Business, Ecommerce

Rural India to Have 315M Internet Users in 2020 – How to Leverage the Next Wave

ecommerce in rural indiaThe first decade of 21st century heralded the era of digital revolution in India. New age entrepreneurs which understood the importance of leveraging the power of Internet to sell to masses, encouraged more individuals to venture out and solve real life problems with technology. Now in 2016 we have reached a stage where there is an endless list of firms that have digitalised most of the sectors, from retail to finance to real estate to education and beyond.

The biggest impact of this revolution is seen in the way the Indian consumer has evolved. Geographic boundaries are now considered passé. Businesses are now able to cater to even the remotest areas in the country. However, the focus of most digital firms remains on urban areas where acquiring and servicing customers is relatively easier than in the rural region. This is when over two-thirds of India’s population resides in rural areas, and with growing Internet penetration, a pool of green consumers is getting created.

As per a report by Boston Consultancy Group (BCG) on ‘The Rising Connected Consumer in Rural India’, the number of connected rural consumers is expected to increase from about 120 million in 2015 to almost 315 million in 2020. It predicts that by 2020, these users will make up 48% of the Internet population in India. Thus making it important for businesses to have a strategy and plan for tapping into the rural segment.

Understanding the Rural Connected Consumer

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Even with the current connected base of over 120 million in rural areas, under 20% users actually engage into online transactions. As shown in the well segmented infographic above, Internet is essentially used for social networking and accessing digital media. Also, where in urban areas males make up 79% of the Internet populous, in rural areas it’s whopping 98%.

In the coming 4-5 years, most of the connected users growth is expected in the 18-40 years age group. This is the segment that is also more likely make online purchases.

The pattern of Internet usage in rural areas isn’t uniform geographically, it varies with the level of need, awareness and literacy in different states. Among southern states, Kerala and Tamil Nadu, while in northern states — Himachal Pradesh, Haryana, Punjab, and Jammu and Kashmir—have the highest penetration.

Selling to the Connected Rural Consumer

It is common knowledge that one of the growth factors behind growing connected user base in rural areas is the increasing smartphone penetration. What businesses have to keep in mind is that these smartphones aren’t high end, and most might not even have 3G connectivity, let alone 4G speeds urban users are gradually getting access to. Access to content in vernacular languages is another factor that comes to play when one decides to target this section.

Based on the consumption pattern and preferences of the rural consumers given in the report, the following actions could be drawn out for the firms looking to tap into this growing segment

  • Understanding the Different Segments Before Targeting

As mentioned above, rural population can be segmented into 5 categories based on Internet awareness and usage. Companies should devise strategies on the basis of which level and occupation of users are they specifically looking to target. There are niche firms in Edu-tech, Retail eCommerce, Travel, Agri-Tech segments which have devised their overall business models to cater to the rural segment.

  • Evaluating the Cost of Selling in Rural Markets

Even as several entrepreneurs aspire to create a globally scalable business model, they need to understand the economics of even first covering just India as a whole. Depending upon the core business proposition that is being sold, marketers need to re-assess the market demand in the area they are looking to target.

  • Building Rural-Friendly User Experience

As the spotlight shifted to mobile, digital businesses started optimising their websites for a mobile-friendly experience. Most of all, in many cases even a mobile only product exists for the best experience. Likewise it is to be understood that even mobile friendly experience might not suffice when selling to rural audience. As mentioned above, most connected rural users have budget smartphones that operate on low Internet speeds. The design and content needs to be optimised for smaller screens. Additionally, presenting content in vernacular languages can give an extra leverage.

  • Address the Challenge of Advertisement

If one thinks about reaching rural audience in masses, print and television media are two ways of going about it. Certainly both the channels call for a heavy investment, which might not fit the budget for every company. Digital media can play a game changer here. Again, vernacular content across genres could become a driving force for engaging users. Firms need to think beyond their conventional practices to target rural consumers

  • Spreading Awareness

In a column on Potential of eCommerce in Rural India we mentioned that users in these areas are indeed buying online. A major area that e-businesses need to tackle is instilling trust about online shopping. The introduction of the concept of Cash-on-Delivery did a remarkable job at converting digital users into digital buyers. Yet even now the urban users are still skeptical of making a prepaid payment while shopping online, the report notes that rural consumers are even more so. Citing the report – “Almost 40% of rural consumers feel that their personal information is at risk, while 30% believe that products sold online are of poor quality and 25% find eCommerce sites and apps hard to use”.

These issues need to be dealt by spreading awareness about the safety, convenience and the benefits of online purchases. Marketers can consider building a reward driven referral system for converted loyal users.

Since rural India will make up for almost half of the digital population by 2020, now is a good time for businesses to prepare for how they will leverage this market.

To view the original report, click here

Image Credit: Huffington Post

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