Today I came across a fascinating bit of news on BBC. It details the business model of a small supply chain company, United Villages, based in rural Rajasthan, India.
While there has been a lot of talk about fortunes at the "bottom of the pyramid", not many businesses have yet reached out to the poor rural masses of India. As it turns out, the bottleneck is cost. In the isolated pockets of India, i.e. the middle-of-nowhere villages with a population of less than 5000, it is just not cost-efficient to establish a supply chain. This is especially true for small and medium businesses that typically have a short return horizon. The downside of this is that retailers in these villages need to shut down shop and trudge to the nearest "big" market to restock. This is not only inefficient but also leads to revenue loss.
The solution according to United Villages is technology, specifically the ubiquitous mobile phone. The idea is to send restocking orders via cell phones to state level hubs. The requested goods are dispatched to the retailers! A simple idea but I am sure it is making a huge difference to the productivity of the system.
Of course there are bottlenecks. It turns out that the retailers are pretty conservative when it comes to technology and who can blame them? Most of them are on razor thin margins and without a security net to fall back on, they are risk averse. On top of that, I guess most of them are either unfamiliar or totally ignorant of the technology. This makes the sales staff with the requisite local connections very valuable, leading to problems in finding and retaining staff.
But on the whole a very neat idea that is being implemented well. This is similar to a wave of schemes that leverage proliferation of mobile phones to help the poor in India ( for e.g. banking, news, etc. ). Entrepreneurship, especially the low-cost targeted-for-the-poor type is the only way towards sustainable and equitable growth.
While there has been a lot of talk about fortunes at the "bottom of the pyramid", not many businesses have yet reached out to the poor rural masses of India. As it turns out, the bottleneck is cost. In the isolated pockets of India, i.e. the middle-of-nowhere villages with a population of less than 5000, it is just not cost-efficient to establish a supply chain. This is especially true for small and medium businesses that typically have a short return horizon. The downside of this is that retailers in these villages need to shut down shop and trudge to the nearest "big" market to restock. This is not only inefficient but also leads to revenue loss.
The solution according to United Villages is technology, specifically the ubiquitous mobile phone. The idea is to send restocking orders via cell phones to state level hubs. The requested goods are dispatched to the retailers! A simple idea but I am sure it is making a huge difference to the productivity of the system.
Of course there are bottlenecks. It turns out that the retailers are pretty conservative when it comes to technology and who can blame them? Most of them are on razor thin margins and without a security net to fall back on, they are risk averse. On top of that, I guess most of them are either unfamiliar or totally ignorant of the technology. This makes the sales staff with the requisite local connections very valuable, leading to problems in finding and retaining staff.
But on the whole a very neat idea that is being implemented well. This is similar to a wave of schemes that leverage proliferation of mobile phones to help the poor in India ( for e.g. banking, news, etc. ). Entrepreneurship, especially the low-cost targeted-for-the-poor type is the only way towards sustainable and equitable growth.
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