5 Reasons Why Leading Brands Should Look At Rural E-commerce

The rural Indian market assures untapped potential to become market leaders

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India is witnessing unprecedented growth in the digital sector. According to the IAMAI-Kantar ICUBE 2020 research, the number of active Internet users in India is predicted to rise by 45 per cent in the next five years, reaching 900 million by 2025.

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Technology-driven purchase revolution, the rise of digital wallets and online payments, and festive seasons leveraging the untapped power of small-town shoppers, are some of the top reasons why in comparison to the rest of the globe, India is regarded as a hotspot for e-commerce.

For most e-commerce business enthusiasts and new entrepreneurs, the rural Indian market assures untapped potential to become market leaders. As a result, there is an urgent need to speed up the establishment of commercial companies and e-commerce operations in rural areas.

According to a report published by Statista Research Department in 2021, the number of Internet buyers would increase to over 220 million in 2025. The majority of these buyers were sourced from tier II and lower cities. With such a large market share, e-commerce enterprises have a lot of room to grow and a large customer base. Most major firms are already undertaking campaigns to harness rural India's potential. For instance, empowering the rural kirana stores where the population is even lower than 500 people. Such markets where earlier neglected by major leaders due to the small size and logistical issues. This can be considered an essential step towards rural e-commerce. But before any leading brands or entrepreneurs consider this idea, it's crucial to know some of the vital reasons why brands need to further explore the prospective rural e-commerce market.

Here are 5 reasons why this idea can positively impact and benefit brands and in turn, result in the remarkable growth of rural e-commerce:

Growth of Internet users in rural areas

As stated earlier, according to a survey released by the Internet and Mobile Association of India (IAMAI) and consultancy firm Kantar, India's rural internet user base is increasing over three times faster than the urban user base. According to the same survey, the rate of Internet adoption in India's rural areas has increased by 13 per cent to 299 million Internet users in the last year, accounting for 31 per cent of the country's rural population. In urban India, however, Internet users increased by 4 per cent to 323 million in 2020, accounting for roughly 67 per cent of the urban population. Considering this, untapped rural e-commerce can play a promising role in the growth of a company and the overall economy.

Evolving infrastructure

With programs such as Digital Village, rural areas are now connecting more to the virtual world. Digital Village's objective is to make the roots of Indian society―digitally connected, facilitating all rural citizens' digital knowledge. In such a scenario, the digital ecosystem including vernacular, voice, and video shall emerge as game-changers for the digital environment. This evolving infrastructure can make the villages and rural areas lead the e-commerce sectors.

Need for quality products

Consumers in rural areas desire what is popular in urban areas and they do not like to settle for anything less. They do not wish to compromise on brand or quality either. This has made the job of consumer products firms easier because instead of having to innovate the product, they can now focus on reaching villages and establishing product relevance. Rural consumers are increasingly aspiring to buy branded products according to various reports, and this is likely the most compelling reason for rural consumers to use e-commerce platforms. Through this, leading brands can provide easy access to the products and expect an increase in their profit margin as well.

Increasing use of digital payments

With infrastructure development and evolving technology, the use of e-payments has witnessed an increase in the number of users. This sudden shift to digital payment is empowering rural consumers, who can deliver as assets to e-commerce businesses' growth.

Transformation of rural kirana stores using technology

Most of the villages with less population rely on the nearby kirana stores to source their daily essentials and run a comfortable living. Technology-driven features and collaboration with B2B platforms are now empowering these local kirana stores as well. Apart from these, digital orders, local language application, efficient inventory management, and a developed credit system are now transforming the way kirana stores function, pushing them to a larger market share. Leading brands can benefit from this transformation of the local kirana stores and further reach a niche consumer market.

The Indian rural consumer market is likely to come out stronger in the near future with an aspiration to be at par with its urban counterparts and flourish. It not only has the potential but also strength to create an infrastructure that can be beneficial for generations to come. This could be the most ideal time and opportunity for big brands to penetrate the rural consumer market and be a part of the great shift from urban to rural population.