Cracking the rural code

Consumers in hinterland of India never looked so bright and green for e-tailers. Markets in the remotest corners like Urupakkam in Tamil Nadu, Lunglei in Mizoram or Jharsuguda in Odisha are suddenly being perceived by e-commerce brands as gold mines waiting to be tapped.

And it’s not just limited to big names like Google and Reliance chalking out their e-commerce plans or Amazon consolidating e-tail assisted programme for rural shoppers - project Udaan, niche and newbie e-commerce brands are pumping up their rural push. 

The non-urban expanse has huge growth potential. As per EY India, the rural e-commerce market can boom to $10-12 billion in the next four years due to increasing internet penetration and rising millennial aspirations. Moreover, non-metro shoppers are likely to account for 75% of e-commerce shipments by 2020, up from 60% in 2016, as per RedSeer Consulting. Meanwhile, internet penetration in rural India will rise from 18% at present to 45% by 2021, as per industry estimates.

The increased mobile and internet usage has changed the pattern of communication to a great extent and has altered the operational fundamentals of the business-to-consumer markets, catalysing India’s rural transition, says Varun Alagh, co-founder, MamaEarth, which is into toxin-free babycare products.

Experts believe rural consumers of today are highly aspirational and as fashion and trend conscious as their urban counterparts.

Alagh says, “E-commerce in the rural markets has witnessed a steep growth. Thanks to social media, there is a lot of awareness that is allowing consumers to make informed purchase decisions based on features and quality, rather than the price. Consumer behaviour is evolving and there is tremendous opportunity to drive digital commerce over the next decade.” Currently, over 50% of sales for MamaEarth come from outside of the top-10 cities.

Jagrati Shringi, co-founder and CTO at Voylla, an online jewellery brand, says, “Around 12% of our sales are from the rural segment.”

Even though remote towns appear attractive, brands have to first overcome a gamut of challenges in order to successfully establish their presence.

Consumers in the hinterland might have warmed up to online shopping but since not all are digitally forward, products and platforms should be simple enough to align to their needs, feels Sachin Jaiswal, CEO and co-founder of artificial intelligence (AI) company niki.ai.

Jaiswal says the technology-enabled interfaces are understood fully by only one in ten Indians who use the internet. “We will use our AI-based proprietary technology to build a suitable product for rural regions,’’ explains Jaiswal, adding that they are bundling all services into a single app to simply online transactions and facilitate purchases.

Customising content in regional languages is another challenge for brands. Data pegs the number of internet users relying on vernacular languages to reach 536 million by 2021. “We are getting ready for this by adding multilingual chat and voice capabilities. This will exponentially simplify online transactions for the rural masses,” says Jaiswal.

MamaEarth has been working on vernacular advertising, says Alagh, “as this helps to reach consumers in their native languages and gain their trust.”

A third pressing challenge is the need to craft out a product basket suitable to the needs of non-urban people. This includes localising products, presenting a mix comprising value-for-money products and affordable luxury, private labels and branded goods which cater to the diverse aspirations of consumers, a good segment of whom are price-sensitive.

Although brands claim they have the necessary product mix to appeal to rural masses, they cite last-mile delivery issues as the crucial challenge here.  “After sales service, quick delivery and returns should be executed in the same manner as it is done in the cities. Otherwise, customers may be lost,” adds an expert.

Sanjeev Mukhija, founder, Breakbounce Streetwear, admits that often products get delivered to the houses of the consumer’s peers since their own pin codes are not serviceable. “We plan to leverage our partnership with local delivery and channel partners and reach out to consumers at various touch-points.’’ 

Shringi agrees, saying unstructured addresses of rural consumers is a major challenge. “We have tied up with the Indian Postal Service for effective delivery. This will enhance our rural sales.”

$10-12 bn – Rural e-commerce market can boom to in the next four years. And 75% of e-commerce shipments by 2020 will come from non-metro shoppers