Rural India, Unlocked: How one strategy led to 3x rural coverage

by Sam Richardson

Oct 10 2024 | 03 min read

Rural India accounts for approximately 65% of the country’s population, representing a vast, underserved market. The rural FMCG has been gaining momentum and driving the rise and revival of the industry. The semi-urban and rural pockets of India saw a 16% uptick in FMCG sales in August (YoY). By 2025, the rural FMCG market is projected to reach $220 billion.

Key Challenges in Rural Distribution

High Distribution Costs: Delivering products to smaller villages is significantly more expensive due to lower sales volumes. Maintaining a sustainable distribution model in these areas poses an economic challenge for existing distributors.
Credit Extension to Shopkeepers: Shopkeepers in smaller villages often require credit to purchase inventory, which complicates transactions and increases financial risk. This practice can result in delayed payments or defaults if not tracked properly.
Out-of-Stock Issues: The variability in demand and community-based purchasing patterns in smaller villages often lead to stockouts, negatively impacting sales and customer satisfaction.
Inefficient Traditional Distribution Channels: Conventional methods frequently fail to meet the needs of rural consumers, resulting in lost sales opportunities and a lack of product availability in these.

Key Trends in Rural Marketing

Emerging Market Potential: Rural India, comprising about 65% of the population, is becoming a critical growth engine for the FMCG sector, which is projected to reach $1 trillion by 2030. The average rural household income is expected to rise, enhancing purchasing power and driving consumption growth at a CAGR of 9.7% from 2020 to 2030.
Digital Transformation: The surge in digital adoption among rural consumers is reshaping brand interactions. Over 53% of internet users are from rural areas, indicating a shift in how brands engage with these consumers. This trend has led to increased brand loyalty and awareness.
Health and Wellness Focus: There is a growing demand for health-conscious products among rural consumers, influenced by rising awareness and education about wellness.
Sustainability: Eco-friendly products are gaining traction, with consumers willing to pay more for sustainable packaging.

Here is a group that enjoys the patronage of 1.2 billion consumers globally, across different businesses. They wanted to expand their presence in the Indian rural market by building an unparalleled sales network that reaches every village and small town in India. The vision was to reach 50,000 villages and 8,000 small towns within three years.

Going Wide and adding more outlets directly to increase rural penetration

The challenges in the rural market required the company to innovate, leading to the implementation of the Van Sales, The solution aimed to enhance efficiency and effectiveness in reaching the rural market with limited manpower.

Solving Challenges in Rural Distribution

High Distribution Costs: Delivering products to smaller villages is significantly more expensive due to lower sales volumes. Maintaining a sustainable distribution model in these areas poses an economic challenge for existing distributors. But Van Sales solves this by effectively by deploying a van on a planned route to cover maximum outlets with just a few sales executives, resulting in reduced distribution costs
Loss of sales due to stock-outs: Through the traditional distribution, stockout situations are frequent due to variability in demand and community-based purchasing patterns in smaller villages. Van Sales ensures the retail stores are stocked even when there is a sudden surge in demand from the retailer, as it can fulfil it on the spot.

Here is what the company was able to achieve in one year

Expanded Distribution: The company expanded its network to 6,000 small towns and 22,000 villages, significantly increasing its rural presence.
Increased Rural Contribution: The rural segment’s contribution to total revenue increased to 42%.The Van Sales initiative significantly expanded the company’s market share in rural areas, enhancing its distribution network and brand visibility. The company successfully expanded its reach to 3x more villages.

Rural Outlet Coverage through Van Sales

This is not just about a rightly timed strategy but the operational excellence backed by a solid tech platform. Increasing rural presence with limited resources in the field is a goal that most of the expansion plans strive to achieve. To enable that the resource in the field must be equipped with tools that can remove redundant processes and enable them to take quicker decisions while maintaining transparency. We at Bizom are extremely happy that we were able to help our partner in achieving this.