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JANUARY 2015 THE RURAL MARKETING JOURNAL selling transactions by Indians on eBay India, over a period of 18 months showed that out of the 4,556 e-commerce hubs in the country, there are 1,233 rural hubs along with 3,313 Bharat hubs (tier II and III cities). There has been a significant upsurge in the number of rural hubs as compared to the previous Census. With the quantum of customers logging on to e-commerce sites, to shop online, increasing at a rapid pace, all players are looking forward to tapping the rural market and connecting with the emerging online shopper in these areas. Growth Triggers 2015 is going to be the year of customers shopping online from non-metro cities. There has been a significant uptake of products by customers from rural markets as revealed by the eBay India Census 2014. The increasing penetration of the Internet into the rural markets coupled with the surge in the number of users accessing the Internet through mobile phones and devices, is expected to expand the reach of e-commerce across the challenging geographies of the country. According to the eBay India Census 2014, Guntur (Andhra Pradesh), Tada (Andhra Pradesh), Karthikappally (Kerala), Ghattia (Madhya Pradesh), Chorayasi (Gujarat), Jalgaon (Maharashtra), Budgam (Jammu & Kashmir), Cachar (Assam), Adur (Kerala) and Villupuram (Tamil Nadu) are the top ten rural hubs in the country. Popular Categories According to the Census, the top five products traded in the rural markets are — mobile accessories, tools and hardware, stationery and office supplies, coins and notes, chocolates, cakes and food items. The top five products exported from the rural markets are —jewellery, watches, decorative pieces, cell phones and accessories, home and garden products, clothing, shoes and accessories. We expect these products to be traded extensively, with other products in the lifestyle and electronics category catching up fast. Challenges With its increasing disposable income and exposure to urban trends, thanks to the media, the rural market is becoming increasingly attractive for various industries, especially e-commerce. Internet bridges the supply chain gap between brands and the rural market. However, there continue to be some key challenges, which are largely in the area of infrastructure. You can say that between the demand and supply sides, there are more supply-side challenges. Internet penetration is still low compared to the urban areas, and mobile Internet will play a big role in bridging this gap. Then, there is the challenge of logistics-related infrastructure and low reach of logistics partners. The only third-party logistics provider (3PL) with a wide reach is India Post, which is now investing in e-commerce deliveries, but has a long way to go. Devesh Rai G, Founding Member and Corporate Vice President - Business Development, ShopClues 8
THE RURAL MARKETING JOURNAL JANUARY 2015 Tapping the rural E-commerce players are well aware of the opportunity that lies in the rural markets. On the one hand, there are strong demandside factors, such as high disposable income, willingness to spend, exposure to urban trends, and desire and ambition to own the best. On the other hand, there is the opportunity arising out of the limited reach of the traditional offline supply chain. Right now, these factors are playing a big role in the growth in sales from tier II and tier III towns—a major focus and growth driver for ShopClues in particular. The same will follow in rural areas as well. Growth Triggers In my opinion, the growth of e-commerce is faster and will continue to be faster than what most of us can fathom. ShopClues already sees a lot of orders from the hinterland with village post office addresses. So, clearly, e-commerce has already taken off in the rural areas. It will definitely see a major upward trend in the next two years, following improvements in the Internet and logistics infrastructure. Popular Categories Electronics and fashion will be major drivers. Within electronics, demand will mainly come from low to mid-range mobiles, laptops and appliances, which do not have reach in the rural markets. Fashion will remain centred around affordable daily wear, with low- to mid-range brands taking the lion's share. Challenges The retail landscape has changed globally, and is changing in India too. E-commerce has transformed the way people shop and do business. Simplicity and accessibility have been the hallmark of the e-commerce industry growth in India, led by companies like Snapdeal. Internet connectivity, which is low at less than 10 per cent, is a significant challenge in reaching out to the rural consumers. Low penetration of Internet banking and credit/ debit cards is also a barrier in the way of online shopping. This is now being overcome with the 'cash on delivery' option. However, the biggest challenge has been the lack of trust in online shopping, which is being addressed through active communication via various mass media channels. Sandeep Komaravelly, Senior VP – Marketing, Snapdeal Tapping the rural Snapdeal.com is betting big on the tier II, tier III and rural markets as rising aspirations and corresponding increase in digital penetration will lead to growth, driven by these 9
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