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80% of Online Shoppers Are Mass Consumers from Tier 2 and 3 Towns : Meesho Report

SUMMARY

1. Meesho’s report reveals that mass consumers, who drive low average selling price (ASP) purchases, now make up 80% of India’s online shopper base. These consumers predominantly come from tier 2 and tier 3 towns, with a significant portion under 25 years old, and are propelling growth in categories like fashion, beauty, and electronics.

2. The increasing influence of these consumers is reflected in a projected rise in online lifestyle penetration from 13% to 18-22% by 2028. Meesho is responding to this shift with strategic moves, including appointing new board directors and securing $275 million in funding as part of a larger $600 million investment round.

In a recent report by Meesho, the landscape of Indian e-commerce is undergoing a significant transformation. Mass consumers, who generally make lower-priced purchases, now constitute about 80% of the online shopper population in India. This shift highlights the burgeoning potential of markets beyond the major urban centers, with implications for both consumer behavior and industry growth.

Rising Influence of Mass Consumers: According to Meesho's latest report, the majority of Indian online shoppers fall into the mass consumer category, characterized by a low average selling price (ASP) purchase behavior. These consumers typically have an annual household income ranging from Rs 2.5 lakh to Rs 10 lakh. Notably, approximately one-third of these consumers are under the age of 25, reflecting a youthful and increasingly influential demographic.

Shifting Patterns: A striking 80% of these mass consumers are from tier 2 and tier 3 towns, showcasing a significant shift from the traditional focus on metropolitan areas. Notably, shoppers from tier 4 towns are the most frequent repeat buyers across various categories, including women’s fashion, footwear, and baby care products. States like Uttar Pradesh and Bihar are leading this e-commerce growth surge, underscoring the expanding market reach beyond major cities.

Popular Categories and Growth Trends: The report highlights several categories that are performing exceptionally well among mass consumers. Beauty and personal care (BPC), electronics, home and kitchen, and health and fitness products are experiencing robust growth. Particularly noteworthy is the performance of categories such as books, office supplies, stationery, and home improvement, which have seen sales more than double year-on-year.

Fashion Trends and Future Projections: In a related development, a joint report by Bain & Company and fashion marketplace Myntra revealed that two-thirds of fashion consumption now comes from outside the top 50 cities. This trend is expected to drive online lifestyle penetration from 13% to an anticipated 18-22% by 2028. This significant growth highlights the increasing importance of tier 2 and tier 3 towns in shaping the future of online fashion and lifestyle markets.

Strategic Moves by Meesho: Last week, Meesho bolstered its strategic position by appointing four new independent directors to its board. This move comes on the heels of a successful $275-million funding round, which is part of a larger $600-million funding initiative. This investment underscores Meesho’s commitment to expanding its reach and enhancing its offerings in the competitive e-commerce landscape.