Ever since the dotcom revolution, the world of retail has been in the news for good reason. It has been a harbinger of change, not just in retail but in lifestyle and consumer behaviour too.
Ever since the dotcom revolution, the world of retail has been in the news for good reason. It has been a harbinger of change, not just in retail but in lifestyle and consumer behaviour too. First it was about price discovery and not about gouging consumers. Then consumers using online reviews developed a more powerful voice than that of brand advertising. Finally, it completely altered the equation of who decides what is best for the consumer — a brand manager or consumers themselves?
This change was not restricted to online retail purchase. For example, if I can purchase a television online, why not pay my electricity bill? However, in India, the behaviour change had a slow start. Limited by the reach of the internet, large swathes of population were left out of the new experience. This changed with mobile internet and one other cultural change in the country — that of aggressive entrepreneurship. Today, 18% of the rural population is accessing mobile internet. That is over 160 million people outside urban centres, or roughly the population of Germany and France combined.
The world of e-commerce is providing unprecedented opportunity for rural consumers. Here are some factors that could be driving this change:
n Normally, small towns and rural India have been conservative in their choices. A relatively slow pace of change, restricted exposure and fixed social relationships meant that people did, bought and wore the same thing people older than them did. Exposure exploded with TV, beaming a completely new world right into homes. Wonder turned to “why not?” Also, as the urban migration for jobs picked up, young family members moved to cities to earn more. Not only were they sending money back home, they were getting a shock exposure to a different culture and norms.
n Delivery in a large country with sparsely distributed demand is expensive. Consumer goods companies tend to focus on the top 80 or 100 towns for retail focus. Larger e-commerce companies have already spread to over 400 towns. In far flung rural areas, assisted commerce of the kind offered by StoreKing and Inthree helped people deal with the unfamiliarity of an online purchasing experience, putting a human being in front of them who could build trust.
n With the combination of exposure and delivery mechanisms, people could select brands to express themselves — brands they could see on TV or hear about from people who could access the internet. Even a very small percentage of the population buying can be highly attractive to a premium brand when the population itself is so large.
What can kill the buzz?
These are still early stages with huge challenges. Building reliability up and down the value chain is critical. Can I trust the buyer and ship something at a relatively high cost across the country? Can I pay upfront as is the norm in smaller rural towns, and hope the seller will honour the agreement? Can delivery happen when it is expected? Will the tracking be accurate enough?
Furthermore, an entire market that has been born from large scale change can be threatened if the pace of change is too fast. Today, just as governments struggle to keep pace with technology, social adoption often lacks regulation and legislation. So, lack of clarity can be a problem. Has small town India learnt to deal with change at an accelerating pace? It remains to be seen.
By- Alagu Balaraman. The author is partner & MD, CGN Global India