find takers in hitherto underserved regions. Take Bella Vita Organic, a direct-to-consumer (D2C) beauty brand, for example. The company which sells primarily through Meesho has seen sales surge by 173 per cent, driven in large part by the increasing popularity of its unisex fragrances and gifting sets. 

The company says it has effectively tapped into Meesho’s extensive network, expanding its reach to customers in both metropolitan and Tier 2 cities like Kota, Thrissur, and Ghaziabad. This strategic expansion has allowed the brand to establish a strong foothold in underserved markets, meeting the aspirations of customers seeking quality and affordability. 

“Our partnership with Meesho has been transformative, driving a 300 per cent growth in revenue over the past year,” said Rajat Khullar, chief business officer at Bella Vita Organic. “The extensive reach of Meesho Mall has enabled us to connect with millions of customers across India, particularly in smaller towns and semi-urban areas, who value high-quality, affordable fragrances. To cater to this audience, we introduced innovative product offerings like our 20ml fragrances, which have been extremely popular among price-conscious shoppers.” 

Amazon added that it witnessed the highest-ever number of sellers (from Tier-II and III cities) receiving a sale (versus AGIF ’23). 

E-commerce firm Flipkart recorded an overall 7.2 billion visits in terms of customer engagement this festive season between September 1 till October 28. 

Reflecting a surge in consumer sentiment and digital adoption, the home-grown e-commerce giant witnessed a record 282 million unique visitors during the period, primarily driven by premiumisation and personalised preferences, especially in metros and Tier-2+ cities. 

Flipkart hosted the 11th edition of the company’s 11-day-long 'The Big Billion Days (TBBD) 2024' sale event from September 27, with early access beginning on September 26 for Flipkart VIP and Plus customers. Amazon Great Indian Festival (AGIF), the month-long festive sale of Amazon, also started on September 27. 

Speaking on the growth observed during the festive season, Harsh Chaudhary, head of Growth (vice-president), Flipkart, said the response seen this year underscores the company’s efforts to make e-commerce available even in the remotest regions of the country. 

Megha Agarwal, chief business officer at Meesho said Meesho Mall’s growth has proven its ability to help brands unlock new customer segments across Tier 3 and 4 markets in India. “Our focus on making branded products accessible at affordable prices has been instrumental in enabling brands like Bella Vita Organic to thrive in underserved markets,” she told Business Standard. 

Fashion e-commerce company Myntra’s recently-concluded festive sale has been the firm’s largest such edition by far, registering 627 million user visits, a significant growth over last year’s edition. During the week-long festival, Myntra onboarded over 1.5 million new customers, with over 80 per cent coming from non-metros. 

Honasa Consumer Ltd. which is home to brands like Mamaearth, The Derma Co., Aqualogica, Dr. Sheths, BBlunt and Staze Beauty, witnessed demand for personal care products from bustling metros to the remotest corners of India across 18,700 pincodes this year. 

“With changing consumer behavior, coupled with the continued growth of innovation, global influences, and the rapid expansion of e-commerce and quick commerce, the beauty and personal care market in India will continue to grow,” said Varun Alagh, co-founder and CEO, Honasa Consumer Ltd. 

Changing patterns 

> Meesho concluded 2024 with a 35% Y-o-Y increase in orders, more than half were from small towns 

> Ladakh, Uttar Pradesh, and Bihar emerged as big contributors to e-commerce user growth

> Amazon India witnessed 1.4 billion customer visits, with more than 85% of customers from non-metro cities

> Flipkart witnessed record 282 million unique visitors during the period, especially in metros and Tier-II+ cities

> Myntra onboarded over 1.5 million new customers, with over 80% coming from non-metros