Convenience is a key determinant of online shopping which is evident from the dominant share of mobile phones across consumer segments. For the customer from a tier 2 and tier 3 markets, there are not many shopping options that are convenient and cost effective both. The key categories therefore for these customers are those for which an offline store shopping experience is highly time consuming. The categories selected are

Online Groceries Gift and Confectionaries Furniture

The mapping of these categories to the selected target group is given below

1. Online Groceries: In most tier 2 and tier 3 cities there are a few retail shopping stores like Big Bazar etc. and therefore the time consumed during shopping is generally high. Also, retailers in tier 2 and tier 3 cities do not have a complete stock of products. On an online groceries platform, a customer can simply place his order in a few minutes and does have to bear the hassle of driving to a shopping complex and spending a lot of time on walking through the aisles. Given, Amazons superior logistic and supply chain function, the order can be delivered within a short time span. Also, since the cost of products in this category is low, it is an ideal platform to convert first time users to regular online customersThis category has already kicked off with many startups like Bigbasket, PepperTap, ZopNow in the fray. The buzz around online grocery space in India has reached new heights in the past few months with investors started pouring millions into this space. Retail consultancy Technopak has estimated that online grocery business to grow at a rate of 25-30 per cent y-o-y basis in major cities of India. As of now, the absence of any major ecommerce player in this segment is an opportunity for amazon carve out a big chunk of market share for itself.

2. Gift and Confectionaries: Given the paucity of good gift and confectionary stores in Tier 2 and Tier 3 cities and the long delivery time taken for existing players, this is another category which can be forayed into. The gifting business is estimated to be worth $7 billion in the country. The share of gift vouchers and cards is expected to reach Rs 9,000 crore by 2017. Of this total market, at least 40% is expected to be from the tier 2 and tier 3 markets. This category can be specially targeted to those customers who are not living in the cities and wish to gift their friends and families for some occasion. As of now, the key players in this segment is Fern and Petals, QwikCliver etc. The drawback with these players is that to deliver the order in time, the order needs to be placed well in advance. Amazon with its well-developed logistics model will be able to cut down the delivery time required.

3. Furniture: The Rs. 140000-crore Indian furniture market is highly fragmented and unorganized. Within it, the online market accounts for a mere Rs.750 crore. But it is growing rapidly and expected to be worth Rs.15000 crore in the next three years. The market is led by Pepperfry, Urban Ladder and Fab Furnish, three online furniture retailers founded in 2012. The tier 2 and tier 3 customer is increasingly spending more on customization of products and therefore furniture is an ideal category wherein the customer can create own designs based on his/her convenience. Amazon can tie up with a few furniture makers in the cities and supply them with the design and then deliver the product. The category can be easily integrated with Amazon’s logistic network and Amazon can guarantee timey and damage free delivery

Time Starved customersValue Conscious Customers First time users

Online Groceries

Value Conscious Customers Emergent Affluent customersGift and Confectiories

Time Starved customersValue Conscious Customers Emergent Affluent customers

Furniture