Rural India to Be Next Driver of E-Commerce Activity, BCG Says

(Bloomberg) -- A surge in internet connectivity in rural India, home to some 870 million people, will lead much of the nation's e-commerce activity to move into regional areas during the rest of the decade, according to a report by Boston Consulting Group.

The number of web-connected rural consumers will more than double to 315 million by 2020 from 120 million last year, fueled by inexpensive smartphones, the consultant said in a report released Wednesday.

Such a surge is expected to be a boon for e-commerce and boost companies such as Flipkart Ltd. and Amazon.com Inc. as well as Facebook Inc. and Alphabet Inc.'s Google, which are charting a path to India's countryside after focusing on urban areas. By 2020, about half of all the nation's Internet users will come from rural areas, it said.

The report cites efforts by Alibaba Group Holding Ltd. to reach consumers in regional China as a model for tapping rural spending. The Chinese e-commerce operator has outposts in almost 16,000 villages, where it provides computers and free web service and gives locals a place to pick up goods they order online, pay bills and book travel, BCG said.

BCG said its Indian study surveyed 4,000 rural consumers in 27 villages in 14 of the country's 29 states.

Currently, rural internet users are 98 percent male. That differs from urban areas, where 79 percent of users are male and 21 percent female.

Of the rural web users, nearly 70 percent access social networks, which are their most popular online destination. There they download media, search for information, chat and e-mail.

To contact the reporter on this story: Saritha Rai in Bangalore at srai33@bloomberg.net. To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan