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05/10/2017

The Emergence of E-Commerce In Rural India

We are witnessing the impact of e-commerce website development in the rural areas of India. Recently, the technology has touched the rural parts effectively and has changed the general thinking that e-commerce companies may not reach the rural region of India.

Let us see how this is happening. It is a known fact that the postal service has the power to connect every corner of the world. Evidently, it has reached all the villages and remote locations successfully. Moreover, the last two years has witnessed a dramatic change in the Indian Postal service as it is getting collaborated with more than 400 e-commerce websites. Mention not to say, the Amazon and the Flip kart are included in the list.

Today, more than 1,55,000 post offices of remote areas are connected to deliver the goods to the customers. It is a welcoming scenario where e-commerce industries are involved in helping our country to become digital through logistics channel. The e-commerce stores have their own delivery system for these locations or they are using the third party services like the postal services and other small agencies. The past two years have witnessed dramatic growth for the Indian postal service. The reason is that the department which had been in losses since many years has now collaborated with more than 400 e-commerce websites that also includes big ones like Amazon and Flipkart for goods delivery.

The e-commerce giants like Myntra, Jabong, Voonik, Amazon, Shopclues, Flip Kart and others’ revenue coverage from the villages are appreciably notable. The villagers are gaining benefits of online delivery system. And with the penetration of the Internet and the smartphones, most of the villagers are using mobile applications and computers to order their goods. These companies say that the products like electronic items, utensils, grinders, baby products, mixers, and, etc., are the main goods in demand.

And, the fascinating thing about the orders is that there are less likely returns of the goods as they order only the most essential goods. This is saving cost on logistics for the company, as they are less investing for taking the delivered goods back. Certain companies like Ipay, Storeking, eDabba and, etc., are completely working for rural locations and they have innovative web design and development and work in view of the Internet connectivity limitations of the rural areas.

Certainly, it is high time for the retailers to achieve profit in their online business by tapping the rural population. More than 65% of our population still lives in villages and 138 million of them are well versed with the usage of smartphones and computers. Internet penetration is certainly on a rise. It is expected that within next two years all the villages will be connected to the e-commerce.

Almost half of all Indian internet users will be from rural areas in 2020, according to a recent article from The Boston Consulting Group (BCG).

The number of connected individuals in rural India is expected to grow from 120 million in 2015 to roughly 315 million by 2020, an average increase of 30% per year. Rural India accounts for two-thirds of the country’s population, or 807 million people, and their migration to the internet will be a driving force behind the country’s e-commerce growth.

India’s e-commerce economy is on pace to triple in size by 2020 to $200 billion. However, e-commerce activity in rural areas is still quite small. Only 15% of connected users in rural India use the internet to either research a product, purchase a product, or submit a product review, estimates BCG.

The majority of connected users in rural India use the internet to access social networks, with 70% citing social as their most popular online destination. This represents a huge opportunity for Facebook, which recently revamped its social commerce tools. The social giant could look to grow its social commerce presence in India via partnerships with local and global retailers, helping it to reach the increasing number of connected users in rural India.

Delivering goods to rural India will be the biggest challenge for the major e-commerce marketplaces. Amazon India, Flipkart, and Snapdeal are the major e-commerce players in India, and each of them has been making significant investments in the country. In fact, all three have developed in-house digital payment solutions to help meet the growing online presence of Indian shoppers.

However, the physical delivery of goods to rural consumers remains a large challenge for these companies, as a lack of logistics infrastructure makes it difficult to access rural areas. Looking ahead, e-commerce sites in India should focus on building out logistics capabilities to serve rural consumers in order to drive growth in the future.

Flipkart co-founder and chief executive officer Sachin Bansal said the e-commerce business in India is expected to reach around $50-70 billion by 2020 on the back of a fast growing internet-connected population and improvement in related infrastructure like payment and delivery systems.

The size of India’s e-commerce market in 2013 was around $13 billion, according to a joint report of KPMG and Internet and Mobile Association of India (IAMAI). The online travel segment contributed over 70 percent of the total consumer e-commerce transactions last year.

By Nishad MUKHERJI

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