I stay in rural Maharashtra. We have reached a stage in life where we hardly shop but sometimes need specialty items like books, computer peripherals, herbal teas, etc. These items are not available in our rural town of Phaltan, so we go online to buy what we need. In the last year or so we have discovered the power of such shopping.
With increasing smartphone penetration in rural India, mobile apps work well for shopping, and the lack of PCs is hardly a hindrance.
In the recent past we would go once a month to Pune to buy a few things. Now because of online shopping, the frequency of such trips to Pune has drastically reduced. Thank goodness for that -- it takes about three hours to reach Pune, driving over backache-causing pot-holed roads. Besides, the traffic jams and pollution in and around Pune are far from pleasant. To put ourselves through these discomforts for a few items was quite a chore, a waste of energy and time. Now online shopping allows us the luxury of getting all sorts of items at home.
Online shopping, for long the province of urban India, is being discovered in rural areas around the country. However for such e-commerce to take place it is necessary to have a good internet connection, the ability to sift through the various items offered and the wherewithal to zero in on the best items by Googling them and comparing their prices and specifications across vendors.
I find that the rural population is learning this search-and-pick process at amazing speed, and this is reflected in the increase of online sales in rural areas. Rural residents also order items seen on TV ads and those they've heard of by word of mouth. With increasing smartphone penetration in rural India, mobile apps work well for shopping, and the lack of PCs is hardly a hindrance. Cash on delivery means that not having a credit card is not an obstacle either. The goods to rural households are delivered by young delivery boys on motorcycles who track the addresses via mobile phones.
Online companies are providing employment to a large number of rural youth as delivery boys.
Online shopping is fuelling consumerism in rural areas, helping to urbanize them. It is happening because it produces a win-win situation. For example, one can get quality goods at substantial savings, as they are usually much cheaper than what one would pay in a shop in Pune or other big cities. The time and energy used in actual shopping and going to a big city are also saved. This is the reason why e-commerce has spread so rapidly all over the world and rural India is only now getting the benefits of this revolution.
The foray of online companies in rural India is also a boon for the job market. It is providing employment to a large number of rural youth as delivery boys. Besides, it has given a shot in the arm to the loss-making India Post since their large network of postmen is being used by e-commerce companies to penetrate rural areas.
However such shipments are energy intensive. For a small item, the packing is almost three-four times the size of the item. This is a waste of material, adds to the weight of shipment and to the transport energy cost.
Secondly, at times locally manufactured items are shipped to big cities and then again to the final destination. For example, we ordered a packet of mango pickle (of a brand that is not available in Phaltan) which is manufactured about 45km from our rural town. This packet was shipped to Bangalore from where it came to us! This is a real waste of energy in transport but the shipping company may be finding it cheaper to do so for whatever reasons. Yet with all this travelling around we got this packet at nearly half the price of what we would have paid in a Pune shop.
So, how do companies like Amazon, Flipkart, Snapdeal and others who have big online presence in India still make money on such transactions. Data from their financials reveal that presently all of them are losing money, primarily because it is the start of the e-commerce boom in India. However, they feel that there is a great future in online shopping and with time their profits will increase. Thus only those companies with deep pockets will survive since they have the staying power to penetrate rural markets.
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