When thinking of India, it is easy to focus on huge metropolises like Mumbai and Delhi that are home to millions. But many Indians live in small villages and with limited infrastructure it is hard for villagers to get goods and for packaged goods companies to reach villagers. (A topic we have touched on before.) As the BBC reports, a firm called United Villages is trying to modernize rural distribution by relying on mobile technology (Mobile tech brings big retail brands to rural India, Mar 27).
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The firm says the real opportunity is in villages with less than 10,000 people.
According to the firm’s own research, retailers in Indian villages with a population of less than 10,000 people usually have to leave their immediate areas to procure 81% of their stock.
Mr Sharma [a United Villages representative] says that before United Villages began its mobile supply operations in rural Jaipur, retailers had to shut their shops and travel 30 to 40km to the nearest market to get supplies.
That, he says, used to waste valuable time and lead to a loss of sales. Now, he claims, vendors can have products delivered right to their doorstep in a cost-effective manner that makes operational sense.
This is an interesting example of how one new technology (mobile technology) can impact an otherwise staid business. Assuming that United Villages can manage the supply of goods and delivery reliably, there should be an opportunity here that benefits all concerned, the retailers, their customers, and the branded producers. The weakest link, however, may be United Villages’ field sales force:
Mr Bakshi claims that one of the biggest challenges is hiring and retaining staff with good local knowledge and an ability to incentivise the use of new products and make bigger sales.
For this to really work, United Villages needs a sales force that can really work with local retailers, convincing them of the service the firm provides as well as getting them to try new products. So you need people who are charming and convincing and willing to spend all day riding a motor bike from village to village. One would expect that the ability to get enough staff will limit their growth but that they need that growth to make real money. Purchasing and distribution usually exhibit economies of scale and that is likely the difference between this being a good business and being a great business.