BackThe upcoming digital tsunami
Multiplied by the sheer size of the population, 55% of all consumption in India by 2020 will happen in towns or villages with population less than 100,000
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In the vast oceans, there are waves that come and go every few seconds, and then there are tsunamis that come once in a lifetime for most people. In India, we are currently watching the rise of digital tsunami. This tsunami was triggered by the rise of Internet and digital products of the Silicon Valley and is now hitting the Indian shores.
A few numbers will explain what we mean. By the year 2020, we expect 650 million people in India to be digitally active. That is more than twice the population of the US. On an average, these people will be online about 2 hours in a week and purchase more than $100 billion worth of products and services online annually.
What is more interesting is not the size of this movement, but its shape. The stereotype of an average Indian Internet user as we know today is a college-going youngster, typically living in a large city. This stereotype will be flawed very soon on two counts. The first, by 2020, nearly half the internet users would be from rural areas and tier-4 towns (with population under 100,000). The second, the average user would be much older with one-third of the users being above 35 years of age. While most companies do understand their older consumers well, the idea of a digitally savvy rural consumer is a relatively novel one as that is still taking shape. Let us explore that a bit more.
Rural has always been a large part of the country’s population. Over 75% of the country still lives in towns and villages with population less than 100,000. One big challenge to tap this opportunity has been about affordability—the average rural household in 2010 earned ₹ 12,500 per month vs ₹ 28,900 per month for an average urban household.
But with rapid economic growth, this is changing. Rural incomes have grown much faster than urban incomes in the last few years and by 2020, we expect an average rural household to earn as much as ₹ 26,700 per month.
Multiplied by the sheer size of the population, this means that 55% of all consumption in India by 2020 will happen in towns or villages with population less than 100,000.
The other big challenge has been around access—making the relevant products and services available in far flung areas with poor infrastructure at low-ticket sizes, which is not easy economically.
That is exactly what the impending Digital Tsunami will change. The Internet penetration in rural India in 2014 was at 14%, up by 1.5 times from the previous year. As rural consumers get digitally connected, it suddenly opens up a world of new possibilities—reaching a large consumer base in a cost-effective, personalised and a targeted manner. However, that is easier said than done. There is a significant difference in digital behaviour between rural and urban consumers, driven by nature of data connections, type of handsets, and core consumer profile.
The digital rural consumer operates on a much lower connectivity speed, and is much more selective about the apps/browsers he uses to optimise on data consumption and speed. Apps/websites that are popular among rural users for music and entertainment include UC browser and Sideload Music, which are in contrast to apps that rank higher in popularity among urban users. They also prefer downloading content over streaming it so as to avoid recurring data usage.
In rural areas, local language content wins as the rural consumers prefer news and videos in regional languages. This was corroborated by a proprietary study conducted by the BCG’s Centre for Consumer Insight.
According to the study, regional news sources such as Dainik Jagran and NewsHunt received higher number of mentions among rural users compared to some of the more well-known sources from English media.
Also, in contrast to urban users, who use the social media primarily to connect with friends, rural users use it for their daily dose of entertainment, i.e. to watch videos and read news.
Hence, it is imperative for players to use new tools to leverage the power of social media to create digitally engaged communities.
All this has implications on a) the type of content to be created b) the media to be used c) the online platforms to be leveraged or created, to target rural consumers.
As some would say, these are nuances. Perhaps at the stage that the industry is in currently, it is sufficient to focus on simple things like great prices, high variety and reliable service to woo all consumers. But that paradigm is changing faster than we realise and the low-hanging fruits will dwindle. The Digital Tsunami is coming… and the players who want to come out victorious need to think through these nuances sooner rather than later.
Amitabh Mall is partner and director, and Namit Puri is principal at the Boston Consulting Group.
This is the first part of a three-part series about the digital economy. All views are personal.
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