Tapping the pot of gold in rural India, Desta Global
Indian economists and corporates realized the potential of tapping rural India sometime back. According to some reports, rural India currently accounts for 50% of Indian GDP and rural consumption per person has increased by 19% yearly between 2009 and 2012; two percentage points higher than the urban populace. This opportunity therefore makes the space also very attractive for startups to look at.
Desta Global is one such venture which is looking to grow on the back of opportunities provided by rural India. Founded in 2010, Nishant Bonare started Desta, which means ‘happiness’ in African Amharic; and the cofounders were Ron and Marlys Boehm. Desta provides a variety of products and solutions that maybe needed by farmers and normal villagers to lead a better life. The three areas that Desta operates in therefore are Desta Sales, selling products that are of use to villagers; Desta Marketing Services, working with corporates to help them reach out to the local population; and Desta Fulfillment and Payment Service, helping rural e-commerce and traditional commerce fulfillment and payments.
How it works
Nishant is a computer science graduate from VJTI and a post-graduate in management from ISB. Nishant met his co-founder Ron Boehm at a conference in ISB and decided to startup. “On the one hand, we observed that rural customers have very limited choices for products and services compared to urban customers; and, on the other hand, there are many products and services that can improve lives of people in villages. But companies find it too expensive to market, sell, deliver, and collect payments from villages. To fix this situation, we decided to build an infrastructure that can help any product or service company reach villages in a cost-effective manner,” explains Nishant. This was done by partnering with stores that sell agricultural products, through a group of people whom they refer to as Desta Village Managers (DVMs).
Products that Desta sells include drip irrigation kits, cook stoves, on site soil testing and solar lamps. All these products are low on cost and help give cost benefits to people investing in them. The delivery of these products is done by DVMs, who also do the work of educating farmers and advising them on improving yield and income. All products sold by Desta are focused on agriculture, livelihood education, renewable energy and water. Products sold by Desta are in the range of $6 - $40, but despite them being so high cost, Nishant says customers buy them because of the long-term value they have to offer. To-date, they have sold more than 500 products and done few crores of revenues in the last few months, he claims.
Desta also runs a product development center called as Desta Innovation Labs that focuses on developing market driven products. One successful product they have made is the Desta Water Wheel, which is a 40 liter rolling drum that helps people in villages and slums to easily transport water from public sources to their homes without the need to pickup heavy buckets that many women in villages and slums normally do.
The startup is also working on improving the adoption of organic farming by the farmers. “Currently, only 0.3% of agricultural land in India is under organic farming. Farmers are not adopting organic farming because they do not have ready market channels to sell their output. Also, lack of knowledge about organic farming and the access to quality organic inputs works as a deterrent,” explains Nishant. Desta is trying to solve these issues using DVMs and encouraging small farmers to adopt organic farming. Desta has a total of 150 village managers in about 1000 villages in seven districts of Maharashtra reaching out to about 15,000 farmers.
Revenue model
Desta earns from the products they sell, as well as through the leads they generate for corporates via Desta Marketing Service. Desta works closely with corporates who sell solar lamps, financial services, mobiles, laptops as well as non-profit social messages. Products that have so far been unknown to customers in the village are exposed to it as well as educated about them. This is done through high-quality marketing and education in villages using village meetings, videos and targeted lead generation. The meetings happen via the Village Managers who make sure these meetings help bring together appropriate target audience who have the ability to purchase products that companies want to sell. “In the meetings, we discuss village problems as well as talk about the products and brands, which ensures a good recall value for customers. We have few top corporates as clients for this service,” says Nishant.
The startup started operations in 2010 and piloted in one district in 2011; in 2012, they expanded to six districts, and today work in 15 districts. Starting out, admits Nishant, was difficult, due to a variety of reasons: high costs of servicing rural areas, unavailability of quality talent in rural areas and low income level of customers. Less use of technology in villages made even simple information collection and dissemination very difficult, he says about the challenges faced by the startup.
By the end of 2016, Desta aims to increase the income of two million households by 10% per annum, and create business opportunities for 5,000 Village Managers. Expansion of the list of products they work with as well as expanding in other states beyond Maharashtra is also on cards, says Nishant.