Move aside Mumbai and Delhi, Flipkart and Amazon’s biggest consumer base is in cities like Indore and Lucknow

The meteoric rise of e-commerce in India since 2014 is due to increased businesses from smaller towns according to a report by consultancy firm PwC India, exclusively available with Business Insider India.

The report states that Tier 2 and 3 cities have seen 30% to 50% rise in transactions. E-commerce is making available world class luxury brands to the small town consumer base. This was unthinkable earlier.

E-commerce sites are usually data heavy due to the several pictures and plug-ins they use. With roughly 50% data penetration in towns one would think there is not enough 3G out there to support e-commerce in smaller towns across the country. Looks like that is not the only deciding factor. “Companies would have to devise strategies to make their websites and apps lighter. It’s definitely a market with untapped potential”, Sandeep Ladda, Leader of Technology Sector Practice, PwC India said.

The current report also outlines incentives like free delivery, CoD and deals and discounts as the key reasons for the recent take-off. Add to that enhanced functionalities like specialised products and expanded product baskets.

Previously, only 5% of the ecommerce transactions were made with mobile devices. The figure has more than doubled to 13%. Some online retailers claim that over 50% of their orders are being placed through apps. “The e-commerce industry is definitely moving towards mobile apps, thanks to smart phones and 3G connectivity”, Ladda says.

Apps are ‘stickier’ than websites. They can help contribute to building brand image and brand loyalty among consumers. However, the recent drop in Myntra’s sales raise questions whether the industry is ready to go app only.

The fast-growing internet population of 243 million in 2014 is a general indicator of the huge potential of e-commerce in India. The industry has grown by 34% since 2009. It is pegged at $16.4 billion as of 2014. The figure is supposed to jump to $22 billion in 2015.

(Image credit: Indiatimes and PwC India)