The introduction of 4G at cheaper prices has given a boost to the use of mobile internet to an unconditional level. E-commerce is the trend and companies like Pepperfry, Snapdeal, Flipkart, etc. have joined the bandwagon with other etailers. This festive season, these companies have seen immense growth from buyers coming from rural areas than metros.
The Indian retail sector is witnessing a clear market shift with the increase in buyers more from the rural areas, and this has become possible only because of increased connectivity supporting the use of cheap mobile internet.
Thanks to the E-commerce applications that customers, even from rural areas, can use and buy products. This scenario has driven the start-ups to focus on rural areas. Further, online shopping supported by smooth and convenient delivery options like Cash on Delivery has been predicted to be the cause of an incredible E-commerce growth in the rural sectors.
The Current Figures of Ecommerce Sales this Festive Season
Pepperfry co-founder Ambareesh Murty claims to have a 50% growth this year when compared to last year’s sales. Snapdeal has witnessed a growth of 52%, and shoppers are coming in mainly from non-metros. A good comeback for Snapdeal as the sales doubled in more than 120 non-metro cities where nine out of ten online orders were coming from these areas.
The Growthstory.in partner K Ganesh mentions witnessing a growth of 70% to 80% for Blue Stone and Big Basket in terms of transactions. BlueStone, a jewelry retailer, says that the average spends, which was Rs 20 K to Rs 40K, since a couple of years ago, which have now increased to Rs 50 K to Rs 60K this year. Club Factory, a Chinese etailer, has seen vast growth in sales from states like Telangana, Bihar, and West Bengal.
Expansion of Talent Pool in the Rural Areas
Major E-commerce giants are now betting high on small towns, especially tier 2 and tier 3 cities; in order to explore the area, expand their base by developing their talent pool to fuel growth in these areas. These Etailers are focusing on recruitment to bring customers from small towns to shop online.
According to the experts, to meet this rising demand of customers, e-commerce firms have been trying to set-up warehouses in the small-towns and recruiting talented individuals to help them meet the increasing demands. Mayur Saraswat, Head of Digital and IT, Team lease Services mentioned that there is a 40% contribution of festival sales directly from the tier II and tier III cities. With the setting up of warehouses, most E-commerce companies are focusing on logistics and efficient connectivity, and this will result in the job market growth of 15 % in the small cities.
Competition in the Cities Reaching Saturation Levels
The cut-throat competition in the cities is reaching its saturation level, and companies have to look for other markets to survive, and this is chasing the organic growth in small towns naturally. The 18 % of job postings from online retail companies are seen in Haryana, 8% in Uttar Pradesh, and Rajasthan and Gujarat being at 2%.
Growing Lifestyle in Rural India
It is evident that easy access to the internet and cheap mobile data with better connectivity has led to the sudden growth of the rural e-commerce industry. According to the researchers, the prediction is that by the year 2021, approximately 500+ million users will be using local languages, with an astonishing penetration of 45%. People in rural areas have already started thinking ahead to try out multiple sources of income rather than just sticking to agriculture, and this has led to a good revenue generation, especially for the Etailers. The spending power has increased with the increasing number of nuclear families in tier 2, tier 3 cities as well as towns.
Localization of Products Availability
The rural population makes up around 60% of the entire nation’s population, holds a lot of potentials, and is yet untapped. Rural areas and tier 2 & 3 cities are soon going to be the next battleground for business for most companies who are facing the lowering of their sales figures while targeting big cities.
For the retailers to keep their customers engaged, the development of logistics in rural areas is crucial. Retailers also need to focus on product availability, which is according to the choice of their customers. For this, the right mix of unbranded and branded products needs to be made available, which will hold their customer’s interest in different ways.
The cheap mobile data is bringing up the sales and increase in demand for employment in rural areas as retailers need to take their respective businesses online. To cater to their customers with quick delivery and prompt services, they need to set-up more warehouses and maintain stock. The land available in small cities and rural areas is cheap, rents are low, and customers are always ready to try out online stores with new product formats and better product deliveries. This is a superior opportunity for the growth of lifestyle and standard of living for the people in rural areas.