Posted by In terms of percentage, the rural population accounts for nearly 68% of the total Indian population. According to market research firm Nielsen, the rural India FMCG market is projected to grow significantly and reach a market size of $100 billion by 2025.
Everyone other sector is competing for this market, right from FMCG companies with their special SKU (stock-keeping units) pack sizes for rural India to mobile companies offering the latest smartphones at throw-away prices. The rural India market is no longer driven by non-branded essential commodities but lifestyle products as well.
Everyone wants a piece of the rural consumer share of wallet and when it comes to the rural economy, just the Agri-inputs industry which comprises of three key sub-sectors viz., crop protection (pesticides), crop nutrition (fertilizers), and seeds are set to touch a staggering $8.1 billion by 2025.
With a focus towards aggressively driving mechanisation to boost output efficiency from the resources available, Agri equipment, cold chain, food processing, and warehousing in addition to the Agri-inputs constitute is approximately $750 billion markets.
To access this growing market, companies have no choice but to make inroads into the Indian rural hinterland which presents a unique set of challenges that make this seemingly lucrative market challenging to access.
Companies need to invest heavily into distribution networks consisting of warehouses, distributors, and retailers, fleets carrying the goods, and systems needed to track and manage inventory.
Given the size of consumer spread, access is usually dependent on the network of roads which, while improving in certain states, are still lacking the reach to the interiors.
Patchy internet makes aggregation of demand and sales data difficult to consolidate thereby resulting in companies being less agile when it comes to making informed decisions. Lack of continuous electricity supply makes managing local systems inefficient.
All this results in a lack of adequate data points for companies to take faster decisions along with lower technology adoption rate. The same supply chain used to distribute products is then responsible for data and information gathering, revenue collection, credit, and instruction dissemination.
However, a new breed of solution has taken up the challenge to work with these constraints and leverage technology to help organisations become more agile.
While the dependency on transport infrastructure, power supply, and internet can’t be resolved by investing even gargantuan amounts of capital. Companies can surely look to these solutions to solve their need for faster inventory information collection across the supply chain network and, using multiple data modelling to predict demand across micro-regions and planning their distribution accordingly.
Cloud systems help companies reduce the need of setting up local infrastructure to run their systems. In fact, a hybrid system allows companies to reap the benefit of optimising capital expenditure while enabling companies to continue running operations in absence of the internet.
Not only is this a boon for downstream supply chains. Most manufacturing plants set up close to the source of raw materials are able to capitalise on such solutions to extend tighter control on production.
One of the challenges faced by organisations operating in rural India is to find talent which is able to not just execute their line function but be able to operate systems so as to record data. Mobile app enterprise solutions are solving this problem by making intuitive app-based solutions with minimalistic design to let the user record data with ease.
Organisations are today relying on technology to counter supply chain constraints presented by the lack of infrastructure development in rural India. As a matter of fact, the Rural AI Market size in agriculture is expected to reach $8.4 billion by 2030.
(This article is written by Advait Parnaik, SVP – Operations, O4S. The views expressed in this article are of the author.)
(Image credit – Pixabay)