by Ishan Bhattacharya

Internet, mobile penetration gives birth to India’s rural e-commerce

Sep 22, 2015

Inthree, an e-commerce organization, through their web portal and app Boonbox, have been serving rural India with the wonders of technology advancements for the past six years.u00a0

“It’s difficult to predict what rural customers want. Recently we delivered two point and shoot Canon cameras in Gulbarga (an underdeveloped district in Karnataka) and this indeed is motivating. This also points to the fact that we cannot be guessing a rural customer,” said Ramachandaran Ramanathan, founder & CEO, Inthree.

The potential of mobile and internet penetration in India is fairly summed up in the above words. The very image of a farmer living in some remote corner of India, where enjoying uninterrupted supply of electricity is a luxury, ordering goods online end doubts over our country’s IT boon.

Inthree, an e-commerce organization, through their web portal and app Boonbox, have been serving rural India with the wonders of technology advancements for the past six years. The company’s journey however surfaces few aspects of a developing nation where success and failure are demarcated by a thing line called ‘challenges’.

“There are two ways of doing business, either you do what everyone is doing but more effectively or you do something that has not been done before. But in our case there was more to it than that. Having spent a long carrier in finance, I always wanted to explore the possibilities that lie in rural India,” Ramanathan said.

Although there are differences between an urban e-commerce customer and a rural one, but Ramanathan believes that it is “dangerous to stereotype” the latter just because of “urban arrogance”.

“When we started off we thought rural people will be very different from those living in cities, hence started selling only solar lamps and water purifiers,” Ramanathan said.

Time is the best teacher. Soon Inthree realized that people living in rural areas are actually very aspirational and therefore similar to an urban customer.

“We were giving them products we thought they needed instead of giving them what they wanted. A significant difference with urban customers probably will be in price points. Aspiration for latest fashionable apparels are there, but not so much for high end brands like, Levi’s. They want smart phones but not iPhones,” Ramanathan pointed out.

Terming rural e-commerce consumers as “unforgiving” when it comes to product quality, Ramanathan says that unlike the Flipkarts and Amazons of the world, Inthree cannot rely on discounts as he feels discounts does not ensure customer loyalty especially in rural India where access to products gathers more significance.

When it comes to doing e-commerce in a pastoral setting, there are definitely reasons why access to products tops the priority list as, herein comes the challenges.

“Poor connectivity, lack of awareness or education, dearth of cashless transactions and last mile reach are the major barriers associated with rural India,” Ramanathan said.  But on the flip side, he believes that these challenges happen to be entry barriers for other companies as well.

Inthree’s strongest shield against competition is their market knowledge and field force.

“Market intelligence and knowledge are extremely necessary. To address connectivity issues we operate through SMSs as well. Then comes last mile connectivity issues. For instance, it is easy to deliver goods till Gulbarga, but from Gulbarga to a village 70 kms inside is a challenge. In such cases we need to figure out if there are empty trucks available or even autos and buses,” added Ramanathan.

To address problems relating to cash on delivery, and goods being returned, Inthree is planning to switch to a “wallet” soon. But when one does business online, social media becomes paramount.

The opportunity to analyzing data generated from social media happens to be a big plus for urban e-commerce companies, as it helps understand customer behavior, but this does not stand true for a company like Inthree as where they operate, presence of social media is meager.

“Market intelligence will make or break a business. India itself is not one market. Our strength lies on the field work. Our agents visit small towns near villages and find out what is available and what not. The kind of products a shopkeeper wants, there is a B2B opportunity as well,” Ramanathan said.

The virtue called ‘patience’ happens to be more in people living in countryside and this itself addresses the challenge of expecting quick delivery.

“We have tie-ups with manufacturers like Samsung and others and we help them reach out to rural customers, as this market is too fragmented. Our promise of delivery is 12 days, but we have been successful in doing it in 7 days, even though natural calamities like heavy monsoons, floods, landslides and others come into play,” he said.

According to a World Bank report more than 66 percent of India’s population lives in villages, so it can only be imagined the kind of impact India’s economy will experience when rural e-commerce will gather serious momentum.

“When rural e-commerce takes a leap, manufactures and others involved will start taking it seriously, hence more investments. Today, nobody services a product beyond 40kms of range, but this will definitely change. The potential of this market is limitless,” Ramanathan added.

He also said that competition defines space and three years down the line there will be companies penetrating this market. “I doubt the big e-commerce companies will come here as the skill set needed is very different,” Ramanathan said.