The level of digital adoption being witnessed draws attention to the untapped potential of rural e-commerce.
It calls for concerted measures to enable effective internet penetration and success.
What is the emerging scenario?
The next wave of internet users that are coming online are in rural areas.
From the current 18% penetration in rural areas, it is expected that, by 2021, internet penetration will be as high as 45%.
These enablers mean a much higher growth rate for rural e-commerce than urban.
It is estimated that this market is likely to be a $10-12 billion opportunity in the next four years.
What are the needed measures?
Language - As much as 88% of the Indian population is non-English speaking.
It is anticipated that 85-90% of the 300-million-plus new internet users that will get added by 2021 will be local language users.
Therefore, customising applications to interact with rural customers in their own vernacular language is crucial.
This applies across different touch-points such as mobile apps, service and call centres.
Logistics & distribution - Models that leverage existing infrastructure, and assets to lower costs and de-risk asset ownership and investments are essential.
India Post has been leveraged by some players, given the cost and coverage it has. It is an effective way to reach the last mile in rural areas.
Effective supply chain planning helps to address cost of logistics.
E.g. having multiple procurement points, especially for unbranded products closer to distribution areas
Alternate delivery models such as use of crowdsourcing platforms to connect business to non-professional couriers who can deliver goods instantly can be developed.
This “uberisation” model likely suits rural markets, which lack logistics network.
Distributed logistics including using a pool of local people as delivery agents is an effective access and cost management strategy.
Assisted commerce - Mobile-first is a good strategy, given the proliferation of smartphones in rural areas.
But it cannot be the only strategy to serve rural markets where lack of trust and knowledge are the biggest challenges for transacting online.
An appropriate omni-channel strategy would be required depending upon the product categories.
High capital requirements and sparsely populated geographies make physical stores in rural India unfeasible for many companies.
So generating orders though use of digital catalogues and samples can be taken up.
These orders can be fulfilled through kirana stores, cooperative banks, telco offices, etc, serving as enablers for assisted commerce.
Also, the offline-to-online model would help alleviate challenges of low digital literacy and lack of trust on the digital platform.
Products - Given the lower disposable incomes, price plays a major role in product choices of rural customers.
So maintaining the right mix between unbranded products and branded products is critical.
Players need to run continuous analytics and curate a product catalogue based on the past buying behaviour.
It can also address the issue of poor internet connectivity by displaying limited items on the applications that can load easily.
Technology - Technology will be an important lever but it is important to keep the digital literacy of the segment in mind.
Technology that provides operational effectiveness (data analytics, buying aids, recommendations) is important.
Also, that which build trust and transparency (blockchain, IoT, payments) require more attention in the short term.
