The report says that for Tier 2 and Tier 3 cities, localised customer support in regional languages and dialects will help businesses to gain a competitive edge.

E-commerce purchases to increase from Tier 2 3 cities UPI to dominate Instamojo
Atom E-commerce Saturday, January 09, 2021 - 13:12

The year 2020 witnessed interesting business developments, with the pandemic changing the way businesses operate and interact with their end users. A report on the e-commerce outlook for 2021 shows that customer purchases are likely to increase from Tier 2 and Tier 3 cities, with UPI set to dominate the payments space.  

Instamojo, a full-stack solutions provider for MSMEs, conducted the 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 which draws the experiences of more than a million small businesses across the country including Instamojo’s merchants like LegalWiz, Syrow, Profitbooks, and MSMEx.

While Instamojo witnessed 135% year-on-year growth in the use of UPI on its platform, the report states that more affluent buyers will purchase from local businesses in the future. 

New “tech-powered” entrepreneurs have emerged from Tier 2 and Tier 3 cities with a 3X growth in unique businesses creating online stores, the report says. Looking ahead, businesses will come prepared with lean and flexible models that operate in an online-offline mix and the focus will be on selling directly to the consumer in 2021.

Upskilling will become a priority for businesses in 2021 and digitisation will make small business owners invest in digital skilling programs. The outlook for 2021 suggests that businesses will become funding-ready with government 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,” the report notes. 

Online accounting, invoicing, and inventory management will emerge as the first preference for the new age entrepreneur. For Tier 2 and Tier 3 cities, localised customer support in regional languages and dialects will help businesses and brands to gain a competitive edge. Customer support will be tech-driven with automated ticketing, live chatbots, advanced CRM (customer relationship management) and omnichannel support, the report says. 

“As a large number of businesses went online in 2020, they also recognised the importance of a wide social media presence, with Instagram becoming a major branding and acquisition channel for businesses. The number of businesses updating their social media handles on their Instamojo online store went up an average of 30% quarter-over-quarter,” according to the report. 

The outlook for online businesses is looking bright. Today’s digital entrepreneur is more aware than ever and with the right kind of tools and support from the government and private sector, India is set to record massive business growth, the report says. 

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.”

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