Is it time for Rural-First eCommerce?

Are we trying to sell English-Language classes through ads printed in English? The funny bit is, if you look around you'll find a lot of language institutes trying to do just that. It isn't just funny, it's a sad waste as well. And that brings us to our burning question. Is it time for rural-first eCommerce?

A lot of critical determinants of an eCommerce model vary between urban and rural markets. Customer evolution, internet speeds, language proficiency, retail expectations, buyer-seller-distance, supply-chain infrastructure - to name a few - vary between urban and rural areas. Hence the obvious fact that rural and urban eCommerce may need different approaches.

I'm not speaking of inventory itself - that's relatively simpler. We already know rural customers may have a stronger preference for battery life and ruggedness with respect to heat, humidity, dust and power-quality. We also know regional brands and designs may have a higher acceptance. I'm also not talking of translation or even of the different expectations (and realities) on delivery time, customer-care etc. I'm speaking of stuff that's tougher to pin down.

There is the complexity around color, font, language, dialect, idioms, syntax, imagery and visual design. If you ask typical rural populations in India, you might find they prefer the orange-colored Micromax phone with the loudest ringtone to the Vertu, and the Su-Kam inverter print-ad to the understated Apple ad. If you want to know what works for rural, look at the posters political parties make. They may not be the most elegant works of art for you and me, but they work for the rural masses- and much better than a Benetton hoarding.
And then it gets more interesting.

Rural isn't 'one' market. Urban, interestingly, may well be - most large cities turn cosmopolitan and while they do retain a bit of local flavor, urban markets tend to be more homogenous than rural markets. Each rural market may have its own unique idiosyncrasies. There is some media commonality so one may expect similar demand-trends, but the regional influences could be stronger than global cosmo ones. In the colorful south of India, people may prefer pristine whites while in the bleak Thar or Rann of Kutch, the preference may be for mirror work and applique in rich colors. Spending could me more linked to the 'actual ' harvest than the harvest festival as per the calendar. The differences by religion, caste and occupation could be more pronounced. Matriarchal and patriarchal societies could respond to different communication.

Now imagine one business that starts of by adapting its global platform and processes, and another that starts from a region, say the North-East of India - the more local business could well be better-suited for local success. Its challenge would be scale. The global business may have better scale, but if it doesn't resonate with the customer, it'll have a tough time succeeding. The business is not about - crudely put - discounting mobile-phones, wrapping them in miles of bubble-wrap and Fed-Exing them. The challenges could include the following:

• The translation challenge: from today, when everything from the website name to search-experiences and item-details are in English, how do we go to being easily understood by populations who may understand English less or differently - the answer may either lie in language adaption or in language-independence (visual / audio web etc)
• The custom-experience challenge: from uniform all-India prices, promises and T&Cs, how do we vary our promise of the best-possible for each taluk or tehsil, and how do we deliver, say, local language customer-support from a centralized location, how we get the items there and the cash back; also the business may need different measurement-norms on COD%, return-rates and so on
• The inventory challenge: how do we get to the portfolio that is closer to actual consumption
• The hand-holding challenge: how do we get people comfortable with the idea of digital commerce, where the initial levels of exposure, DIY and comfort with change vary from urban populace

The long-term game is about creating local or language-independent experiences, generating custom prices, delivery times and T&Cs on the fly, selling sattu, gamchas, lanterns and fertilizers, building financing, supply-chains and reverse supply-chains, getting customer-care to talk in the dialect and so on - while still aiming for economies of scale. A lot has become easier with soft keypads on touch-phones, transliteration and translation tools etc, but a lot more needs to be done. The big promise is that once these engines are built, they may well end-up being applied to urban niches as well.

A lot of this will remind you of the mass-customization paradigm. It is simple, but not easy.

The way ahead may be complex, but is certainly interesting. More than economic potential, it has the promise of separating the innovators from the me-too's, the talkers from the doers, the wheat from chaff - much more than the comparatively-less-complex urban eCommerce.


Previously published in ET Retail on July 29, 2015

The Changing World of a Shopkeeper

All of you have followed the developments around eCommerce, local commerce, daily-deals etc. as businesses. All these businesses to some or the other degree depend on the traditional shopkeeper as the supply source. eTail is probably the model that depends on him least, because it can go directly to the source, the manufacturer or the large distributor, but it still needs shopkeepers in some categories where the aggregation of demand, like in auto-accessories, happens at the shop-level. Or when one needs services like installation that the shopkeeper can provide. For local commerce, the shopkeeper is the backbone, as it is for many businesses for daily-deals.

Truth be told, most traditional shopkeepers think of themselves as being in the business of moving boxes and managing cash. They haven't really thought of themselves as entities for digitizing supply, taking pictures and writing product descriptions. They also don't think of themselves as being in the business of delivering goods, though most of them do it for some percentage of their orders. Most of them don't have MIS or ERP systems and they manage inventory through heuristics. They don't know how to manage feedback on digital platforms. There are therefore significant challenges in them making the transition to the supplier digital businesses will look for. And it's a lot more.

A traditional shopkeeper may make his money in fairly unstructured ways. He would buy in bulk on credit or against a cash discount for volumes he has back-of-envelope (or back-of-hand) calculations for. He can then weigh goods approximately (erring on the side of less sometimes), pack it in an old newspaper, have it delivered through a person who may be below legal age or statutory salary, do pure cash transactions where he does not provide a receipt or pay taxes, or through credit where he has some leeway on the month-end calculation, and so on and forth. One is not saying adulteration or substituting lower-grade loose commodities is a norm but that too is possible. Each one of these activities adds up to margin. The result is a profitable business that loses value once it gets 'organized'.

And that is where a big problem exists.

Today digital businesses are not only expecting this person to agree to tax scrutiny or accept credit cards, or to install a POS software and MIS, but - what is more important to keep in mind - we're also expecting behavior change, which, as all of us know, isn't easy. A shopkeeper today may be happy getting 5% additional sales through local commerce, but one day he may not deliver his order and not even be apologetic about it because in his earlier world, it was okay to tell the customer he forgot, or his delivery boy came back late from lunch, or that the electricity went off, or the bicycle had a flat tyre.

Online businesses are in the business of structuring this market, of making promises that are kept and of assuring quality and timelines. We must remember the chain is as strong as the weakest link. If we create a middle-layer that will cover-up for what may go wrong, we risk becoming a different business - one that carries inventory of its own, has its own delivery, answers queries on behalf of shopkeepers and resolves problems on behalf of customers and eventually costs more than the efficiency we are seeking to create. So that not being a sustainable option, the other workable solutions involve handholding, education and behavior change.

And that takes a while. When we set up companies that depend on the shopkeeper keeping his promise, this is something we should keep in mind.

[note, this has been previously published in ET-Retail on July 1, 2015]