India’s e-commerce revolution: Force of empowerment for villagers on path to prosperity

Deep in Odisha, India’s second-poorest state, vans deliver washing machines to village homes located by directions such as “around the corner from the temple”.

The supply of modern appliances to India’s hinterlands is facilitated by online marketplaces such as Boonbox and StoreKing that target the nearly 900 million Indians – almost 70 per cent of the population – who live in towns and villages until now left behind in an e-commerce boom that is now part of daily life in major cities.

India’s e-commerce market is growing at an annualised rate of 32 per cent, according to Deloitte, and expected to be worth $84 billion by 2021. And while India’s nine biggest cities account for more than 54 per cent of the market, the fastest growth is in rural areas that are rapidly coming online.

“The tectonic plates of the India consumption story are shifting,” says Ramachandaran Ramanathan, co-founder of the Boonbox platform that has reached more than a million rural households.

India’s rural e-commerce revolution is a powerful force of development in vast swaths of the subcontinent that have been held back by poverty, conservative norms and a lack of education.

The United Nations Conference on Trade and Development lists a panoply of benefits from spreading e-commerce: improved digital literacy; better logistics and infrastructure; enhanced purchasing power; time and travel savings for villagers; promotion and awareness of digital entrepreneurship.

“Potential benefits for developing-country companies and consumers range from greater efficiencies to deeper specialization and division of labour,” UNCTAD says in a report. “Digital technologies can also be used to empower women entrepreneurs.”

Much of the research surrounding rural e-commerce has focused on how it helps local producers reach wider markets. While that’s an important factor, studies indicate that the greatest benefits may lie in the way e-commerce boosts access and living standards across village life.

“The gains are driven by the consumption side, through a significant reduction in household cost of living that is most pronounced in more remote rural markets,” according to a paper by scholars at University of California, Berkeley, Stanford  University and China’s Jinan University.

“Our results also suggest that these effects are mainly due to overcoming the logistical barriers to e-commerce in rural markets.”

In India, Boonbox, which sells everything from smartphones to footwear and solar lamps, teams up with village stores called kiranas, providing them with tablets through which customers can place orders. This practice is known as assisted commerce. Boonbox associates, often village leaders who can navigate the nameless streets, help the platform deliver goods to customers at their doorstep.

The Chennai-based platform, meanwhile, keeps costs down by aggregating demand through data processing in each rural district, then placing orders with merchants and storing the goods at its own local warehouses.

Investors are taking notice. Last year, Boonbox’s parent company InThree Access attracted nearly $3.6 million in funding from investors including Ventureast, Orios and Indian Angel Network Fund.

Now India is set to see a new explosion in its rural e-commerce landscape – as mobile operator Reliance Jio makes India’s data charges among the cheapest in the world. That will translate into massive growth in the pool of online shoppers, currently 160 million in a nation of more than 1.3 billion.

There is a possibility that strict rules imposed this year on foreign e-commerce groups dampen this momentum. High levels of e-commerce competition would instead probably help to boost rural development and the economy overall. Global expertise meanwhile would also be able to combine with local knowledge, cultivated by platforms such as Boonbox, to help bring the fruits of India’s economic ascent to the countryside.