Although over the past five years e-commerce has grown unprecedentedly in India, it has not touched rural lives in any big way. Experts believe that the real e-commerce boom will come with increased participation of rural consumers.
While unicorns like Flipkart, Snapdeal and Amazon have been trying to get inroads in rural markets, some e-commerce startups like iPay, StoreKing and Inthree solely focus on rural markets.
Inthree’s consumer facing platform Boonbox acts as a vehicle to enter the rural markets for merchants. It aggregates demand for various products and then places order with the merchant. Boonbox is a sister concern of Inthree and was recently launched in select districts of TamilNadu and Karnataka.
The company has a network which enables reach to the farthest towns and villages in the hinterland and is a potent channel to distribute products and services to the vast rural audience. It focuses on catering to the aspirations of the rural customer, leveraging years of experience in last mile distribution and providing expertise in working in rural markets.
Inthree is inspired from Indian Peter Drucker - C.K.Prahlad
While budding entrepreneurs draw inspiration from likes of Steve Jobs, Jack Ma, Sachin Bansal and Kunal Bahl, Inthree’s founder R. Ramanathan interaction with late Dr. C.K.Prahlad motivated him to conceptualise Inthree for rural markets.
Recommended read: Prof. CK Prahalad: A Tribute from YourStory
Prahalad was professor of management at University of Michigan, and considered as the Peter Drucker of India. Earlier in his career, Ramanathan has held senior management positions as SBU and Profit Center Head, with RPG, ICICI and TVS Groups.
Initially Inthree did consulting assignments in the rural marketing space, because it did not have the capital to get into distribution. Ramanathan says,
We launched the smokeless chulas in India for Philips and did consulting for Eureka Forbes, Nokia, Titan Industries and Heinz Foundation, among others.
At the end of 2011, the company launched the sale of solar lamps through select post offices in Tamilnadu and based on the unprecedented demand for the product, scaled it up across TamilNadu and then Karnataka Ramanathan adds,
We then diversified into working with various non-traditional channels like NGOs and agri boards and sold over 7,00,000 units of various durables, to around half a million customers in rural areas.
Despite the success in distributing products like solar lamps, we understood that the rural customer is aspirational and diversified our business into the e-commerce space, aimed at offering a choice of products to the rural customers.
The launch of Inthree and Boonbox was fueled by the belief that marketers concentrate their efforts on metro/urban
areas,leaving a large part of India without access to products that enhance either the quality of their lives or their lifestyle.
For the end merchant, Boonbox is a platform to establish foothold in rural markets. Inthree aggregates demand for
various products and then places order with the merchant. Currently, it has a presence in all districts of TamilNadu and Karnataka and entered the Andhra Pradesh market recently.
The product procured by Inthree goes through the company’s warehouse where it is checked for quality and packaged for despatch to customers' homes.
So far Inthree has sold 7,00,000 units of various durables,including solar lamps and water purifiers. The venture is profitable for many years and in August 2014 it raised funds from Indian Angel Network (IAN).
With a GMV of over Rs 50 crores and a gross profit of over Rs 2 crores, till recently, the company’s business was funded by internal accruals.
Pointing out about challenges, Ramanathan says,
The major challenges include customer acquisition at reasonable cost, lack of internet penetration, poor penetration of credit cards and last mile connectivity.
Inthree, currently, has a team of 40, which is expected to expand to around 100 in the next one year. Pointing out the challenges, Ramanathan adds, Ramanathan concludes,
Boonbox expects to pioneer the rural e-commerce market. We will expand the range of products and also start operations in North Indian States.
Accessibility and lack of options (thin catalogue) with organised retail have driven e-commerce in India to a large extent. As of now, rural India is completely deprived of organised retail, hence success of e-commerce in rural areas is more evident. However, supply chain and last mile connectivity are some major hurdles and, of late, startups like Inthree, iPay and StoreKing solved the aforementioned challenges in south India.
With government efforts to connect every village with broadband connectivity, future of e-commerce in rural India looks very promising. In future it would be interesting to see how these players fare up in north and other parts of India.