Over the last two decades, rising Internet penetration and growth in mobile phone users, have changed the way communication and business are done in the developing countries. Where China is on a steady growth path, it still falls into the category of ‘developing’ alongside with India. Even with the growing Internet user base, a significant question that arises is that do these users fall into the area of e-commerce penetration as well?
Recently at an event in China, Alibaba CEO Jack Ma spoke about how the company sees rural e-commerce as an opportunity and what has it planned going forward.
Both India and China are highly populated countries. No doubt that e-commerce has the potential to become massive in India and China but at the moment it is only popular in the cities, and not the rural parts of the respective countries. Out of a 1.4 billion population in China only 46 percent of it have access to the Internet, whereas in India, out of a 1.23 billion population only 20 percent have access the Internet, as per Internet Live Stats data at the time of writing this article.
According to Jack Ma, the gap between the urban and the rural is not a technology problem, rather its a consciousness problem i.e. whether or not are you ready to accept these advances problem. Which is true for India as well.
Alibaba plans to expend a lot of energy in the entire field of rural e-commerce, hoping to bring e-commerce to most of the China’s villages where people can sell their own products in cities. It will however, increase its investment in the rural financial industry, and rural distribution.
Low education levels, low broadband facilities, low smartphone penetration due to less or no knowledge of it and its usage, and under developed infrastructure that lead to slower shipping and delivery system are some common key reasons for lack of e-commerce penetration in India and China both.
Challenges in India
Education is one of the biggest challenges in India. A recent report by McKinsey revealed, around 88 percent of class 8 students are unable to read primary class text and over 500 million people don’t have secondary education or skills training.
Another main reason as to why internet penetration is such a roadblock in India is because of lack of infrastructure and electricity in many regions. Around 300 million people don’t get electricity in India, as per the same report.
Another challenging aspect in India is knowledge and awareness about digital world. According to a recent KPCB report, India has only 117 million of smartphone users as compared to 422 million users in China. Most people in India are either not aware or suffering from lack of knowledge on how to use and fully optimise the use of technology for their personal benefit and growth, this also comes with lack of education and non availability of basic necessities of life like electricity. This is one factor that gives makes rural e-commerce in China a brighter opportunity at the moment, than that in India.
A majority of the Indian population is still untouched by Internet, let alone e-commerce. As rural India offers highly untapped potential for ecommerce players willing to ride this opportunity to scale further. Though faster penetration of Education and awareness are also required to bring a change. With introduction of Internet infrastructure in the rural masses, there can be a massive change in the way information & knowledge is shared, and the way how businesses are done. Can first movers gain benefit and advantage from it or will they wait for others to break the ice?.
If Alibaba is able to succeed in reaching and converting rural population in China, will e-commerce leaders in India try and replicate the model as well?