Cracking Tough Nuts

Rural distribution of social impact technologies requires cracking a number of tough nuts. What do Essmart and other companies attempting rural retail and distribution have to consider?

  1. Picking the right technologies. In terms of products, there is a lot of junk out there. For example, solar-powered products tends to have a bad reputation among rural populations because so many products break. The products need to be of high quality and appropriate for the population in terms of usage and price. Giving end users choice in the matter is also important. Kopernik is one organization that aggregates social impact technologies for NGOs, but its vetting process could be improved.
  2. Marketing. These technologies are not pull technologies, but they are push technologies. Push technologies, it seems, require intense, in-person marketing in the form of demonstrations and promotion by trusted community individuals. There are few marketing channels that reach rural populations, and there is no one brand that sells products across categories for rural consumers. Frontier Markets is really strong because of its on-the-ground presence through demonstration centers.
  3. Sales. This typically involves sales agents or village level entrepreneurs who sell door to door (Sakhi Retail andProject Dharma) or store to store. There might be a retail store that the sales agents are associated with (Villgro StoresDesta Global). It seems that sales agents are difficult to find, though. That’s why some people are using shop owners as sales agents – they already know how to sell. However, shop owners won’t push products (I’ve been told that if they push products, customers will think they’re getting some type of cut – not sure if that is actually true, though).
  4. Pricing and financing. The various companies I’ve seen in rural distribution haven’t really addressed the financing question. Most expect their end users to pay upfront in full, trust the middle man (e.g. the retail store owner) to take care of credit on their own informal basis, or provide credit themselves, which creates a huge cash flow issue. I think that price is one of the hugest obstacles to disseminating these technologies. CK Prahalad’s Fortune at the Bottom of the Pyramid might have raised a lot of false hopes, but one thing it did teach was that $1/day is much less expensive than $30/month for low-income customers. Thus, the appropriate pricing scheme would make waves. One company that I’ve seen addressing this problem with technology isSimpa Networks, which is trying to help finance the solar systems installed by SELCO. Applying this type of thinking to buying consumer durable products could make a big difference.
  5. Moving the technologies. From what I’ve seen, companies involved with rural distribution to local kirana stores  hire couriers or have their own vans, such as Drishtee and United Villages. I guess this gets the job done, but there might be a better way that has great reach with less overhead.
  6. After sales service. For consumer durables, after sales service is key – especially if the products are new and not branded with a big name. After sales service gains loyal customers and ensures that technologies don’t end up as trash by the roadside. Frontier Markets also takes care of this through the demonstration centers, which are also service centers. Additionally, it is important to really understand why products fail. Failure might be due to user error, or it might be due to mishandling, or it might be due to shoddy products. No manufacturers of social impact technologies do thorough problem analyses.

Right now, Essmart is piecing together this puzzle through a number of partners that are located in the US and in India. We want to make Essmart scalable so that it has impact in more than just one region, which is the case for many of the rural distributors/retailers out there. Is this possible, given the diversity of India’s rural population? Honestly, I am not sure. But I do think that there are aspects of this puzzle that can operate independently of local culture. There are solutions that have worked for the Bottom of the Pyramid, such as microfinance and mobile phones. These work because they address realized needs and present obviously favorable customer value propositions. But will social impact technologies automatically generate this kind of thinking?

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Essmart’s mission statement is to bring essential, life-improving products to all people, no matter who they are or where they’re from.

Essmart is registered as a US Corporation and an India Private Limited company.

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