The D2C Opportunity in Rural and Small Town India

About 69% of the country’s population is rural — making Tier 3, 4, and 5 regions the future epicenter of India’s eCommerce opportunity. The GDP, nonetheless, out of these dwellings, accounts for only 25% of the country’s GDP. Challenges do exist. For instance, internet penetration stands at a trifling 31%, even after relatively rapid digitization over the past few years. No wonder even a company like Amazon India has a decade-long challenging legacy of building solutions based around these under-the-radar towns and villages. 

But things have changed after the Covid-19 pandemic, and that, too, substantially. The scope of success in the agrarian economy, which was ailing from the lack of capital inflow and crippled by middlemen throughout the farm-to-fork process, is back on the menu, and our pioneering enterprises are ready to rise to the occasion.

As the word goes around, with the advent of hyperlocal eCommerce branding, a fresh wave of opportunity is sweeping over these areas. It is bringing with it not only a fresh set of infrastructural and procedural demands but also a new kind of business pipeline — a D2C one — and a very intriguing one at that.

An Opportunity-Laden D2C Segment in Rural and Small Town India

The D2C industry seems poised for a virtuous cycle of growth. This is because it empowers brands to meet the fundamental needs of their customers at a local level through faster, more affordable, and more effective distribution.

But the central element to the various opportunities that are presenting themselves is the growth in consumer technology adoption. As per IAMAI Kantar ICUBE 2020 Report, technological adherence in rural and small-town India has grown by 13%, with more than 299 million users adopting daily internet technologies. This is complemented by the 13% contribution to the eCommerce revenue recorded in Q3 2020. Indeed, such a surge spells success for a business if it can prove its agility to adapt constantly to these changing habits.

Digital and social channels have reduced the distance between the customer and the brand. This makes it possible for brands to reach out to customers more broadly, across all channels, in several languages, and from various locations. WARC reports that regional content consumption is growing explosively, explaining why OTT platforms consistently push non-English content and put forth D2C advertisements in local languages. Enterprises need to:

  • Tweak the brand messaging to the local demographic and psyche
  • Assure the customers that the new brand is not just selling branded or generic products but is touching their lives in a value-added personal way
  • Promote the brand as a new-age solution to the shoppers’ daily problems
  • Convey the message of cost-effective, convenient, and higher quality services to the customers
  • Concentrate their efforts on the digital pipelines now active in the area

On a functional level, all the above reflect more opportunity than a challenge. Suppose a brand can empathize with the consumers, focus on the multiple touchpoints in their lives, and develop the right content in the local language that satisfies their socioeconomic needs. In that case, it stands a better chance of connecting with them — something that’s previously been out of the question.

Challenges for Consideration

D2C proliferation promises that rural and small-town India is a relatively untapped market, and there are many reasons behind that. Be it the non-availability of a digital infrastructure, the lack of cash or bank accounts, or even lack of standard payment methods (like credit/debit cards, wallets, etc.), an overwhelming majority of unconnected rural consumers have been deprived of an opportunity to buy goods in their towns — let alone from the relatively advanced Tier 2 and 3 regions. 

But even that could be overcome through a digitalized, organized, efficient, and practical logistics system, with periodic deliveries scheduled at predetermined intervals. 

Another major challenge is what the customer sees as viable to purchase through digital channels. 

For example, there is this ever-looming reluctance to purchase fashion products online. While talking to Inc42, FabAlley and Indya’s founder Tanvi Malik said that “for the fashion category, in particular, there is resistance to shopping online in Tier 2 and Tier 3 cities. Our target audience/potential customers in these cities are more comfortable with trying and buying from neighborhood stores rather than the ease of online shopping.” 

A similar narrative is exhibited through the words of HomeLane co-founder Tanuj Choudhry who calls his brand’s space in small towns “largely unorganized.” If this is the case for Tier 2 and 3 cities, the rural areas must be even more skeptical regarding specific industries. 

Fundamentally, the challenge is more significant for some industries. Electronic gadgets, for example, are status symbols in India and often attract small-town users. A brand in that domain is more focused on supply chain options than building brand reputation. Well, online reviews on YouTube, Amazon, etc., do it for them.

On the other hand, the fashion and the furniture industry suffer from the lack of touch-and-feel factor. Hence, for them, long-term aggressive digital marketing and advertising campaigns that are more in turn with the rural and small-town lifestyle are likely to be more effective. Moreover, it’s for them to use technologies like Augmented Reality (AR) that provide a virtual experience of how the product would look and fit.

Summing up

We’re witnessing a significant shift, where D2C provides answers to the conventional supply-chain and advertising ecosystems, where brands and retailers are under heavy pressure to take care of margin-sensitive consumers and offer them hassle-free experiences.Indeed, D2C is a product of the convergence of technology and consumption. We at Aroscop feel privileged to witness this change and are dedicated to helping brands find their place in it. Learn more about how our feature-laden tool suite can help you conceptualize the D2C digital experiences for your brand’s prolonged success.