‘Driving the Next Billion Sales in India’ | Re-imagining the Hyper-Local sales model | Part 1/3 – Research

I recently completed my semester long pre-thesis project at college under the guidance of my project guide Riyaz Sheikh. It was quite a long and challenging journey with ample learnings at various stages. Apart from learnings about the domain there have been loads of learnings about the process and my practice as well.


Project Brief

The overlying theme of our project was ‘Weaving the Threads’. It asked us to look at tightening the “social fabric” by strengthening bonds between the people in this fabric.

I chose markets as the core area for my project, and hoped to strengthen the social fabric of markets in the bigger umbrella of strengthening the overall social fabric.


Why Markets?

One perspective to understand life itself can be to see it as an act of procurement and engagement with resources. It was this very push that changed man from a hunter to a farmers a need to be self reliant and in abundance of resources. Jump forward to 21st century – we’re still driven by the same force. What’s driving the youth from the rural to the urban isn’t merely a want for better incomes – but also the things that they’d purchase from these new riches. The same can be said for the urban population that aspires to move to different countries. In such a scenario – the project hopes to make its share of contribution, by shifting the trend of flow from ‘people to resources’ to that of ‘resources to people’ – beginning with the rural populace where this issue of lack of access to goods/services is most stark.

Who are these Next Billion Users?

The number of internet users around the globe has crossed the three billion mark. But there’s a segment of users that have recently come online whose expectations and behaviours isn’t compatible with existing technological offerings. Google launched the Next Billion Users project with this very aim of making artefacts for the new generation of digital users rising in developing countries like Brazil, China, India, Indonesia and Nigeria.

The research began with and continued to rely on the basic presumption that these Next Billion Users are the worst victims of market empowerment as. Adept and informed technological users (through the use e-commerce and information services) are well-equipped with tools to make smart and shrewd purchasing decisions.

But any sort of framework to group these market dis-empowered users based on demographic, social, cultural, economical and educational factors has so for failed. These digitally illiterate users, when looked at collectively, are somewhat distinct and dispersed. Although I find there is some truth in the statement that access to technologies and internet accessing devices has been harder for those in lower income-brackets, from my personal observations I find this is not consistently true. For example, on a bus ride home, I see a man in shabby slippers and wearing pants which were muddy up to the knees. He removed six coin from his chest pocket to get a bus ticket. As he sat next to me he took out his smart phone that seemed like it was crushed under a bull stampede. What he does next was of significant interest to me.

He opened the newly launched flipkart groceries app, added two real juice tetra packs to his cart along with some other rations. He checked out there and then and put his phone back in. I asked him as a curious bystander, “What is this app you’re using?”, he replies, “Flipkart.” “Do you use it often?” “Yes. It’s good, simple and cheap. They deliver in two-three days”.

There is also a lot of research linking incomes to literacy, but what is important to consider at is digital literacy, and this is distinct to literacy per se. I used to take tuition from a math professor in class twelfth. He holds a double master’s degree and a gold medal in economics, and has successfully n run a tuition center for over two decades. The two sedan cars in front of his house are proof of his economic well being, yet he still uses a feature phone with a keypad. Individual cases like these pose the challenge of clubbing people together based on any existing data statistic of incomes or traditional literacy.

Significance of working with these users

Market Growth – Scope for E-tail Growth

India is the fastest growing e-commerce market as of 2018 with a compound annual growth rate (CAGR) of 19.9% standing tall in front of the global CAGR of 9.6%. The internet penetration in India (which albeit can do with some improvement considering high global average rate of 51%) stands at 29.5% – yet the digital buyer percentage in total number of internet users is at 58% and the e-commerce share in total retail sales in India stands at a staggering 4.4% compared to a global 11.6% in 2018. A drop in retail e-commerce market share is further heightened by the fact that the retail e-commerce growth rates are projected to drop from 25% to 15.7% from 2018 to 2022. These figures are a clear signifier of latent potential and opportunity areas that need to be tapped. In developing countries, e-commerce providers target the most e-commerce ready segments i.e the 13 educated urban user – to increase the e-commerce share in total retail sales. Thus it is in my opinion that a change in strategies and ideologies is required to address the dropping e-commerce growth rates by looking at population beyond the e-commerce ready segments and bringing on-board a set of users that have hitherto been largely ignored.

Technological Growth – Next Billion Users

Google’s efforts through their Next Billion Users project has been focused at looking at these untapped groups. They were smart to realize that markets in most of the developed countries were maturing (e-commerce CAGRs – use the full form in USA and UK are at a receding 9.6% and 5.8%, respectively, comparing to India’s 19.9% ). It couldn’t have been said better than Sengupta (2018) that, “The future of the internet is in the hands of the next billion users—the latest generation of internet users to come online on smart-phones. As time goes on, the average internet user will be more like these ‘Next Billion Users’ in developing countries than the first billion who started on PCs.”

Technologies made for the next billion users will prove to be useful for the first billion users as well. Google Maps Offline was built for two-wheeler riders in India who faced a lack of access to internet while riding, but now the feature is used across the world, from commuters going through lots of tunnels to tourists visiting a new country. Technological Leapfrogging is another associated concept – it refers to the adoption of advanced or state-of-the-art technology in an application area where immediate prior technology has not been adopted. Google Assistant is a great example that proves that the next billion users can adopt cutting-edge technology astonishingly quickly. Since the Google Assistant was first launched on feature phones in December, on low-cost Reliance Jio Phones, the usage of the Assistant in India has grown six times over four weeks from launching. It is actually on these grounds, that the future technologies should be designed for and deployed on The Next Billion Users, before they reach the current users. It is therefore true – “The next billion users are not becoming more like us. We are becoming more like them.”


Research Methodology

Secondary Research

The secondary research predominantly draws from existing case studies and data statistics. Researchers argue that case method is ‘‘appropriate and essential where either theory does not yet exist or is unlikely to apply, . . . where theory exists but the environmental context is different . . . or where cause and effect are in doubt or involve time lags’’. The study for commerce (or e-commerce) satisfies these criteria, at least in context of developing countries. I have also reviewed internet blogs and articles, coupled with a literature review of journals and books published on existing research and studies done on e-commerce and technological deployment to under-literate, economically poor and technologically under-served groups, expanding my knowledge base horizontally by generating an overall understanding of the area from a bird’s eye view.

Primary Research

My primary research was conducted to create vertical depth on the focus subject by first establishing my areas of inquiry, then conducting a contextual inquiry – by employing the tool of user interviews, observational exercises, participatory exercises and embodiment exercises.

I began with preparing a semi-structured questionnaire that would yield me primary data and user stories with respect to give the topic here. It was important that I understand both the seller and the buyer perspectives, hence I prepared separate questionnaires.

Research Methodology

Secondary Research – Case Studies

In the rural areas, technology has already stepped in the arena in various parts of the world as major players have acknowledged the trend and have started working in this area that is being labelled as Rural E-commerce. I reviewed some case studies from around the world to understand the rural e-commerce efforts, their success and the social impact that was triggered with deployment of these services.

In India

India has a very peculiar model of “assisted e-commerce” that is almost universally being adapted by all rural e-commerce offerings in the nation. On one side, these services have collaborated with major international brands. On the other side, they have engaged local retailers such as the ‘kiranas’ to do the selling for them. Mobile applications are loaded on to the phones, tablets, and desktops at these local outlets. When the villagers walk in to buy grocery or medicines, they are introduced to the app and urged to buy. In its foundation it solves dual problems of digital literacy and grass-root delivery. StoreKing, one of the largest rural e-commerce players, has 55000 retail outlets where customers can access its app to place orders online with the help of local retailers. Its website prompts one to look at a pyramid that is sketched, “How big is rural India?” Large e-commerce players today address 16 per cent of India or about 423 cities and towns, the sketch says. But there is a middle India with 4,738 towns and a bottom with 600,000 villages. 850 million live in the middle and bottom India. Most of the other rural e-commerce services bank on a similar understanding.

In China

Another case study that has garnered international attention is that of Taobao Villages in rural China. Taobao is the B2C or C2C platform owned by the Chinese conglomerate Alibaba. The platform started with dual aims to allow rural products to meet online consumers and online consumption goods to reach rural residents. As of March 2017, Rural Taobao had managed to establish its presence in 29 provinces, covering more than 600 counties and 30,000 villages, according to Alibaba. Access to new goods/services and increased sale of local goods wasn’t the only impact – the phenomenon lead to new job opportunities – including graphic design, photography, express delivery services, goods storage, IT technicians, etc. – garnering more employment in the rural areas and bringing back the youth from the cities.


Primary Research

Areas of Inquiry

  • One of the key things that emerged from the case studies I reviewed was that the successful operations always had a layer of contextual understanding of existing market practices of the area they were working with. Hence one of the aims of my primary research was to understand how existing physical markets work – what are aspects of social norms (w.r.t. to trust, security and assurance) when a market exchange takes place.
  • Another set of questions aimed at understanding how buyers make purchasing decision – what are the behavioural/cognitive/psychological patterns for a buyer when making a retail purchase.
  • One other crucial factor for me to understand was the existing consumption pattern both in terms of essential and aspiration purchases and how it has been changing over the time owing to physical and digital media interactions and e-commerce experiences.
  • Understanding the pain points in present buying experiences was crucial to suggest any changes that the system might need.
  • Finally understanding their levels of digital literacy was also crucial in case any sort of technological intervention was to be considered.

Sample

Primary research was carried out with around two dozen participants. Interviews were conducted with twenty one participants mostly belonging to lower socio-economic classes in India. Twelve participants belonged to urban areas (eight participants lived in Bangalore, three lived in New Delhi and one was from Dehra Dun). The remaining nine were from rural areas (six from Adiganahalli, two from Sandilla and one from Amethi).

Primary Research Sample

Protocol

Pilot Study

A pilot was conducted with two buyers and three sellers who satisfied the screening parameters. The protocol worked for most purposes except for a couple of changes.

Some questions seemed to annoy the participants. For example, asking them to show their phone apps to me, that was something very personal that they weren’t eager to do and the request made them hostile towards me. So questions like these were omitted.

Some questions seemed extra and repetitive. For example multiple questions aimed to ask them about their aspirations and wishlist items. These were concepts they didn’t understood very well to begin with, and repeated enquiries only distracted and bored them. So the frequency for questions that intended similar responses was reduced.

Actual Study

The actual study was extensively carried out with around two dozen participants. Interviews were conducted with twenty one participants mostly belonging to lower socio-economic classes in India. Twelve participants belonged to urban areas (eight participants lived in Bangalore, three lived in New Delhi and one was from Dehra Dun). The remaining nine were from rural areas (six from Adiganahalli, two from Sandilla and one from Amethi).


Reflection on Primary Research

The nature of my target user groups was peculiar owing to their educational, economical and social background. Interviewing them posed unique challenges. I’ve described and discussed some of them below.

Issues around translation

Most of the interview questions were written in English. Spontaneously translating them to interviewee language changed the nature of the question at times. At the time of writing the protocol, a lot of attention was paid to make sure the questions are non-leading and qualitative, however while translating I realised that while explaining the question or at least the sort of responses I expect the question became a leading one.

For eg – something as simple, “How was experience doing (xyz)?” too was hard to translate. I would usually ask, “वो करते समय आपको कैसा लगा?“ which translates, “How did you feel while doing (xyz)?” – which wasn’t what I meant to ask orginally. A more accurately translated word for ‘experience’ in hindi is ‘आभास/ अनुभव‘ but it wasn’t a common word and the nature of audience was such that sometimes they wouldn’t even knw what these translated words meant.

Observational, Participatory and Embodiment Exercises

I had planned to become a fly on the wall and experience purchases taking place first hand. But again, getting permission sit around and to observe from the sellers I approached was an issue. So I did as much observation as was possible, walking around the streets (looking at interactions with street vendors) or in supermarkets (looking at people making purchases, inspecting products). For understanding patterns around digital literacy too I had to rely on my observations of people using their cellphones while making bus rides. I had tried a small engagement in my protocol to get them to show me how they used their phones, but often this was hard and irreliable. But I did not manage to make any observations of people making over the counter purchases, which was the target interaction for the scope of my project.
Same with participatory and embodiment exercises. I hap planned some in my protocol. But it was extrememly hard to get their consent in participating in an activity or for letting me conduct my own embodiment exercises (like becoming a salesman for a day).

And even otherwise, complete embodiment wasn’t possible anyways, the intent was to understand the nature of interaction between a seller and a buyer. Even if I did roleplay in the same scenario, I lacked substantial seller experience which the real life interaction assumes. So the results of the activity might not be fruitful.

Confusion due to Conceptual Misalignment and Inappropriate Labeling

Some questions were put in the protocol assuming certain kinds of e-commerce experiences. Most participants did not have those kinds of experiences and were clueless as to how to respond. A question in my protocol asked the buyers about items in their ‘wishlist’. This was an unheard of concept to them. Therefore I was quick to realise it is crucial for me to map my questions to their real life experiences and conceptual understanding.


Research Findings

Decoding Traditional Physical Market Interactions

Pre-Purchase

Low-incomes and poverty a preceding barrier

For a majority of participants in my interviews – access to goods (and an eventual purchase) went hand in hand with (perceived and actual) low incomes and savings. Whenever posed with a question of ‘aspirations’ – the common reply echoed the response from participant B-03, “ Thoda paisa hoga toh khareed lenge kuch…” (Translation – “If we manage to save some more money we might buy something”). When they were asked about any miscellaneous difficulties in making physical market purchases, then too the responses had the undertone of lack of money as the biggest factor. Here is a response from participant B-04, “Ek baar paisa aa gaya aur soch liya kuch khareed na hai tab toh kuch na kuch karke khareed hi lete hain.” (Translation – “Once I have the money and have made the resolution of buying something, then I’ll do anything to make it happen.”)

Purchase

Social aspects of market relationships limited to market exchanges

In general, no one seemed to agree that there were extremely warm or cordial relationships between buyers and sellers. Whatever little aspect of social norms in their relationships were, found their roots in – 1.) best price & quality for the buyers, and 2.) the best profits for the sellers. S-04 response to the question of social aspect went like this – “रिश्ते तो क्या हैं | आज खरीददार को दाम अच्छा मिल रहा है, तो वो है, कल नहीं मिलेगा तोह वो चला जायेगा | ” (Translation – “What ‘relationships’? The customer comes to us because he finds the best price and quality. If today another seller offers him the same quality at a marginally better price, he’ll start going to him.)

Problems of navigating physical markets

When asked about displeasing shopping experiences, users pointed to their inability to find appropriate sellers in nearby markets, and the time taken to compare prices, was one of the factors building up to the annoyance. This was a response from B-08, “अभी पीछे बच्चे की स्कूल यूनिफार्म खरीदनी थी | अब थोड़ा टाइम भी कम् था और मालुम भी नही था कहाँ से मिलेगी, तोह जल्दी जल्दी में बाज़ार में एक दुकान से खरीद ली | बाद में पतह चला की एक और दुकान में तोह स्कूल का जूता सस्ता मिल रहा था | और ये दूकान पास में भी थी | ” (Translation – “I had to buy the school uniform for my kid recently. But I was in a hurry, so I went to the market and bought it from the only shop I knew was there. Later I found out that the shoes were available for cheaper at another shop, and that shop was closer to me as well. ”)

Post-Purchase

Price and product satisfaction along with credit trust, lead to return sales

For return customers – satisfaction with price and quality of the product were the primary motivators of repeat sales. S-01 responded to the question of return customers with, “About 80% of our customers are return customers. And even the remaining 20% who are new ones are referred to us by our existing customer base. We’re a furniture store, so the durability and longevity of products purchased from us are very big determinants for satisfaction. And we’re told by our return customers that they come to us because they find assurance and security in our opinion and product recommendation.”
Some retailers also offered minor discounts on expensive items (subject to the seller’s margins). This was a response from S-04, “Usually we have a no bargain policy, but if it’s an old customer and if he says he has found a better price, we try to match it if it’s in our margin scope.”

For most buyers – the ability to make credit based purchases was cited as the biggest factor to stick to a seller. B-01 said, “दो दूकान है पास में जहां से मेरे काम के लिए सामान मिलता है | पर मैं एक के पास ही जाता हूँ | वो ठीक से बात भी करता है और कभी कबार पैसा नहीं होता तोह उधारी भी दे देता है | ” (Translation – “There are only two shops where I can buy from. But I prefer only one of them. The seller their behaves and talks properly, and also trusts me with credit if I need it.”)
Issues pertaining to credit were simultaneously one of the major pain points in existing buying experiences. B-04 cited – “हमारा पनीर वाला हमेशा कुछ न कुछ गड़बड़ करता है | कभी कबर उसका हिसाब गलत होता है | नहीं तोह लेनदारी के लिए परेशान करता रहता है | ” (Translation – “Our paneer vendor always causes trouble because of credit. Sometimes his balance records aren’t accurate. If not that, then he keeps troubling us for repayment.”)

Impact of Technology

Assisted E-commerce’ like online shopping experiences

Most of the interview participants had bought online at least once – either on their own or through the medium of an acquaintance who was himself a user. This is basically analogous to assisted e-commerce setups in rural areas. The “assistant” or the facilitator would show the buyer appropriate information (pictures and content) and make the purchase on his behalf. The buyer would then pay the facilitator in cash. Participant B-09’s experience even went to the extent where his friend (the assistant/facilitator) had not only helped him buy a cellphone online, but also paid for it fully in advance and allowed B-09 to pay back in installments.

Perceived lack of understanding a seeming root-cause to the hesitation to try e-commerce

Many of those interviewed cited “lack of understanding” as a factor adding to the reluctance to trying out online shopping. B-02 responded to the question of causes of not using e-commerce with, “हमें इतना मालुम नहीं है | पड़े लिखे नहीं है ना | ” (Translation – “We don’t know that much. We’re not educated enough.”) Many responses were on the same lines. Most prominent usage trend was a change of primary communication channel from phone calls to whatsapp. A consistent pattern in my primary research was movement to whatsapp as a primary communication platform. A lot of people interviewed talked about spending more time on whatsapp than cellphones, watching videos and listening to songs – either received on whatsapp or searched on youtube. Facebook usage was also quite high. A lot of people had used one of the cab booking apps. Some people also used google search, maps and banking apps.


Design Directions

The nature of the target user segment is very peculiar – if we consider their purchasing and consumption patterns – availability can be met by through local market networks – immediate local markets in case of urban contexts and next village local markets in case of rural.
Therefore the research suggests that the following are some problem/opportunity areas, addressal of which might be a step towards solving the issue at hand :

Better budget management and assisting for easy credit to increase their purchasing power

Talking about these barriers – low and unstable income patterns and lack of savings was one of the bigger hurdles consistently prominent through all users who were interviewed.
Simultaneously another common practice within traditional physical markets was presence of an ability to make credit based purchases for buyer-seller relationships in the category of frequent and essential purchases. The hope is that if we can use these practices and further assist and extent them to non-essential/aspirational market purchases – it might help us overcome this barrier of low-unstable incomes and low savings.

Strengthening the position of small scale sellers and build better local market networks

For a lot of sellers, traditional online shopping has been proven unsuccessful owing to shipment damage and difficult operational methods to maintain their online e-commerce accounts. So it’s clear they are missing out on tools to expand their customer bases and make an online presence. At the same time buyers too faced the problem of being unable to find alternative retailers to buy and compare related products when talking about making physical market purchases. In such a scenario the hope is to intervene in a way so that appropriate buyers and sellers can be connected in local markets which helps both the sellers (to tap potential buyers) and the buyers (to make informed and satisfying choices).

Developing new and simpler ways of e-commerce interactions both for sellers and for buyers

Another finding was an inability to operate existing e-commerce platforms because of high digital literacy expectation from the user. A lot of buyers cited “lack of understanding and education” as factors adding to the reluctance to try e-commerce. Similarly any seller who had tried selling online was obliged to use a desktop to do so because so far there exists no e-commerce platform which allows for all seller function to be performed through a mobile app. In such a scenario, the hope is to see if our understanding and insights from current usage trends of smart-phone usage by these users can help us design better and simpler interactions to conduct these tasks in question. Pattern around their existing technological usage can be taken into account taking a multi-channel approach to access these services – both for the sellers and for the buyers could prove to be fruitful.


Continue reading about this project in part 2 and part 3 where I elaborate on the ideation, conceptualization and development of final the service model.

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