Hitherto dominated mainly by unorganised players, the rural/agriculture sector is experiencing a phenomenal change with the entrance of organised players entering the market.
Seeing the small farmers affected by low yields, high cost of production and low price realisation, corporates are all out to seek improved technology, better farming equipment, superior quality of fertilisers and new scientific methods to aid farmers in cutting down their costs of production and marketing along with providing stable and remunerable market access and improving price realisation and/or increasing yields. With the assurance of availability of innovative equipment, spares and services through a wide network of supply chain and support activities of international standards, modern retail companies are capitalizing on this emerging opportunity in rural/agriculture franchising.
“We want to enable merchants in villages and small towns to not just sell products but also sell dreams. Consumers in these areas have a greater purchasing power now and their aspirations are as demanding as a metro consumer,” shares Sridhar Gundaihah, StoreKing Founder and CEO. He wants to build an infrastructure based on technology logistics and payment to connect these rural sellers with big supply chains. Yogesh Kumar Dwivedi, CEO, Madhya Bharat Consortium of Farmers Producer Company Limited, has a vision for 2020 wherein they want to establish 100 franchisees of Madhya Bharat with that time frame.
A Beneficial Franchise Model
While good quality product, competitive prices and prompt and responsive services are the key mantras behind a success franchise model in this sector, the old world franchisee models have a high requirement on the investment side. “This is mainly because it is a supply-driven model, whereas we are a demand-driven model. We do not have any physical inventory as it is totally virtual in nature. This removes the massive investment one has to make in working capital in a typical franchise model,” remarks Sridhar Gundaihah.
It is a largely acknowledged fact that till the time these retailers have a dedicated and fool-proof backward integration chain in place (production, post-harvest and storage aspects of fruits and vegetables) their business model would not be successful. All such knowledge is achieved at the hands of massive research that goes into this franchise model. The rural market data is the core strength. They can tell a big FMCG where exactly their baby diapers will sell and its projection.
In turn the larger companies trust them to use their rural distribution network and place on board their products to the right seller at the right place. It is not advisable to create stock-up inventory and have it lying around. As the need arises, making it available to the consumer is the best thing to do. With all this in place, Dwivedi opines, “Good demand of the product and better quality, good credulity, credit and return back facilities help decide the criterion for choosing the franchisees.”
The Driving Factors
While one cannot imagine large-scale ecommerce trickling into rural areas, the truth is that with some basic requirements like a laptop, internet connection and some retail setup (which most sellers already have) the business is already flourishing. “The variety of products that one can sell through our channel is the biggest advantage. Unlike other franchisees, this is not restricted to one kind of product only. It could be anything from phones, to pickles to home appliances – whatever the customer desires and we can provide by collaborating with our partners like Amazon, Xiaomi and others,” explains Gundaihah.
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