Rural India- The Sleeping Giant of eCommerce

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According to a recent The Boston Consulting Group (BCG) report, almost half of all Indian internet users will be from rural areas in 2020. Rural India accounts for two-thirds of the country’s population, and their migration to the internet will be a driving force behind the country’s eCommerce growth. BCG expects the Internet to contribute $200 billion to India’s GDP (5 percent of total GDP) by 2020.

Internet and Rural India

#DigitalErra estimates India’s eCommerce economy is on pace to cross $120 billion in size by 2020. However, eCommerce 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 rural users (around 70%) will be using internet to access social networks. This represents a great opportunity for platforms such as Facebook for its social commerce expansion. It can lead partnerships with local and global retailers to reach the ever increasing number of connected users in rural India.

Since, the fact for businesses is that the Internet in India is not limited to urban audiences; the user base is both expanding and diversifying. #DigitalErra expects content to be more vernacular for a personalized touch across all online and offline medium.This massive shift in demography reassures companies to pay attention on a rapidly evolving ecosystem of eCommerce.

Digital India and eCommerce

The Digital India campaign hopes to connect villages with broadband internet. A Mckinsey report says that the country’s GDP will be boosted by $550 billion, pushing the GDP to $1 trillion by 2025, if the campaign succeeds. ECommerce firms are striving to bank on India’s rural market in cooperation with the government’s Digital India initiative. Firms such as Flipkart, Snapdeal, Infibeam and Paytm have signed Memorandum of Understanding (MoU) contacts with the government to reach rural areas and villages.

However, delivering goods to rural India throws a major challenge for the eCommerce marketers. Amazon, Flipkart and other major etailers have made big amount of investments to improve the infrastructure in place. They now have a developed in-house digital payment solutions in place to help meet the growing online payments. Looking further, eCommerce industry will see more investments on building out logistics to serve rural consumers in the future.

Here is a best example of what positive impact digitalization can have upon the society

Akodara, located in Gujarat’s Sabarkantha district is proud to be India’s first ‘digital village’. Situated 90km from Ahmedabad, the village has fully adopted the use of digital payments as neither shops nor citizens here deal in cash. The village of roughly 1,200 people was adopted by ICICI Bank to demonstrate the kind of progress digitization can make on a society. The bank, with help from the local administration, has helped every villager have access to modern banking facilities. Digitalization has paved the path for better education facilities as well in the village.

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According to BCG, there are six areas which require attention:     

  • Increasing access through expanding network reach and bringing more-affordable devices and mobile plans to market
  • Facilitating digital transactions and easing payments
  • Developing a regulatory framework that facilitates content development and does not hinder the growth of local applications and services and the content sector
  • Developing an Internet governance and regulation system that does not constrain private-sector innovation and does enable all stakeholders to function effectively
  • Enabling entrepreneurial ventures through ease of financing, mentorship programs, and the development of a skilled digital workforce
  • Facilitating the creation of local-language, or vernacular, Internet content to boost usage in nonurban areas

India is a special place in the world because it is a market of millions of newly connected mobile users, who are changing the way eCommerce is done altogether.

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