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Why ‘Assisted’ e-commerce?

Published on September 10, 2015

Jayakrishnan R Follow
Research Fellow @Lancaster | Disruptive Tech | Data Science | Blockchai… 12 3 1
1 article

Quote from IL&FS: More than 600,000 villages of India house two­thirds of the
country’s population, and earn one­third of the national income. Rural
consumers currently represent more than 50 percent of consuming class and are
the prime target market for consumer goods and essential services such as
education, healthcare and employment. Despite such an open market, around 68
percent of the rural economy still lies untapped. Given the immense scope of
application of Information and Communication Technology tools for bettering
service delivery processes, and opening up new vistas for village­level
entrepreneurship and generation of local wealth, the key issue in this context is
how to build human capacities.

Indian Culture of looking up-to someone like the elder of the family or the locality is
deeply rooted in these Rural Markets and if someone in their local neighborhood can
assist them in a buying decision that assures best price, dependable guarantee / warranty
and returns / replacement support, the rural consumer base will slowly but surely, be
converted into buying consumer goods online.

This “Assistance/Enabler” is what mVikarsha calls as ‘Agent’ who plays the pivotal
role of a Change Agent for the local population. This mVPayDirect™ ‘Agent’ assists
the local population in browsing & ordering an item of their choice, within their budget,
‘online’ through mVPay™ Apps set up in their mobile / desktop device, gets the
delivery at their store and delivers it to the consumer against cash or any other form of

Messaging 1/5
2/1/2018 (24) Why ‘Assisted’ e-commerce? | LinkedIn

payment methods that will become popular over the

2 years in that3locality.
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buying of consumer through a dedicated local Agent is ‘Assisted’ e-commerce

Why ‘Agent assisted e-commerce’ is a timely innovation that is a guaranteed to be

a significant channel for the retail industry in the foreseeable future?

The Core Selling Proposition for traditional e-commerce has been Convenience,
Selection and Price (CSP) which has allowed it to usurp market share of the retail
industry away from the Brick & Mortar model. However, even after 20 years of
operations in a developed country like the USA, e-commerce still represents a small
portion of overall retail sales—a mere 6.4% in 2014 and is projected to grow at a higher
rate but still be around 8% by 2017.

Even assuming that India, which started late in e-commerce, but being in the forefront
of mobile penetration, will be able to compress the time frame to reach maturity with a
current CAGR of 50%, we cannot imagine e-tailing to be more than 7 – 8 % of overall
retail sales by 2025 , i.e. around US $165 Billion. At the same time organized retailing
can be expected to grow from the current 9% of overall retail sales to around 14-15 %
(while competing with the e-commerce players), i.e around US $300 Billion (60% of
which would be in Rurban areas of India). That leaves a market size of around US
$1600 Billion of unorganized retail, a portion of which will yield to the ‘assisted e-
commerce’ model.

Forecasted Consumption Patterns in India

A ‘Virtual Mini Mall’ in every village with facility to ‘rent’ shelf space for products

Demand in India exists across 4,000­5,000 towns and cities, but there is no
significant presence of physical retail in almost 95% of these. High real estate
cost is one of the main reasons why organized retail is unable to expand at
speeds expected earlier. Real estate as a percentage of sales is 14 times higher
than in the US. For large retailers in India, it is 7% of sales as compared to 0.5%
for Walmart. (Excerpts from a report from broking firm Motilal Oswal)

This forms the underpinning for the business proposition of ‘assisted e-commerce’. 
Retailers can be expected to part with about 10-12% of their GMV (even higher in the
case of distributors/manufacturers) in most categories, to a service provider who
manages the process of acquiring remote orders and payments from consumers who are
willing to pay the ‘shipping and handling charges’  using its own network of Agents,
who in turn can convert the real-estate of their existing businesses into a ‘Virtual Mini
Mall’ for providing ‘assisted e-commerce services’ to the surrounding population. A 2/5
2/1/2018 (24) Why ‘Assisted’ e-commerce? | LinkedIn

host of suppliers will be ready to ‘rent’ a part of the2 shelf space in3 the Agent’s
19 real Reactivate
estate for display of their fast moving items for touch and feel and impulsive buying !

Emerging distribution networks and e-commerce ecosystems like Agent Assisted e-

commerce Channel can easily be used to provide multi-purpose transactional services
by addressing most of the concerns or constraints to the e-commerce, namely, access to
internet (retailer performing transaction on behalf of consumers), all kinds of payment
instruments including cash (simple and convenient), delivery and logistics (Agent as a
focal point ensures quick transaction facilitation and hassle free delivery via ‘Click and
Collect’ as well as COD) and customer support (by an Agent who creates confidence
and trust).

Likely Rural e-commerce Scenario in the year 2025

Rural consumption is going up. Land prices, semi urbanization, micro finance, have
helped a lot. Automobile loans, housing loan have unlocked asset value and capital is
available. There is clear consumption market emerging fast, not yet addressed by

Another point to be noted here is that even for FMCG goods that are now distributed
thru traditional distributor channels, the ‘assisted e-commerce Agent’ can stock these
items by using the same platform to place B2B orders for their forecasted quantities.
This will also enable FMCG manufacturers to get more fine-grained data of
consumption patterns rather than being hidden in distributor’s systems as of now. Also,
the organized sector can reduce their inventory carrying costs and avoid investments in
real estate in relatively low population areas by subscribing to the ‘”assisted e-
commerce model”.

Let us assume, for a moment, that the assisted e-commerce model will work only in the
rural population and its market opportunity will come out of the projected unorganized
retail sales in the rural areas, which is estimated to be about 50% of the total
unorganized retail sales in India (US $1600 Billion). Let us further assume that only a
small % (about 7-8%) of this consumption can be serviced by the ‘Assisted e-
commerce’ model (due to perishability, touch-and-feel, delivery period, logistics issues
etc.). That implies a market size for ‘assisted e-commerce’ of around US $60 B

However, in reality, ‘assisted e-commerce’ can work even in urban/semi-urban areas

due to the presence of a technology averse population (non-youth demography, aged
consumers, migrant workers etc.). Also, a part of the organized retails market share can
be captured because of consumer durables being ordered at the neighborhood agent’s
store rather than going to a shop in a nearby town.

So, we estimate that the market size available for ‘assisted e-commerce’ to be around
US $ 60-70 Billion by 2025.

Market Opportunity not affected by social economic changes but co-exists 3/5
2/1/2018 (24) Why ‘Assisted’ e-commerce? | LinkedIn

This  forecast of US $60-70 Billion market for ‘Assisted

2 e-commerce’
3 is19less likely to Reactivate
be proven wrong than the forecast for self-service e-tailing, since the latter makes a lot
of assumption of literacy, penetration of smart phones and the ability to pay
electronically by the rural population of India. There is also the cultural factor of
Indians, even literate and tech-savvy Indians, being averse to the DIY concept.

Buy Online from anywhere and take delivery locally through ‘Assisted Agent’

But that’s not all. The ‘assisted e-commerce’ platform has applicability even in the case
where the consumer does his / her pre-purchase research and purchase decisions online,
wherein the ‘assisted e-commerce agents’ could be ‘delivery points’ for ‘pick-up’ or
‘home delivery’ to the urban consumers, especially where COD is involved and the
purchaser is not likely to be home during work hours when courier deliveries happen.

For sure a certain % of the consumers who order on an e-commerce site will prefer their
delivery to happen at their neighborhood shop for pick-up and payment and the e-tailers
can be expected to part with a portion of their sales to the assisted e-commerce provider
who manages the process of receiving packages and collecting payments from
consumers and remits the same periodically to the e-tailer.

In any which ever we see whether it is Rural needing assistance in various
aspects of awareness, technology and payments or Urban which needs
assistance in finding options, comparing prices or convenience of anywhere
anyhow anyway, assisted e­commerce is here to stay and "Assist" retail.

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Jayakrishnan R 2y
Research Fellow @Lancaster | Disruptive Tech | Data Science | Blockchain | Mobility | Startup Mentor | Stra…

Absolutely Tamal. The challenge is there is no reference point or blue print for assisted e-
commerce. Our experiences on the ground makes it that much more interesting for us and our
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Bhavani Shankar 2y
Senior Managing Consultant - Global Banking & Financial Markets Center of Competence at IBM

Quite interesting.
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