They call it the “red bike village.” In Sridhar Gundaiah’s hometown in the south of India, all 150 households own a red Hero Splendor motorbike.
This is not just a matter of keeping up with the neighbors.
For Gundaiah, the red bikes hold deeper lessons that he took to heart in 2012 when he set up StoreKing, an e-commerce platform aimed squarely at India’s 800 million rural residents. Unlike typical online retailers that deal directly with consumers, StoreKing sells through a vast network of local mom-and-pop shops — a business model that has attracted the likes of Amazon.com to forge tie-ups.
The Splendors helped Gundaiah recognize the power of villagers to influence one another. The residents of Hanchipura are “not buying to challenge others,” he said. The mindset is simply, “One has a bike, I will also buy another bike like you.”
More importantly, perhaps, he noticed how much local retailers guide residents’ purchasing decisions. Customers rely on local store owners’ opinions on everything from motorbikes to skin care products. “We know [the merchants] by name, we know what they’ve been doing,” Gundaiah said. “It became very clear that an end customer will piggyback on what the retailer is saying.”
So when Gundaiah established StoreKing in Bangalore, he decided to make rural shops the core of his business. This could prove prescient as Prime Minister Narendra Modi’s government tightens rules on major e-commerce players to protect smaller retailers, with new regulations to take effect on Feb. 1.
“We started out saying, ‘Can we give retailers enough power to start educating customers about accessing technology, digitalization, bank transfers?'” Gundaiah recalled. “So we became a distribution channel for companies, but largely driven by assistance” from local merchants.