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E-commerce\ncompanies in India are exploring the idea of setting up offline stores\nin smaller towns as they look to grow their customer base and improve\nlogistics in the unmapped areas.Rather than investing in their\nown stores, e-commerce marketplaces are partnering with local merchants\nwho can assist offline buyers in purchasing goods online. Amazon began\nits assisted commerce programme, Udaan, in 2015 while rival Flipkart is\nmulling doing the same now. “Project Udaan is going to play a key role\nin our effort to make Amazon accessible within a few minutes to all our\ncustomers. We believe that the initiative has the potential to be a\ngame changer for Amazon in India,” said the US retailer in a statement.
The\nmove to tap offline stores in small towns comes as e-commerce\nmarketplaces begin seeing a larger chunk of their sales coming from\noutside the six large metros. During its five-day Big Billion Days sale\nearlier this month, Flipkart said over 65 per cent of its orders came\nfrom Tier-II and below towns.
Amazon claims it sees a similar\npercentage of sales coming from non-metro cities and rural areas. The\ncompany said it received orders from 90 per cent of all\nserviceable pincodes in India during its five-day festive sale, during\nwhich it sold 15 million items on its platform. Udaan is present in 18\nstates across 188 locations and services over 700 pincodes, according\nto Amazon.
It has partnered with sellers as well as hundreds of\nlocal stores. Amazon trains store owners to help customers browse its\nwebsite on a PC and buy products online.
Flipkart declined to comment for this story.
“Consumer\ngoods sales are concentrated in bigger cities. This is why it still\nmakes economic sense for a retailer to set up stores in bigger towns\neven though there’s a lot more competition. But it (online-to-offline\nretail) is feasible, because you don’t have products sitting in small\nmarkets locked away there,” said Devangshu Dutta, chief executive at\nconsulting firm Third Eyesight.<\/span>
The efficiencies that\ne-commerce bring in could finally open up India’s rural markets to\nretail, but there’s still a looming question of whether there is\nactually any demand here. Dutta adds that a critical mass needs to be reached where availability of products pushes demand and vice versa.<\/span>
Flipkart\nand Amazon might be the largest e-commerce players to be exploring\ntaking the offline retail route to enter India’s hinterland, but they\naren’t the only ones doing so. Storeking, an e-commerce firm focusing\non serving India’s rural areas, has partnered with large players\nAmazon, Flipkart and Snapdeal to bring online buying to rural areas.
Storeking\nsays it has partnered with over 25,000 offline stores across 100\ndistricts and services around 10 million customers a month. Apart from\nfacilitating commerce, Storeking also gathers intelligence on customer\nneeds in each region, helping it reach brands and cut exclusive deals\nwith them to serve rural customers.
Xiaomi, one of the largest\nsmartphone manufacturers in the world, has partnered with Storeking to\nbring its Redmi 3S+ smartphone to offline stores in small towns and\nvillages.
E-tailers are not the only ones pushing retail\nofferings to customers in rural India, with the government being one of\nthe biggest advocates of this. By lending a hand to e-commerce players\nby giving them store access at its many e-Mitras, the government is\nlooking to kick-start rural commerce and create more employment.
When\nAmazon signs up a merchant as a partner for Udaan, it trains him and\nshares a commission for every sale. In turn, merchants act as a\nfront for customers in small towns and villages to shop online, while\ntheir stores act as delivery and pickup points, making it much easier\nto sell goods.<\/p>