Towns and villages with less than 10 lakh people have overtaken metros in buying and selling goods online, known as e-commerce in industry parlance, as shoppers exhibit similar interests, preferences and buying patterns.
?Rural aspirations are in the same line with that of metros and Tier-I cities,? says Kashyap Vadapalli, chief marketing officer of eBay India, an online e-commerce portal, on the sidelines of a national digital commerce conference held here. ?There?s tremendous potential in these markets and e-commerce firms should serve customers there.?
According to him, 70% of the country?s R46,000 crore e-commerce business happens in small towns and rural markets. ?For e-commerce, close to 60-70% of transactions happen outside the top 10 cities,? he added.
Interest shown by investors like private equity and venture capital funds to purchase a slice of e-commerce companies is also on the rise. Last year, they pumped in $850 million in digital ventures and more than half in e-commerce portals, according to the Internet and Mobile Association of India (IAMAI).
?This growth is being driven by the explosion in online buying in places which have been demographically classified as ?Bharat? or small town India,? says Himanshu Singh, chairman, IAMAI’s Digital Commerce committee. ?Non-travel e-commerce, which is 30% of the total industry now, is estimated to grow 10 times to $6 billion by 2015,? he said quoting a research report by Edelweiss Securities.
Flipkart, one of India’s largest online companies and often compared with global e-retailing giant Amazon, started out as a metro-centric site with distribution networks in the top 8-10 cities. In the past five years, the company has expanded to 37 cities and have plans to add anywhere between 60 to 70 towns by 2014.
?We have gone wherever our orders came from and more than 60% are from small town India,? says Ravi Vora, vice-president, marketing, Flipkart. ?Bharat, today is more in need of e-commerce as many top retailers have not been able to open stores due to real estate problems and supply chain issues.?
Consumers from both rural and urban areas look for competitive prices, product varieties and shopping convenience. ?The small town shoppers may be denied product varities in stores, a metro buyer might have spend more time and face parking issues,? says Jiby Thomas, co-founder and vice-president, marketing of Quikr, a classifieds site. ?If payment platforms are simplified, the industry will grow even faster.?
E-commerce firms say consumers outside metros often suffered from a trust deficit, but that has been addressed by the cash-on-delivery (COD) payment method.
?COD has really helped e-commerce grow at this unprecedented rate,? says Ashutosh Lawania, co-founder & head of sales, Myntra, an online retailer of fashion and lifestyle goods. ?Even metro shoppers prefer COD these days.?
For e-commerce to flourish even more in small towns, companies need to invest in logistics and specific brand communication to spread awareness. ?Only TV advertising won?t suffice in small towns,? says Flipkart?s Vora. ?We need to reach out to customers through direct marketing.?
