Remodeling City Whole Seller to Village Retailer Delivery business through E-Commerce
By: Amit Bhushan Date: 4th Sept. 2014
Though E-commerce or Mobile based commerce is kicking in a big way, however our thoughts to bring in efficiency in overall systems and supply chain is very limited and basis past experience rather than radical. For example, the idea to reach village markets is still basis individual corporate driven. This has failed earlier as it simply is not cost effective. This is so because small businesses are still not adopting technologies and are comfortable being fringe players with huge dependencies on the larger corporates to bail them out and for fend for them at each step. In part it is also about Technology product suppliers, who do not 'see' them as potential customers and develop 'products' that would be adopted by some of these players. Assumption here is that once a product is 'adopted', then 'payment' model to pay back the product developer is about evolving a win-win model and can be managed.
One of the dependencies or rural India is that it has to visit 'Urban' centers for its shopping needs. Almost all rural retailers source products for consumption basis a 'hub and spoke' model from nearby towns. Each retailer has their own list of favourite Whole sellers, whom he would visit at regular intervals to buy goods. The Whole seller may not necessarily be offering best price or credit, but continues to strive in business due to 'lack of information' in market. Also, each individual retailer making their separate 'trip' for buying and 'transportation' of wares back to villages is not necessarily 'cost effective'.
E-Commerce or M-commerce in local language of the village retailer has the potential to substantially improve the 'market' and bring 'efficiency' to the entire chain. This could be in form of an association of Whole sellers getting on board a suitable E/M-commerce 'product' and approaching the nearby rural markets and 'enlist' retailers in villages. The village retailers can place orders directly through the platform. The E/M-commerce Company can 'pick' orders and deliver to retailers and collect payments. Due to possibilities of combining deliveries for several such 'retailers', the E/M-commerce company can bring in considerable efficiencies. Also, partnering with efficient sourcing whole sellers or 'direct agents of producers' has potential to ensure 'best prices'.
The biggest handicap for such markets to flourish has been lack of technology adoption amongst SMEs. This can change due to SMART mobile technologies which is rapidly penetrating the markets. This is all the while when actual solution development and promotion/adoption of such solutions is not able to keep pace with the adoption of SMART mobile devices in rural India. How many SMART mobile devices retailers in rural India are able to pitch device as a solution to some genuine problems of people rather than just a new 'toy'????? Other issues that has hindered such developments has been 'language' in which to conduct business, lack of collaboration amongst SMEs, issues of trust related to 'payments', issues of quality and timely delivery of 'phone orders', pricing of logistics, challenges with relation to location/roads etc., sensitivity and process maturity to handle transactions (amongst SMEs) and so on. The overall cost of educating the value chain is also considerable, besides lack of demonstrable working models who have met success. Companies vanishing in absence of a regulatory framework for 'payments security', with 'substantial' monies are a big hindrance as markets are suspicious of such players. To start with, a display unit to display each SKU being offered to retailer at the city center which may also serve as 'office' for such E/M-shops as well as point of resolution of disputes that may crop up or other coordination requirements. This may make 'village retailers' comfortable as well help in their training and improvement in process maturity.
While major investment is going on to B-to-C players at the national level who are hogging limelight and getting in funds by truckloads. Actually their scope is very limited i.e. eating into the margins of retailers in city who are being reduced to a kind of 'display shop'. The shoppers 'check' the actual devices at their shops while place orders on E/M-commerce players due to 'price' considerations for such transactions. Though not for all products, this may be true for a lot of widgets and brands. So, though it is attracting 'funds' basis substantial growth being recorded, the relationship is 'transactional' and due to fickle consumers, the balance of business may change depending upon circumstances. Though currently, the E/M-commerce players are able to show the mullah to their investors for more funds without much effort due to market circumstances. This makes case for a considerable need for the SMEs to re-invent themselves in face of such challenges and tweak their business models. As more and more SMEs become comfortable with technology, such business models may considerably change the way India and many other emerging markets transact. These models may be more sustainable due to capacity to drive efficiency and maintain interest of players over a longer run since reach of national players to village level directly ignoring local player is going to take substantially longer time. The potential for large national players to do so may actually be very limited under current circumstance. As the SMEs; & especially those from rural areas adopt technology, the potential E/M commerce wholesale markets goes up several folds and bring with it a whole new dimension in term of scope. Fostering a sense of partnership amongst SMEs may itself create new business models with considerable gains in productivity and growth besides opening new horizons for rural India.
By: Amit Bhushan Date: 4th Sept. 2014
Though E-commerce or Mobile based commerce is kicking in a big way, however our thoughts to bring in efficiency in overall systems and supply chain is very limited and basis past experience rather than radical. For example, the idea to reach village markets is still basis individual corporate driven. This has failed earlier as it simply is not cost effective. This is so because small businesses are still not adopting technologies and are comfortable being fringe players with huge dependencies on the larger corporates to bail them out and for fend for them at each step. In part it is also about Technology product suppliers, who do not 'see' them as potential customers and develop 'products' that would be adopted by some of these players. Assumption here is that once a product is 'adopted', then 'payment' model to pay back the product developer is about evolving a win-win model and can be managed.
One of the dependencies or rural India is that it has to visit 'Urban' centers for its shopping needs. Almost all rural retailers source products for consumption basis a 'hub and spoke' model from nearby towns. Each retailer has their own list of favourite Whole sellers, whom he would visit at regular intervals to buy goods. The Whole seller may not necessarily be offering best price or credit, but continues to strive in business due to 'lack of information' in market. Also, each individual retailer making their separate 'trip' for buying and 'transportation' of wares back to villages is not necessarily 'cost effective'.
E-Commerce or M-commerce in local language of the village retailer has the potential to substantially improve the 'market' and bring 'efficiency' to the entire chain. This could be in form of an association of Whole sellers getting on board a suitable E/M-commerce 'product' and approaching the nearby rural markets and 'enlist' retailers in villages. The village retailers can place orders directly through the platform. The E/M-commerce Company can 'pick' orders and deliver to retailers and collect payments. Due to possibilities of combining deliveries for several such 'retailers', the E/M-commerce company can bring in considerable efficiencies. Also, partnering with efficient sourcing whole sellers or 'direct agents of producers' has potential to ensure 'best prices'.
The biggest handicap for such markets to flourish has been lack of technology adoption amongst SMEs. This can change due to SMART mobile technologies which is rapidly penetrating the markets. This is all the while when actual solution development and promotion/adoption of such solutions is not able to keep pace with the adoption of SMART mobile devices in rural India. How many SMART mobile devices retailers in rural India are able to pitch device as a solution to some genuine problems of people rather than just a new 'toy'????? Other issues that has hindered such developments has been 'language' in which to conduct business, lack of collaboration amongst SMEs, issues of trust related to 'payments', issues of quality and timely delivery of 'phone orders', pricing of logistics, challenges with relation to location/roads etc., sensitivity and process maturity to handle transactions (amongst SMEs) and so on. The overall cost of educating the value chain is also considerable, besides lack of demonstrable working models who have met success. Companies vanishing in absence of a regulatory framework for 'payments security', with 'substantial' monies are a big hindrance as markets are suspicious of such players. To start with, a display unit to display each SKU being offered to retailer at the city center which may also serve as 'office' for such E/M-shops as well as point of resolution of disputes that may crop up or other coordination requirements. This may make 'village retailers' comfortable as well help in their training and improvement in process maturity.
While major investment is going on to B-to-C players at the national level who are hogging limelight and getting in funds by truckloads. Actually their scope is very limited i.e. eating into the margins of retailers in city who are being reduced to a kind of 'display shop'. The shoppers 'check' the actual devices at their shops while place orders on E/M-commerce players due to 'price' considerations for such transactions. Though not for all products, this may be true for a lot of widgets and brands. So, though it is attracting 'funds' basis substantial growth being recorded, the relationship is 'transactional' and due to fickle consumers, the balance of business may change depending upon circumstances. Though currently, the E/M-commerce players are able to show the mullah to their investors for more funds without much effort due to market circumstances. This makes case for a considerable need for the SMEs to re-invent themselves in face of such challenges and tweak their business models. As more and more SMEs become comfortable with technology, such business models may considerably change the way India and many other emerging markets transact. These models may be more sustainable due to capacity to drive efficiency and maintain interest of players over a longer run since reach of national players to village level directly ignoring local player is going to take substantially longer time. The potential for large national players to do so may actually be very limited under current circumstance. As the SMEs; & especially those from rural areas adopt technology, the potential E/M commerce wholesale markets goes up several folds and bring with it a whole new dimension in term of scope. Fostering a sense of partnership amongst SMEs may itself create new business models with considerable gains in productivity and growth besides opening new horizons for rural India.