Post Budget 2017, e-commerce players shift focus to rural India

The GMV of online shopping is expected to grow at a CAGR of 50-60% to $80-100 bn by 2020

The e-commerce and online market place in India are seeing lucrative opportunities coming from the rural areas following Union budget's focus to boost rural economy and promote digital transactions.

"Biggest thrust for e-commerce will come from two key budget initiatives- target to connect more than 1.5 lakh gram panchayats with high speed brand and focus on digital transactions through merchant enabled Aadhar payments and BHIM. Many sectors have benefited from the increased rural demand as a result of agriculture reforms and MGNREGA. Now with the increased penetration of smart phones and internet, we expect a large base of first time online consumers to come from rural areas this year", said Sujayath Ali , co- founder of Fashion e-commerce player Voonik.com

Voonik already covers more than 28,000 pin codes and more than 70 per cent of its demand comes from Tier II and Tier III towns.

"The budget drops some hints about the direction rural spending will take. Real impact will depend on implementation of the reform moves and government projects. These initiatives will impact the demand in tier III and IV cities of the country. We have seen a steady increase in demand from smaller towns. From the current level of $120 million GMV, we aim to scale up our business to GMV of $300million to be profitable", he added.

Capillary technologies that provides OmniChannel engagement and commerce solutions that help consumer brands to increase their customer reach, engagement, sales and loyalty, too is anticipating that consumptions will come from smaller towns.

"According to recent surveys, half of all Indian internet users base will be from rural areas in 2020. With close to 2/3rd of the population being based in the rural markets, the proposed technical enhancements will surely generate business numbers to be accomplished", said Abhijeet Vijayvergia, vice president, Capillary Technologies.

Capillary Technologies, which provides cloud-based software solutions for retailers, expects that over the next three years, consumption will be driven by factors like internet and smartphone penetration, increase in per capita income, and growing number of debit and credit card users.

"With convenience as a prime driver, the GMV of online shopping is expected to grow at a CAGR of 50-60 per cent to $80-100 billion by 2020. It is noteworthy that the major surge in consumption is witnessed in tier-II and tier-III cities. Focus on infrastructure will eventually add up to better functioning of logistics and there by connecting town which were not accessible previously. This will eventually add to the consumption," said Vijayvergia, who is also the business head at Capillary Technologies.

Anurag Avula, chief executive officer and founder, Shopmatic stated that the budget, by all means, has showed positive reforms being proposed in favour of digital pay systems for the common man, more specifically in rural and semi-urban areas.

"It's great to see elevation of high speed broadband connection in rural and tier II and III cities, which further nurtures the country's tech essence. The increasing mobile internet penetration, increasing rural incomes are among various factors which have opened the doors for e-commerce in the rural parts of India. The online platform is currently exceedingly English-centric. If the e-commerce industry aspires to reach out to the rural population, it will have to communicate in all the 22 Indian regional languages, added Avula.

To unravel these concerns, the industry will have to come out with more innovative solutions in the future. The increasing mobile and internet penetration, connectivity and rising rural income will mutually motivate the online business in rural India at the moment, he added.