E-commerce firms rapidly scale up small-town operations head of festive season

From unicorns to smaller peers, India’s small towns are playing host to a bout of rapid expansion on part of the customer-facing start-ups, and the upcoming festive season is playing a part, analysts say. 
Flipkart’s announcement on Thursday that it has added a whopping 800 new cities and towns to its delivery network over the past six months, is just the latest in a series of large-scale expansions into small towns. 

Just a month earlier, food aggregator, Zomato said that it now has a presence in over 500 cities in India, with a significant 40 per cent of its business coming from cities other than the top 15 metros. Swiggy has widened its reach far beyond the metros and e-commerce start-up Shopkirana raised $10 million to fuel expansion into smaller towns. 

In Flipkart’s case, the spike in a number of places it serves comes just ahead of the critical festive season. 
The Reach Project launched in February specifically focused on rapidly scaling up service capability in usually unserviceable areas of the country. Six months on, the company says it has increased operations in these areas by 50 per cent. “This expanded base is going to help more than 60,000 sellers from Uttar Pradesh, Bihar, Tamil Nadu, Telangana, Jammu and Kashmir, Assam and Tripura,” it said. 

“We are making a concerted effort to ensure that MSMEs, sellers, rural entrepreneurs, artisans, and weavers are able to participate, capitalise, grow and prosper through the opportunities afforded by e-commerce and celebrate with the country as a whole,” Flipkart Group CEO Kalyan Krishnamurthy added. 
Analysts say that it’s rather clear to companies that smaller towns are where the growth will come from in the future, which is fuelling the strengthening of networks.

According to a recent Redseer Consulting report, growth in the number of online shoppers in Tier II and Tier III cities and rural areas is expected to rapidly outpace that of urban areas, with close to 70 per cent of the e-tailing of Gross Merchandise Value coming from these markets by 2023. They currently contribute around 40 per cent. “With the festive season just days away, the rural markets become very important for us,” said an industry source.