The Rising Connected Consumer in Rural India

The Rising Connected Consumer in Rural India

          
Title image

The Rising Connected Consumer in Rural India

  • Add To Interests
  • SAVE CONTENT
  • PRINT
  • PDF

  • Implications for Companies

    In 2015 we observed that under the right circumstances, India’s Internet economy could triple in size to $200 billion by 2020. A big part of that growth will come from rural markets as the number of connected consumers climbs toward 300 million. Companies will need to build comprehensive digital strategies, which will have to take rural markets, and their distinctive attributes, into account. Marketers looking to target rural consumers in India should consider the following actions.

    • Develop a segmented view of the rural market. Not all rural consumers are the same—or even alike. As noted above, there are five different segments, each at its own level of digital adoption. Similarly, there are stark differences in the level of digital influence across various product categories. Companies looking to tap the rural market should first evaluate which touch points in their targeted customers’ purchase journeys are most affected by digital and to what extent.
    • Rethink the cost of serving rural markets. The economics of the Internet give marketers an opportunity to reevaluate the business case for reaching rural markets. In other developing markets, such as China, companies have built entirely new models to serve rural customers. (See the sidebar “Alibaba Moves E-commerce into the Countryside.”)
    • Adapt the online experience for rural users. Websites and apps designed with urban consumers in mind may not be effective in rural markets, where device screens are smaller and connections are slower. Content must fit on feature phones and work with low-data apps and connections. There is a strong need for vernacular content as well.
    • Refocus advertising budgets. Even today in rural markets, the Internet rivals TV as a source of influence. Rural consumers spend about 40% of their total media time on digital media—the same as urban consumers—although they have different reasons for preferring digital channels, including the ability to tap into the latest media content at low cost, receive constant updates, and gain access to vernacular and geographically diverse classified content. For all consumers, the number of hours spent on digital media increases with experience and maturity. We expect more media companies to create digital destinations with vernacular content that cuts across genres (such as news, sports, gossip, and Bollywood), which will appeal especially to rural consumers. (See “Digital Disruption in India’s Media Industry: Who Will Win?” BCG infographic, April 2015.) Marketers should think beyond conventional channels when it comes to advertising for rural consumers.
    • Bring down the barriers to online sales. While there has been an upward trajectory in rural online buying, the number of e-commerce buyers in rural areas is still small. Factors related to delivery and returns are big issues, but there is also a widespread perception in the countryside that e-commerce is neither safe nor reliable. 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 e-commerce sites and apps hard to use. On the other hand, rural consumers who have made online purchases cite multiple benefits, including discounts, ease of shopping, speed and convenience, and variety. Marketers can help overcome existing barriers with tools and promotions that increase awareness and use, which eventually will lead to purchasing and loyalty among rural online shoppers.

    ALIBABA MOVES E-COMMERCE INTO THE COUNTRYSIDE

    China’s e-commerce colossus, Alibaba, provides a model for how companies can think about using digital channels to bring e-commerce to rural markets in a large and diverse developing country.

    In October 2014, Alibaba announced it was investing $1.6 billion to set up 100,000 rural service centers all over China’s countryside. It has a presence in almost 16,000 villages so far. These e-commerce outposts are equipped with computers and free Internet service. The centers give villagers a place to pick up the goods they buy online from Alibaba. They can also pay their utility bills, add credit to their prepaid mobile phone plans, and book travel at these centers. Service managers are available to help first-time shoppers.

    In addition, the company’s “rural partners” program tasks Internet-savvy young people who live in cities but often return to their home villages with helping people learn to buy—and sell—online. Some villagers have used the service centers to start their own online businesses—selling clothes made in nearby factories on Taobao, Alibaba’s eBay-like online marketplace, for example.

    The company’s rural expansion program is credited with helping fuel Alibaba’s continued overall growth.




    Rural Internet use in India is rising. New users will come online, and current users will expand both their time online and the activities they pursue as they gain digital maturity. Online commerce is in its infancy in rural markets but is increasing fast. Digital is already a significant influence on purchasing. India’s marketers need to take all these factors into account and plan now for a big and growing rural digital marketplace.