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Rural E-Commerce – The Emerging Giant

The rural population contributes $359 billion amounting to about 57per cent of the entirety of the retail market
Rural E-Commerce – The Emerging Giant
Image credit:
Founder & Chief Executive Officer, MiniDukan
4 min read
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With the Retail market going through several upheavals in recent years, it is not surprising that the trends are shifting rapidly. The most noticeable trends in the last few years have been the advent of the internet and digital marketing as a whole. Even though internet penetration in rural India is at merely 18 per cent, researchers have forecasted that this number is likely to go up to 45 per cent by 2021. The implications of the trends moving towards the digital front are obvious – retailers have to adapt to the modern ways of marketing and make their products available online.

Although it may seem that the market is only now developing to include the rural areas, in reality, there are several e-commerce companies which have already set up their operations in tier 2 and tier 3 cities. These early birds have had the advantage of tapping into a largely unexplored market and what was discovered was rather surprising. A recent report by EY India revealed that there was a contribution of $359 billion by the rural population. This amounts to about 57per cent of the entirety of the retail market. With a whopping contribution like that, the growth of e-commerce in the rural sector is imminent.

Internet Penetration

2018 showed us that there were certain trends when it came to the rural e-commerce market. If retailers are successfully able to keep up with these trends, they will have the option of going forward with the times. The availability of the internet in rural areas has made it possible for customers to view multiple options, store items in wishlists, to view them later and many more such options. These services have made shopping online more convenient than going to an actual store. With all the emphasis being placed on customer satisfaction and convenience, it is not surprising that most retailers choose to make their products available online, so as to reach a larger audience. E-commerce businesses, thus, are doing better than traditional retailers. The shift in modes of income, from traditional agricultural activities to non-agricultural ones, has also contributed to the growth of e-commerce businesses in rural areas.

Technological Advancements

In order to keep up with the rising demand, rural e-commerce organizations have had to use the help of technology, like Artificial Intelligence (AI), to run the data. AI technology is used in order to predict consumer behaviour, predict upcoming trends and even manage queries which consumers may have. The introduction of this technology has helped facilitate e-commerce businesses. By 2020, a majority of customer interactions will be taken care by Artificial Intelligence. AI also aids consumers with purchase recommendations which are based on the purchase history of the customer.

Digital India

With two-thirds of India’s population residing in rural areas, their migration to the internet is what will drive the digital wave in the country. It has been predicted that India’s e-commerce industry can cross the size of $120 billion by 2020. Government initiatives, like Digital India, have helped e-commerce businesses expand their operations to the rural sectors. One of the benefits of an e-commerce business is the real-time transactions which take place. If the infrastructure is not developed in a way, so as to facilitate transportation of goods to rural areas, the movement to a digital platform will be futile. However, there is hope as there are multiple investments being made to build and strengthen the logistics of the rural e-commerce business.

In conclusion, we can say that there is a definite movement of the retail industry from the traditional to the digital. This change, led by rural e-commerce, has the potential to transform the economy to include a wider target audience. Although this is all hinged on the availability of internet in rural areas, seeing the kind of investments being made in the sector helps reassure one of its development in the near future.

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