The demand for Indian online luxury shopping industry is increasing. The luxury segment is poised to grow by around 30 to 35% by 2020. A study by the Confederation of Indian Industry (CII) and research consultancy Kantar noted that the online luxury industry in India grew by 25% from 2015 to 2016.
The luxury segment saw a boost in its sale shortly after the demonetisation in late 2016. Sites like Darveys and Confidential Couture found the number of buyers to be going up, thanks to the discount factor.
Buying luxury products online
Surprisingly, a good chunk of the shoppers is from Tier 2 and 3 cities. Luxury and specialised segments (like jewellery and fashion) are growing faster than the ‘mass produce’ platforms like Flipkart or Amazon.
Luxury platforms like RockNShop, Bombay Perfumery and Tata CLiQ maintain that buyers from Tier 2 and 3 cities are more serious about their purchase decisions, and more informed about brands than their metro counterparts.
Another very interesting trend that is growing of late is that of second hand products. Mr. Luxury Bargain is a platform where people can put their old luxury handbags, ties, sunglasses, cufflinks and fashion jewellery for resale. Shoppers can negotiate the price and buy products with EMIs.
Reasons for the growth of the small-town luxury shoppers
One of the reasons for small town shoppers to turn online for their luxury needs is the lack of facilities in their cities. Falguni Nayar, founder of Nykaa.com says,
“We are seeing 30% contribution towards luxury beauty sales from tier 2 cities. There’s obviously potential demand for such products here, which don’t have the infrastructure to support physical retail.”
Another reason is to escape the thriving fake goods market. Amit Rawal, business head of Tata CLiQ says,
“The discerning consumer now understands that the luxury market is riddled with counterfeit products, especially in the smaller cities. Therefore, they see immense value shopping from us.”
Crunching the numbers
The CII and Kantar study had noted that 40% of the shoppers were from north India, with Delhi NCR region taking the lion’s share. 25% of the luxury shoppers were from south and west of India and 10% from the east.
With most India (60+%) residing in the smaller cities and towns, it is a huge potential for online sellers in general. Mobile penetration has also provided a fillip to the Tier 2 and 3 shoppers. There is an increase in the disposable income of the youth across the country. The market watchers have predicted a good growth for the online luxury segment.
So go ahead and extend your luxury business to the Tier 2 and 3 cities, and watch your sales and profits grow!
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