28 Jul, 2017

Using eCommerce to power rural India – the Taobao model

28 Jul, 2017

Taobao, often known as ‘China’s eBay’, is the largest online marketplace where Chinese users and merchants can sell and buy ¬†products. According to Alibaba who owns Taobao, the rates of eCommerce in rural China have been on the rise, with 70,000 village sellers using the site to retail their produce.

It is interesting to note that there are over 200 Taobao villages in China. A Taobao village has the following characteristics;

  1. At least 10% of village household are engaged in eCommerce or at least 100 online shops have been opened by villagers
  2. The total annual eCommerce transaction volume in the village is at least RMB 10 million. We can see from these numbers that eCommerce is not just an urban convenience but can also be used as an tool to drive the economy of the impoverished Chinese countryside, where 50% of China’s population resides.

The story of entrepreneur LvZhengzong from Beishan village was recently featured by news channel CNBC. Lv was a sesame bun seller before he learnt that people in nearby villages were using Taobao to sell produce to distant places. He then went on to set up an online shop and started to produce camping gear. Today, his company BSWolf generates $8 million in annual sales of outdoor gear. His $16 sleeping bags are a best seller on Taobao.

Soon, Lv’s success became an inspiration to fellow farmers in his village to follow in his footsteps. Under the guidance of Lv, they went to local cyber cafes, taught themselves to type and started their own online shops. 2,300 people in the village have left their traditional farming job to start online businesses.

Over in India, the potential for eCommerce to bring prosperity in rural areas is huge. According to the 2011 census, 70% of the Indian population lives in villages. As such, it is of concern to the government to restrict the trend of migration to urban areas, which puts a huge strain on urban infrastructure and leaves villages stripped of the younger population with potential to work and earn. The solution is to take industry and business opportunity into rural areas and diversify beyond agriculture. The success of Taobao villages have shown that this is possible with eCommerce.

For rural eCommerce to succeed, it is important to have mCommerce in local language enabled. People in rural India mainly accesses the internet on mobile phones. A report in 2014 stated that 66% of active internet users in rural India access the web through mobile phones.

One key factor that facilitated the rural eCommerce boom in China is the local language applications built by the various eCommerce platforms and websites, including Alibaba, Walmart, Suning and many others. It is important to remember that rural consumers are both sellers and potential buyers of goods on eCommerce sites. Therefore, it is important to develop simple and intuitive mCommerce apps in local language that is able to motivate even the first time users to start transacting.

It can be observed that digital inclusion will not be successful as an isolated concept to ‘bring people online’. People need to see for themselves the opportunities for benefit, financial growth, convenience and time saving that are relevant to them. To achieve this, it is necessary to create applications in local language and accessible on every device – be it low end smartphones or feature phones. Pro-activeness is definitely needed to create and tap on the many business opportunities in rural India.




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