Rural to Ruban Transition: Bridging the Delivery Gap

Current Population of India - India, with 1,270,272,105 (1.27 billion) people is the second
most populous country in the world. The figures show that India represents almost 17.31% of
the world's population, which means one out of six people on this planet live in India.
Although, the crown of the world's most populous country is on China's head for decades,
India is all set to take the numero uno position by 2030. With the population growth rate at
1.58%, India is predicted to have more than 1.53 billion people by the end of 2030.
More than 50% of India's current population is below the age of 25 and over 65% below
the age of 35. About 72.2% of the population lives in some 638,000 villages and the rest
27.8% in about 5,480 towns and urban agglomerations.
All the companies in India concentrated on urban market and now the urban market is getting
saturated, therefore all the corporate companies want to tap and explore the opportunities in
the rural market for business growth.
Market Size
Rural India is now being seen as a major hub for investment by India Inc. In the period 2009
12, spending in rural India reached US$ 69 billion. Rural India needs to grow in tandem with
Urban India and standard of life has to improve for inclusive growth to happen.
Some interesting numbers:
1. 12.2% of the worlds consumers live in India. Rural households form 72% of the total
households.
2. Total income in rural India (about 43% of total national income) increased from around
US$220 billion in 2004-2005 to around US$425 billion by 2010-2011, a CAGR of 12%.
3. The purchasing power of rural India is more than half for fast moving consumer goods
[US$17 billion].The durables and automobile sectors contribute US$2.5 billion each, and
agri-inputs (including tractors) about US$1 billion.
4. Some 42 million rural households [use] banking services against 27 million urban
households.
5. 60% of Indias annual consumption of gold and gold jewellery is from rural and semiurban areas.

Information technology:
In todays technology friendly era, Mobile & Internet penetration has resulted in access to
information at fingertips.
Few facts:
1. The mobile subscriber base in India is 680 million out of which 68% of the subscribers are
from urban areas and the balance 32% is from rural areas. The urban teledensity has reached
134% whereas rural teledensity is only 28%. As a result, the telecom subscriber growth in
urban areas is now saturated and further growth can come only from rural India.
2. Rural India is getting fast on the information superhighway. Rural India has 38 million
claimed internet users and 31 million active internet users, according to a report on Internet
in Rural India by the Internet and Mobile Association of India (IAMAI) and IMRB.
3. The penetration of claimed internet users in rural India has grown from 2.6% in 2010 to
4.6% in 2012, a CAGR of 73%. On the other hand, the penetration of active internet users has
grown from 2.13 percent in 2010 to 3.7% in 2012.
E Commerce:
According to a survey, India's e-commerce market, which stood at $ 2.5 billion in 2009,
reached $ 8.5 billion in 2012 and rose 88% to touch $ 16 billion in 2013. The survey
estimates the country's e-commerce market to reach $ 56 billion by 2023, driven by rising
online retail.
The age-wise analysis revealed that 35% of online shoppers are aged between 18 years and
25 years, 55% between 26 years and 35 years, 8% in the age group of 36-45 years, while only
2% are in the age group of 45-60 years. Besides, 65% of online shoppers are male while 35%
are female.
To make the most of increasing online shopping trends, more companies are collaborating
with daily deal and discount sites, the survey pointed out. The products that are sold most are
in the tech and fashion category, including mobile phones, ipads, accessories, MP3 players,
digital cameras and jewellery, among others, it found.
India has Internet base of around 150 million as of August, 2013, the survey said.
Having close to 10% of Internet penetration in India throws a very big opportunity for online
retailers to grow and expand as future of Internet seems very bright.

Those who are reluctant to shop online cited reasons like preference to research products and
services online (30%), finding delivery costs too high (20), fear of sharing personal financial
information online (25) and lack of trust on whether products would be delivered in good
condition (15), while 10% do not have a credit or debit card.
Since there is a huge opportunity in E-commerce industry, companies like Flipkart,
SnapDeal want to enter into the rural market.
Marketplaces like SnapDeal that only work with third-party logistics firms are dependent on
the network of these firms. Through these logistics companies SnapDeal provides pick up
service to sellers in 200 locations and delivery to over 4,000 cities.
Those like Flipkart, which has its own logistics subsidiary, decide on the pin codes they
service on their own. However, Flipkart's logistics subsidiary e-kart has a reach of 200 cities.
Beyond this, Flipkart too works with third-party delivery companies. Even many suburbs of
major cities are not serviced. Parts of Greater Noida and Faridabad in Delhi-NCR are not
covered, as delivering to these parts is not cost-effective.
Bharat is experiencing multiple challenges, still awaiting full scale developmental inroads.
However, despite all the challenges, it puts forth myriad opportunities. The ever increasing
market size and technological penetration, coupled with a young demographic structure
makes it a fertile field to harvest. Corporates are queuing up to sell their products in rural
markets. Growing awareness and higher disposable income is attracting rural consumers to eretail services. Product is ready. Customer is ready. However the biggest question is How to
deliver?
Explore the rural scenario and suggest the E-retailers about various possible opportunities in
rural markets, based on the given data, and help the E-retailers to solve the biggest puzzle