In­dian start-ups count­ing on ru­ral reach to boost e-com­merce

The Pak Banker - - 6BUSINESS -

In­dian en­trepreneurs must do a bet­ter job reach­ing small towns and vil­lages at home be­fore set­ting their sights on in­ter­na­tional ex­pan­sion, speak­ers on a panel at Bloomberg's In­dia Eco­nomic Fo­rum said.

"We haven't even scratched the sur­face yet" in In­dia, said Rad­hika Ag­gar­wal, co-founder and chief busi­ness of­fi­cer of on­line re­tail plat­form Shop­clues, cit­ing a very small pro­por­tion of Web pur­chases com­pared with tra­di­tional re­tail. "We're very fo­cused on get­ting into ru­ral In­dia," and there are mul­ti­ple things In­dian com­pa­nies can do be­fore they start look­ing abroad, she said. Within the last decade, In­dia has gone from hav­ing barely any mo­bile-phone cov­er­age to the world's fastest-grow­ing smart­phone mar­ket. The gov­ern­ment has helped boost ecom­merce by launch­ing high-speed broad­band con­nec­tiv­ity that will even­tu­ally cover the coun­try's ru­ral nooks.

The com­bi­na­tion of more phones and faster ac­cess has spurred hun­dreds of e-com­merce start-ups, ped­dling ser­vices from sell­ing homes on­line to de­liv­er­ing gourmet In­dian meals-mak­ing it one of the most fer­tile en­trepreneurial ecosys­tems in the world. Prime Min­is­ter Naren­dra Modi has said con­nec­tiv­ity cou­pled with dig­i­tal com­merce has the po­ten­tial to pro­pel In­dia from a $2 tril­lion econ­omy to a $20 tril­lion econ­omy.

Right now there is a lag be­tween ur­ban In­dia and the coun­try­side, but it's nar­row­ing quickly, Ag­gar­wal said. The next 100 mil­lion peo­ple who will par­tic­i­pate in e-com­merce will be from In­dia's smaller towns, she said.

Now that ac­cess to e-com­merce is there, the next step is to boost spend­ing to be able to com­pare In­dia with on­line jug­ger­naut China, said Prashanth Prakash, a part­ner at Ac­cel Part­ners. In­dia needs to add an­other $1 tril­lion to $2 tril­lion to the econ­omy to re­ally see the China com­par­i­son play out, he said.

"The av­er­age spend­ing from an ecom­merce buyer in In­dia is $250 to $300," Prakash said. "Eight years ago in China it was $400. So there is a re­ally huge chasm there." Legacy com­pa­nies in In­dia shouldn't be writ­ten off yet ei­ther, said Raghav Bahl, founder of dig­i­tal me­dia startup Quin­til­lion Me­dia Pvt Ltd. Un­like in the West, on­line changes in In­dia are not oc­cur­ring se­quen­tially to tra­di­tional busi­nesses but in par­al­lel, help­ing e-com­merce mod­els evolve in a unique way, he said.

"The end point of e-com­merce will be very dif­fer­ent from else­where," Bahl said. E-com­merce en­trepreneurs will have to be "cog­nizant of the cus­tomers' jour­ney" to on­line shop­ping and "seam­lessly hold the cus­tomers' hand," Ac­cel's Prakash said. "There will be some very in­ter­est­ing busi­nesses we're start­ing to see and fund where off­line and on­line will nicely coex­ist in this coun­try -- maybe a lit­tle bit like what we see in China." And de­spite the gov­ern­ment's pro­fessed startup-friendly poli­cies, reg­u­la­tory hur­dles abound, the pan­elists said.

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