ARTICLE: Rural Marketing: Is e-Commerce the Solution?

By Kamlesh Tripathi- Positions held: General Manager-Mahindra & Mahindra Ltd., Head Operations Mahindra Shubh Labh Services Ltd., Head Agri and Head Engines Escorts Ltd., Vice President Reliance Retail. (Writer and Author)

Before we discuss Rural Marketing and look for a solution in e-commerce let us also understand the complexity and demanding physical features of India as you need to strap the rural marketing to the physical features of India as it won’t work in a vacuum.

India happens to be 10th largest economy of the world in terms of nominal GDP and 3rd largest in consumption or (PPP) purchase power parity and therefore a huge market even domestically. 60% of our population lives in the rural areas. Our population density is 380/sq km and we are the 7th largest country by area, 2nd most populous country after China with over 1.2 billion people. Our per capita income by PPP is 5777$ and by income it is 1626$.

Let us also understand the geographical spread where our supply chain has to deliver. It has 656 districts, 5379 taluks an over 6 lakh villages and a land area of 33 lakh sq km which is five time of Pakistan and one third of China approximately. The terrain is an an assortment of both plains and snow peaked mountains.
Though we talk of one India the divide is deep that makes it two in terms of habitat, requirements, challenges and even family cash flows. And, last but not the least the literacy rate has grown to 74.04% with a decadal growth of 9.21%. And this is something to cheer about.

CURRENT SCENARIO OF RURAL MARKETING

In the current scenario most products, be it FMCG, Engineering, Industrial, Farm Machinery or Farm inputs are all sold through a network of distributors, dealers and retailers who share the channel margin. While they do provide peripheral and ancillary services to the rural folks especially farmers; they make better profits than rural folks and therefore the cost of goods to the end user increases accordingly. And a majority of them are more sales oriented than concern for after-sales-service; which is more because of lack of skill. Net-net this is not a very cheering situation. Even distribution costs rake up, because the goods are first sent to the resellers godown and then to the final user; instead of despatching it straight to the end user.

WHAT IS E-COMMERCE?

In very simple terminology e-commerce is selling through internet; as many global and Indian companies are doing such as Amazon, Flipkart, Snadeal to name a few. And, it has been extremely successful in the cities and with that rationale there is no reason why it shouldn’t be a success in the rural areas.

SO HOW WILL RURAL MARKETING THROUGH E-COMMERCE HOLD OUT?

With the increase in literacy levels especially of females going up to 65% and males to 80%, e-commerce in rural markets appear to be at arm’s length now. But, literacy needs to be converted in to skill of handling computers and operating INTERNET to enter the domain of e-commerce and this should not be difficult. Even in the arena of connectivity much has been achieved barring the speed of the INTERNET and availability of power. Some other major deterrents in ramping up e-commerce could be as follows:

• Current purchase system of farm machinery through subsidy has many leaks and only a fraction of what is spent by the Government actually reaches the beneficiary. This problem can be arrested by making DBT (Direct Bank Transfers) through Jan Dhan Scheme of the Prime Minister.

• Major sustenance of livelihood in rural areas is through farming, and therefore the government should promote e-commerce for purchase both farm machinery and inputs. But it won’t happen unless there is a monetary push by the government in providing cash incentives for orders through INTERNET out of the subsidy amount.

• Marketers will soon have to open INTERNET kiosks for selling their products at rural centres as some companies are already planning. These centres can either be managed by companies themselves or they could out source it.

• And after e-commerce catches up as a concept in Rural Marketing, companies will have to plan for service dealers aggressively for product demonstration, installation and after-sales-service. As one can only procrastinate e-commerce for a while and not reject it.

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