Chasing the next 100 million internet users in small town and villages is the Holy Grail
Scaling the infrastructure by improving the roads network and connectivity to bigger cities, India has extended the suburbs and accessibility to larger towns. Not just expanded, it has also given rise to a new market, which lays at the intersection of rural and urban markets- the ‘rurban’ market. This is the market where affordability has changed the economics of the whole cluster. The primary change in affordability has come because of the increased connectivity to large towns where people hop in search of non-agrarian employment. Since the income from non-agrarian employment is at least 10% higher than the farm income, the consumer’s with non-agrarian jobs have higher disposable income.
Directing this affordability into expenditure is the awareness factor. With the penetration of mobile phones, Direct-To-Home satellite broadcasting channels, cheap mobile data and ubiquitous internet, the rural consumer is aware of what’s available outside the rural market. This awareness emanates into adoption and consumption of new categories of products.
The burgeoning category of the ‘rurban ‘consumers has made it an opportune time for companies to cater to this market. While there has been a flurry of activities for distribution and inclusion of the new class of consumers, nothing robust has been developed yet.
With the availability of macroeconomic data, geospatial data and meta analytics the real challenge is not in identifying such clusters, but in planning the last mile route and delivery channels. Even after identifying the process and strategies for delivery, approaching the last mile by developing its own dedicated channel does not yield gainful ROI for the companies.
Historically the underserved rural and semi-urban users have relied on neighbourhood stores. Thus an ideal strategy to approach these markets would be via the neighbourhood stores, the unorganised offline ‘kirana’ stores.
Pay1, a retail tech platform is tapping on such superior distribution channel needs of the companies and the technology and additional revenue streams need of the retailers by acting as a facilitator connecting the product and services companies to the unorganised offline retailers through its platform.
The companies can launch their products and services on the Pay1 platform which has a large network retailers across India. The platform brings down the costs of marketing and promotion for the companies and gives access to new products and technology to the retailer.
The dual impact of the platform is reduced costs of doing business for the products and services companies and added revenue streams for the retailer.
The e-commerce giants have been spending a large chunk of money on technologies and working out intricacies on reaching the non- metro customers. A report says that ~ 10-12 % of all shipped items fail to reach the end customers, first delivery attempts strike rate remains a dismal low of 75% and last mile costs as a part of the overall logistics costs are a high 40-45%. These not only impact the costs but also reduce customer stickiness and captive market for the online retailers.
Having identified the challenge, Pay1 is in talks with retailers for a possible collaboration to use ‘kirana’ store infrastructure. The store can become an extended arm of the e-commerce logistics companies to send their shipments to the customers in the tier 2 cities and the semi-urban areas. The networked retailer on the pay1 platform can lend some space in his shop as the delivery centre, mini-warehouse or a depositary for the e-commerce companies or logistics companies for last mile distribution.
The partnership of e-commerce companies with Pay1 helps them grow their network of delivery centres and expanding its basket of products available to semi-urban customers.
The whole business proposition also makes an impact on the offline kirana store. It helps them monetise their surplus manpower and storage space, thus enabling them to add a revenue stream.
Pay1 with its extensive network of merchants and huge market share in the mofussil of India is mining the hinterland to develop and capture the market of rural India.