The Mobile Entrepreneurs of India

July 26, 2013 by Manju Bansal 0

Photo: iStockphoto

Photo: iStockphoto

India remains one of the world’s largest mobile telephony markets, with over 825 million subscribers increasing by almost one million every week. Clearly, ubiquitous mobile devices have changed the face of the country in a way that was unimaginable even a few years ago. Now, there is an opportunity to do it all over again, this time by using mobile technology as the enabler that allows marginalized individuals and micro-entrepreneurs to become a part of the economic mainstream. Imagine street merchants connecting with back-end distribution systems running at Procter & Gamble, Unilever, and other corporations large and small, and in the process making a few pennies more per sale than they would otherwise, allowing them to better support their families. With nearly half of India’s population living in poverty, this is not merely an academic issue but one that has massive implications on public spending.

Changing the Status Quo

Four billion people worldwide lie squarely at the bottom of the economic pyramid, eking out a marginal existence of about three dollars per day. Over 500 million of them live in India alone, according to reports from the Planning Commission. A vast majority of these folks receive government handouts or end up working in what is euphemistically called the “unorganized sector” i.e. casual labor, in small factories, underemployed, or worse. And if you go to any urban or rural area in India, you will find a “panwallah” or a street vendor peddling betel leaf/nuts, cigarettes, and soft drinks. When not selling pan, street vendors might sell similar items like fruits and vegetables, packaged foods, newspapers, magazines, and candy bars.

As a business model, there is a lot of inefficiency built into the supply chain and replenishment process for these street vendors, because they reside a few notches down in the distribution system from the regular brick-and-mortar merchants with whom they compete. Each layer of distribution adds to the cost of goods, thus eating into their already razor-thin margins, because all consumer goods sold in India have a manufacturer’s suggested retail price (MSRP), which is the final price a customer is willing to pay.  The challenge is not that the street vendors cannot sell enough products; they cannot sell enough at a margin that offers the prospect of a decent wage. And this is where existing enterprise resource planning (ERP) and mobile technologies can come together to change the status quo, and do so quite radically.

Next page: ID numbers project and mobile phones transform business scenario

Traditionally, manufacturers and brand owners have not cultivated the street vendors as a credible distribution entity; they were content to have them merely as consumers whenever possible. And to be fair, in a poor country with no uniform basis for an official identity, it was difficult for organizations to do business with individuals as opposed to companies who had established credentials and business tax filing numbers (after all, if there is no social security number, or equivalent, how does one conclusively define an individual’s identity that a company can do business with?). Two things have the potential to transform this scenario:

  • The Unique Identification Authority of India (UIDAI, also known as Aadhar) has so far issued 450 Million unique identifications (based on individual biometric scans), according to the Times of India and are targeting a near nationwide coverage by 2015
  • Mobile phones have become more ubiquitous than the sacred cow

Product training avoids extra expense

The distributor (and by extension the original manufacturer or brand owner) is happy because the SMS text (or a call with an automated voice response system) also lets the ERP system know how much inventory is being drawn down and when to start the re-order process. For businesses like consumer durables – refrigerators or water purifiers – where the original purchase is accompanied by a long period of a service opportunity, this enabling of the bottom tier can offer even more savings. No longer does an Electrolux Aquaguard reseller, for instance, have to employ mechanics to service the water purifiers when simple product training (with the market development funds provided by the manufacturer) avoids this extra expense and provides coverage in areas that could not be physically reached prior, all with zero impact on his own payroll.

Tablet devices have power to change economics

On December 15, 2011, India announced the public availability of the $35 tablet computer. Datawind, the manufacturer of these tablets has so far sold 1 million of these commercially at a price of $60 and according to CyberMedia Research within two quarters of its introduction, the Aakash tablet has leaped ahead of Apple in terms of market share in India. One hundred thousand of these devices have been purchased by the Indian government from Datawind for $40 and are being provided to teachers and school children for a subsidized price of $20. Additionally, the government has asked Datawind to develop the 4th version of these tablets to upgrade them to Android Jellybean OS and provide support for USB devices, among other improvements, and now other Indian vendors are jumping into the fray as well.Imagine if the street vendors no longer relied on their non-smart mobile phones but started using web-enabled tablet computers to conduct business. That has the power to unleash a wave of entrepreneurship that can not only increase the GDP but also change the economic face of a nation forever.

Tags: , , , ,

Leave a Reply