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Key Trends That Will Revolutionize Rural E-commerce In 2019

Looking forward to 2019, we can say that the market will be moving primarily in the direction of setting up logistics to support penetration in the rural area

Photo Credit : Reuters

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Looking at the Retail sector in India we can see a marked shift in the buying capacity from the urban to the rural. With the introduction of technology in the rural areas, and the increased connectivity it brings, the audience has begun to seek out better options when it comes to the choices they are making. No longer is it a market where you buy only that which you have access to, now customers in tier 2 and 3 cities can choose from multiple products, thanks to e-commerce applications. The introduction of the internet has also brought in better ways for e-commerce start-ups to penetrate the rural economy. The development of Customisation and Distribution Centres has helped smoothen out the process of delivery. Such developments along with options like Cash on Delivery, can help us predict that the immediate future of the e-commerce sector lies primarily in the rural sector.

Mobile Internet Penetration

With a whopping 59 per cent of penetration in urban India, the next surge of mobile internet users will be coming from the rural sector. At present mobile internet penetration in rural India is as low as 18 per cent only. However, there is hope as last year saw 15 per cent growth in the number of mobile users, with a majority of them being 25 years or below that. With this growth of mobile usage in the rural sector, we can definitely expect it to be reflected in the buying trend in 2019. In fact, looking forward, we can say that this market has the potential to reach $10 billion to $12 billion, in as short a time as four years. When it comes to the number of internet users, researchers have predicted that there will be approximately 536 million users using local languages, with a penetration of 45 per cent, by 2021. This upward trend of internet users has a direct effect on the industry, as it becomes apparent that retailers need to take their businesses online if they want to prosper in the near future.

Aspirational lifestyle growth in rural India

The Rural e-commerce industry has seen a sudden rise in the recent past. While one of the primary reasons for that is the increased availability of information via the internet, there are several other factors which also need to be taken into account. The multiple sources of income for those residing in rural areas, is one of the primary factors. Diversifying from the traditional agricultural activities, the rural population moving slowly towards non-agricultural sources of income has led to greater revenue generation for the Retail industry. With an increase in the number of nuclear families, there has been an increase in spending power.  A recent report by EY India revealed that there was a contribution of $359 billion by the rural population. This amounts to about 57% of the entirety of the retail market.

Localisation and product mix

An increase in demand obviously indicates the need for increased supplies which can help meet those demands. While the rural market is still a largely untapped one, e-commerce companies need to successfully develop the logistics of rural e-commerce, if they want to keep their customers engaged. For instance, localisation is also an important part of running an e-commerce business in the rural areas. Apart from this, retailers also face the challenge of providing the correct mix of products for consumers. A large number of high-end products will reduce the interest of the buyer as these may be relatively more expensive, while a complete lack of branded product is not the ideal situation either. Online retailers need to have the correct mix of branded and un-branded products in order to hold their customers’ attention.

Looking forward to 2019, we can say that the market will be moving primarily in the direction of setting up logistics to support penetration in the rural area. Those companies which innovate are likely to stay in the game, while those who stick to traditional forms of retail are likely to be left behind. There is a definite shift towards the rural markets and e-commerce businesses need to keep up with the times.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


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Jitender Singh

The author is Founder & Chief Executive Officer, MiniDukan

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