Strategy
E-Commerce giants like For instance, Amazon is seeing growth in the industrial town of Tumkur, northwest of Bengaluru, thanks to a month-old pilot. A dedicated rural e-Commerce distribution centre manned by local youth in the town has now reduced the delivery time from over a week to two to three days.
"Unlike big cities where e-Commerce delivery guys spend hours on the road carrying heavy packages, life is much more simple here - I can deliver 12 packages in a couple of hours," said Doddaiah, who stays in a nearby village, and rides on his Honda motorcycle every day for delivery.
Amazon, which started with an average of 10 packages daily, now ships around 150 packages in and around Tumkur. Other tier-II towns like Davangere and Hosur in Tamil Nadu too are part of the pilot.
Likewise, Flipkart last year piloted a plan to sell Motorola phones to rural consumers by setting up local networks of entrepreneurs who marketed the product.
One of the residents, Mohan Kumar, had ordered an HTC smartphone on Monday and was pleasantly surprised to get delivery of the product the very next day. "It's really fast now; my daughter will be thrilled," he told Economic Times, receiving the shipment from Doddaiah.
The phone was shipped from Amazon's Hosakote warehouse located on the outskirts of Bengaluru city the same day it was ordered online.
"We are trying to create a rural-urban bridge," Madan Padaki, the founder of Head Held High, a skills development and employment company which runs these centres in smaller towns and rural India for various eCommerce companies, told ET. "These centres will provide distribution, customer acquisition, lead generation and sales as a service to ecommerce companies," said Padaki.
The demand from small towns and rural India can no longer be ignored. ET reported that in Sira in Tumkur district, Padaki found that out of 224 people surveyed, 57% accessed internet on their smartphones - like Mohan Kumar, the HTC customer - but only 4% had used it for ecommerce, quite unlike Kumar.
"That's a huge opportunity. Essentially, you have people with internet on the phone. The next logical thing is to use it for commerce," Padaki told the financial daily.
However, retailing in rural India has its own challenges. For instance, Hariyali Kisaan Bazaar, the retail arm of DCM Shriram Consolidated, had to restrict sales only to fuels in 2013 due to unpredictability of demand and losses.
"Now companies only have very loose control over the seller distribution system in rural areas. So they will have to set up completely new models of distributing," Siddharth Singh, associate professor at Indian School of Business told ET.
The financial daily reported Amazon had tied up with India Post to service 19,000 pincodes and Flipkart has been beefing up its delivery staff in over 1,000 cities.
(Image: Reuters)