With rising Internet penetration across the country and adoption of online shopping among the masses, companies selling products and services through websites are looking at smaller cities in order to expand their business.
According to eBay India Census 2012 report eCommerce is here to stay. The research findings were based on an analysis of all online buying and selling transactions by Indians on eBay between July 1, 2011 and December 31, 2012. The marketplace had around 4500 eCommerce hubs during the time of study, of which over a thousand hubs were located in rural India, indicating that consumers in the smaller towns of India are a major force in this online growth story.
Challenges while reaching the rural areas
eCommerce companies face a number of operational hurdles, especially in rural areas—given the poor infrastructure available in those parts of the country. The low literacy rate in the country is the another problem for the growth of eCommerce, as even the educated people in rural areas are not able to handle cyber technology.
“In recent years, rural markets have acquired significance, as the overall growth of the Indian economy has resulted in the substantial increase in the purchasing power of the rural communities. In fact estimates show rural markets are growing much faster than urban markets. But there are a number of factors hindering the growth of eCommerce in the country, biggest of which are low Internet penetration, payments and distribution logistics.” said Sanjay Panigrahi, CEO at Sahaj eVillage.
COD—a fantasy in rural areas
Talking of product delivery, eCommerce companies struggle to reach the unreachables in many remote areas including many states in Northeast India due to poor transportation facility. Moreover with more than half of the online sales being dependent on COD and unavailability of third party logistics services in rural areas, online retailers in order to satisfy complete their Pan-India network, use private courier services which then doesn’t allow companies to accept COD – the only successor of Indian eCommerce industry.
Payments is the biggest challenge while selling in Tier 2 and Tier 3 cities, believes Durgesh Gupta, CEO at Real Shoppe. “A majority of population living outside urban areas do not have any bank cards to pay with, and those who do have, are not very comfortable using them. So card payments in those areas aren’t going to generate much traction unless and until you innovate payments in such a way where you the money beforehand.”
India Post however, is one such delivery service that promises to deliver Pan-India and that too on COD. But how efficient their services are, is the real question here. Despite having a huge coverage the service is not the preferred service by the eCommerce players.
So there are several logistics, operational and technological challenges when it comes to reaching the consumers living in rural areas.
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