Why startups are tapping into India’s small towns

In these Covid-19 saturated days, doom and gloom are not far away from our minds. But I want you to forget the crowded metro spaces of India for a while and think of the vast horizons of Bharat. This ‘country’ so very different from India has long intrigued me. For, this is where the ‘next billion digital consumers’ reside—the consumers who will lead the next phase of the digital revolution in India and across the globe. But few companies have truly been able to capture this market. Why is that and why has this market become the Holy Grail for tech companies?

You might relegate many of the videos created by Bharat’s creative minds on Trell and Chingari, (and erstwhile TikTok) in the cringe category. But the 200 million, mostly tier 2 and tier 3 users of TikTok (until it got banned in India) made us collectively sit up and notice the fact that these so-called roti, kapda, makaan focussed consumers were not just consuming digital content but were also actively creating it. This is not a digitally illiterate population anymore.

With better infrastructure, cheaper data plans—thanks to Jio—and affordable smartphones, Bharat’s citizens will go digital in their millions in the next few years. Communication and entertainment are, of course, the first ports of call when a user newly discovers digital. Trell, a home-grown short vlogging startup that supports Indian language content, sees 25 million monthly active users and 5 billion views a month! But Bharat consumers are also looking for solutions that solve specific needs.

myUpchar, an online Indian language health content, consulting, and medicine delivery provider, sees over 20 million users visiting its site and facilitates 300,000 teleconsultations a month. Edtech is also finding takers in this market when it is solving Bharat’s particular problems. Pariksha’s mobile app helps aspirants prepare for state government jobs in local Indian languages along with English. It already caters to 1.9 million users and has a potential user base of 75 million.

However, companies need to understand that it is not easy to monetise this market. The main challenge is that India is not homogeneous. Products that work well in developed markets work well in India’s tier 1 markets. That’s not the case with Bharat. For instance, consumers are mobile web first and are not used to complex sites. This is why a simple interface like WhatsApp worked well for them.

Pulkit Agrawal, the co-founder of Trell, tells me that startups need to innovate bottom up. Trell, for instance, built a community of users from small towns before launching its vlogging platform. Rajat Garg, the co-founder of myUpchar, says his team spent an additional year understanding the nuances of the tier 2 and tier 3 markets before rolling out the product.

Further, languages, customs, and nuances change across regions. Customising for each of these submarkets and ensuring they earn money is difficult, especially for those offering products beyond communication or entertainment. While offering content in multiple local languages has become de rigueur, that isn’t enough.

Garg shares this great insight: In the areas close to the Bangladesh border the strain of malaria is different and needs a different set of medicines compared to the rest of the country. If a person here is consulting with a doctor in, say, in Delhi, the doctor needs to have this local knowledge and that needs to be built into the system.

While trust has gone up, cash-on-delivery (CoD) continues to be king—93% of transactions on myUpchar are still CoD. The bigger challenge is convincing the consumers that a service or product is worth paying for. myUpchar had to keep consultation free and monetise on medicine delivery.

As is clear from the points made earlier, I believe the future of digital in India lies in Bharat. What startups and investors targeting this market need to remember is that Bharat is a long-term play and startups catering to this market need patient, long-term capital. Further, releasing a product and expecting the consumers to ‘bite’ is not going to work. This market doesn’t need yet another edtech company offering basic online streaming of classes. We need to go beyond Make in India and work towards Made for Bharat.

The good news is that in this massive market that is mostly still untapped, there are vast white spaces that are perfectly poised for tailor-made products. So, a Pariksha that caters to the large customer base of state government jobs’ aspirants finds success.

A company like myUpchar that started off with health content evolved to offering virtual consultations and medicine deliveries, thus solving real problems of the Bharat market. Similarly, agritech startups offering agronomy advice and agri-inputs are finding a ready market among farmers. These white spaces are present within each sector, from finance to commerce. Startups should be willing to look beyond the obvious and come up with creative solutions, and investors need to be willing to back these new business models. So, startups providing easy credit via mobile for rural craftspeople based on past sales or current orders, or those offering better access to online school education in local languages even on 2G networks, or those creating better on-demand and low-cost supply chain support for farmers will all find takers. Like I said, the horizons of Bharat are vast and pioneers are the need of the hour.

Views are personal. The author is president, LetsVenture Plus.