What is the issue?
- 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.
Source: Financial Express
