Network Past Issues

Rural India goes shopping
As eCommerce firms develop new strategies for distribution models and expansion, they turn towards rural markets to tap into huge spending potentials

Tumkur, a small industrial town northwest of Bengaluru, isn’t a place many would have heard of. This is where the world’s largest eCommerce firm, Amazon, conducted a pilot this year to come up with some amazing results. The firm established a dedicated rural distribution centre manned by the local youth reducing, thereby, delivery times from over a week to about 2-3 days. During its inception delivery was limited to only about 10 packages a day. Today, this number has risen to more than 150. The pilot has, since, spread to other areas down south.

Flipkart tried a different experiment last year by floating a plan to sell Motorola mobile phones to rural customers by setting up a local network of entrepreneurs who would market the product, place the orders on Flipkart, and deliver the products to customers.

A rural-urban bridge is being built leading to improved distribution, customer acquisition, lead generation, and sales. Rural marketing is fast turning into a reality.

A mounting smartphone penetration and rising aspiration levels has stimulated demand in both small town and rural areas. With some smartphones costing as little as INR 5000, Amazon says that it gets more than 50 percent of its orders from outside the top eight metros of the country. A huge population in those areas uses the internet on smartphones although most consumers may not be using them for shopping currently. This fact, alone, presents an opportunity. Spending in rural India outpaced urban spending in 2012 for the first time, according to data released by NSSO. Between the fiscal year 2010 and 2012, spending by rural India was INR 3.75 lakh crore, which is nearly 20 percent higher compared to that of urban areas.

On its Big Billion Day sales in October 2015 Punit Soni, Flipkart’s Chief Product Officer, affirmed through his blog on Medium that a majority of the orders came from rural areas. The BBD sale was entirely “app only”. Before the sale, during the same time, Snapdeal had claimed that it expected to net 70 percent sales from the country’s remote areas. Last year, Snapdeal had even started a pilot in collaboration with Fino Paytech and launched about 5000 eCommerce kiosks across 65 cities and 70,000 rural areas. Over 65 percent of the orders on Amazon, during the same sale time period, came from tier II and tier II geographies. Traffic from mobiles on Amazon was over 70 percent and a large number of customers came from cities like Aurangabad, Malappuram, Dhanbad, Kannur, Tiruchirapalli, and Jamshedpur among others.

Amazon has tied up with the Indian Postal Service to service over 19,000 pin codes and Flipkart has been tweaking its mobile app to work under poor network conditions while beefing up its delivery networks in over 1000 towns. Flipkart’s Punit Soni went out on the fourth day of the Big Billion Sale to deliver packages personally to customers and gathered valuable feedback about the services. Developing slotted delivery options is another solution that is being worked out. All eCommerce giants are now focusing heavily on their app functions. Recent reports say that Flipkart wants to use drones to deliver in rural areas. Amazon is also expected to follow suit. The main snag, however, is that civilian drones are not currently permitted on Indian territories. Yet the giants are hopeful about being able to convince the Government.

With the country’s economic situation improving the technology market is spreading its wings wider while constricting the gap between India and Bharat at the same time. All thanks to a growing eCommerce market. The gap will, hopefully keep converging, to one day stand up and celebrate the rise of a new unified India with no divides.

 By: Bhavi Patel PRM 27 Email: bhavi.patel@collabera.com The author is Business Development Executive at Collabera