New Delhi: Bharat is getting online faster than India. By 2020, about 315 million Indians living in rural areas will be connected to the Internet, compared to around 120 million. That’s about 36% of the country’s total online population. By 2020, this share of rural India will jump to 48%, creating a huge opportunity for brands and marketers in places where establishing a physical presence is still a challenge, according to a study by the Boston Consulting Group (BCG) titled ‘The Rising Connected Consumer in Rural India.
At present, the study noted that rural Indians use the Internet mainly for social network websites (around 70% of the Internet users living in rural areas) such as Facebook and for emailing. About 15% of rural consumers use the Internet to research products, purchase a product, or register satisfaction or dissatisfaction after the purchase, compared with 30% of urban consumers. “The amount of online commerce in rural India is still small, but it is picking up. From 2015 to 2016, the penetration of online purchasing in these areas doubled from 4% to 8%,” noted the study. The key reasons are “convenience and discounts,” it added.
The BCG study said that rural consumers hesitate to buy online because of delivery and return issues and a widespread perception 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,” it added.
BCG suggested that marketers should have a different digital strategy for rural markets. These include a simpler or different app designed for smaller screens, low-bandwidth telecom networks, and local language availability. Besides, marketers should make advertisements more relevant to this new set of target customers.
“Companies looking to tap the rural market should first evaluate which touchpoints in their targeted customers’ purchase journeys are most affected by digital and to what extent… The economics of the Internet allows marketers to re-evaluate the business case for reaching rural markets,” added the BCG study.
Marketers agree.
“The benefit of the Internet is that people are more aware of what is happening worldwide. With the digital revolution taking place in the country, it becomes easier for brands to reach consumers. We are hopeful that with rural Internet penetration, people will be more aware of brands and products, and it will greatly help the retailers,” said Sandeep Jain, executive director of Monte Carlo Fashions Ltd.
According to Kumar Rajagopalan, chief executive of The Retailers Association of India (RAI), bandwidth is the biggest challenge. “I don’t think true inclusive growth can happen until we get the bandwidth sorted,” he said.
Vivek Gaur, CEO of online seller Yepme.com, agreed. “The infrastructure needs to come up as quickly as Internet penetration is coming up. For a brand like ours, a mass casual wear brand, it makes a lot of sense to have something driving traffic from the bottom of the pyramid. I think the government is investing a lot, and I sense that India will be more like China than the US in a couple of years, where people have much more access to the Internet,” he added.
In its study, BCG gave the example of China’s largest online seller, Alibaba’s model, which is tailored for rural areas. “In October 2014, Alibaba announced it invested $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,” noted the study.
Alibaba-backed Paytm, an Indian online payment service provider and marketplace, declined to comment on how it is considering expanding its reach in rural markets.
The study offers insights into the user base expected to drive India’s next wave of Internet consumption. That is perhaps why search engine Google and popular social networking site Facebook invest top dollars in local content in India. At present, Google is working with the government to roll out its ambitious Internet balloon program, Project Loon. This program forms a large communication network using balloons in the earth’s stratosphere, specifically aimed at providing connectivity in rural areas.
The report is based on BCG’s Center for Customer Insight (CCI) surveys of approximately 4,000 rural consumers in 27 villages in 14 states in 2015 and 2016. It profiles five different segments of Internet users in rural India – mature, ambitious, late adopters, next-wave users, and ‘dark on the Internet.’ More than 60% of rural users have been online for less than two years, meaning most rural users are still digitally immature. Their usage patterns can be expected to evolve as they gain experience. It is a mistake to regard rural users as a single set.
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“Ambitious users play games, download media, and are especially active on social networks. The online activities of next-wave users are more limited: interacting on social networks and listening to music. Late adopters are mainly social networkers, while mature users seek out business and job information, read news, and play games,” stated the report.
Therefore, marketers must understand the differences between rural and urban consumers. Two-thirds of rural users use feature phones online, and only a quarter have smartphones. In contrast, almost two-thirds of urban users own smartphones. Because of differences in devices, network capabilities, and underlying consumer behavior, rural and urban internet users choose different apps and do other activities online.
For example, rural users are more likely to use the UC Web browser (popular in other emerging markets) because it employs technologies such as data compression, which helps load web content faster and reduce data consumption during browsing. They use apps like SongsPK, which downloads songs for free because streaming does not work well on 2G connections. Many rural residents use WhatsApp for messaging, which would probably be one of the first apps they tried. Alternatives such as Hi and Line are perceived as heavy data consumption apps; they are used more for video calls and exchanging files. Vernacular media consumption apps such as Daily Hunt (formerly NewsHunt) and Dainik Jagran are more popular than English-language media apps.
