There’s something intriguing about offline retail that has ecommerce companies wondering if they should explore this field. Last week, IOS brought you insights about Flipkart’s plans to go offline. This week reports say Amazon is looking at diving deeper into the offline retail landscape; specifically, in smaller towns and rural regions.
Amazon initiated its offline activities through an assisted commerce program called Udaan, back in 2015. This project is aimed at partnering with local sellers to enable offline buyers to make online purchases. Amazon trains the merchants it partners with and splits a commission with then for every sale made. Merchants are a front for village and small town residents to shop online and their stores act as product delivery and pick-up points. This makes is far easier to sell in rural areas.
The etailer mentioned in a statement, “Project Udaan is going to play a key role in our effort to make Amazon accessible within a few minutes to all our customers. We believe that the initiative has the potential to be a game changer for Amazon in India.”
Online marketplaces are beginning to realize that a huge portion of their sales come from rural areas and small towns. The demand from the six large metros in the country are no match to this.
Shopclues stated that its rise in festive season demand came from Tier 2 and 3 cities. Tire 3 cities accounted for 48% of total demand of the etailer’s goods.
During the festive sales conducted so far majority of orders from Flipkart that is 65% of orders came from Tier 2 cities and below towns, claimed the marketplace.
Amazon is also witnessing the similar sales figures in these regions. The etailer received orders from 97% of the country’s serviceable pin codes during its second festive sale. Project Udaan is present across 188 locations in 18 different states. These locations cover 700 plus pin codes, claimed Amazon.
Amazon and Flipkart are not the only ones to have realized the potential of offline rural retail. Ecommerce company Storeking focuses on rural India’s needs. The firm partners with Amazon, Snapdeal and Flipkart get online retail to rural locations.
Currently, Storeking has 25,000 offline store across 100 districtswhich it uses to service approximately 10 million customers in a month. Besides this, the company also collects information about customer requirements according to their region. This enables it to reach out the right brands and create the right deals with that will encourage rural buying.
The Indian government is also pushing retail offerings to consumers in the rural parts of the country. It is giving ecommerce businesses access to many e-Mitras. This it feels will prompt rural commerce and generate more employment.
Online retailers are looking at setting up offline stores in small town and rural areas so that they can maximize online consumer bases and build better logistics in unmapped regions.
Third Eyesight Chief executive, Devngshu Dutta said, “Consumer goods sales are concentrated in bigger cities. This is why it still makes economic sense for a retailer to set up stores in bigger towns even though there’s a lot more competition. But it (online-to-offline retail) is feasible, because you don’t have products sitting in small markets locked away there.”
Ecommerce efficiency could open India’s rural markets for retail. But will there be demand? That is the question.
According to Dutta, critical mass must be reached where availability of products pushes demand and vice versa.
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