The time for a compassionate and collaborative commerce is now
The lockdown to combat the spread of COVID-19 has spared few in India’s economy. Small businesses, a key employment generator that contributes to 30 percent of the gross domestic product (GDP) and 50 percent of exports, have been hurt by disrupted supply chains, a liquidity crunch, and a fall in demand.
To understand the new business landscape and how to grasp the opportunities it will provide small businesses in the future, the Global Alliance for Mass Entrepreneurship (GAME), as part of its webinar series powered by YourStory, ‘Small Businesses Coming Back To Life - Recovering from COVID-19’ held a panel discussion on ‘Enabling new market opportunities’.
The panel saw Avinash Pol, Chief Advisor, Paani Foundation; Sandeep Varaganti, MD and CEO,; Anish Kumar, Managing Director, Transform Rural India Foundation; Ashish Jhina, Co-founder & COO, in conversation with Madan Padaki, Co-Founder, .
The situation on ground
Ashish began the discussion by saying that the lockdown and social distancing norms are compromising certain business models, but not the kirana stores.
“The kirana shop has stood tall in the crisis, as it has had the hyper-local niche offering convenience, the sheer grit of entrepreneurs, 95 percent of the food and grocery share, but less than 2 percent of the media. This is getting corrected as people are getting more aware of the importance of the kirana,” he said.
Ashish added that in these times, traditional food supply chains such as distribution and wholesale are being hit, and that will speed up the amalgamation of the traditional and modern food ecosystem.
“Kiranas will also change soon. Around 25 to 30 percent of kirana store sales are in home delivery, and that will go up. Kiranas will carry out their purchases through more resilient supply chains, and greater use of in-house technology. With this, the operation of a kirana will require more professionalism and business savviness,” said Ashish.
He added that with the rise of businesses like Jumbotail and others in the back of the supply chain that are helping to improve the efficiency of sourcing of their supplies, more entrepreneurs will be encouraged to start their own businesses.
The silver lining for farmers
When asked about what has changed for small businesses and farmers operating in rural India, Avinash said this is the time for villagers to form strong bonds. The various problems and lack of availability of education and sanitation meant greater migration to the cities like Mumbai and Pune.
But due to the COVID-19, a lot of them have now realised the importance of their village and returned.
“I have been getting many calls from the metro cities saying that they have the money for vegetables, fruits and groceries, but none of these are available,” said Avinash.
He added that this means the farmer now has the opportunity to directly connect with city people and carry out direct marketing. To this end, an initiative was carried out to use 120 vehicles to deliver produce to different parts of Satara in Maharashtra.
“Everyone gets their vegetables at their doorstep. The beneficiary gets the produce at a good price and quality, and the producers can sell it at a decent margin,” said Avinash, adding that those in the meat, online education, healthcare like ayurveda and yoga, and financial planning businesses, among others, are seeing a good opportunity in the future.
Driving local opportunities
Anish added that while the talent drain of better skilled and entrepreneurial people is reversing, the local employment opportunities and the social stability expectations of those returning would be very different.
“A lot of these youth coming back would not be ready to go back to farming. Many of them have risk-taking abilities, are better skilled and have proficiency in some trade,” he said.
He recounted he encountered a person in Mirzapur stitching tracksuits and who was based in Mumbai earlier, and he had come back before COVID.
“An opportunity to explore would be connecting such skilled persons to enterprises and creating a closed loop-hyperlocal economy,” said Anish.
Tackling the immediate challenges
Sandeep added that after carrying out a survey of small businesses who collaborate with online marketplaces, the team at Prione found out that the crisis is going to shift in the way in which customers can access products. “The system is going to evolve to be a combination of physical and digital touchpoints. There is going to be a continued significance of offline play,” he said.
Sandeep also highlighted that there will be four key challenges going forward. Fixing the inventory and supply problem after the end of the COVID pandemic is going to be one of the largest.
“The kiranas have got back on their feet, but are struggling to access inventory. Now that demand for essential and non-essential items has dropped, they still have to pay inventory and rent for supplies, and electricity and manpower,” he said.
The second and third problem is access to manpower and funding. Coming out after the lockdown, Sandeep said it will be important to see lending behavior of the various Non-Banking Financial Companies (NBFCs) and lending platforms that offer micro loans to small businesses.
“Fourth: We are going to have a supply crunch of raw material in the manufacturing industry. It is going to impact them in a big way. Even if they are willing to open shop, and start manufacturing [post lockdown], the raw material is going to be a significant blocker,” said Sandeep, adding that the next couple of weeks will be crucial in solving these problems.
Building an alternate narrative to encourage going ‘glocal’
Ashish added that one of the main things to drive growth in the rural economy is to solve the gap in opportunity.
“We have a lot of young people in this country that are not just satisfied with roti, kapda and makaan. They want bangla, gaadi and personal satisfaction in what they do. Unless we do not solve for those, moving people back to the rural economy is not going to create those opportunities, and it has to be done proactively wherever reverse migration is happening. The lure of the city is very powerful, and it is because that is where such aspirational dreams come true,” he said.
Madan said that building an alternative narrative where positive stories around aspirations being met in the rural economy is one the efforts undertaken at GAME.
“I am sure that out of all the thousands of instances, there would have been some brave ones who have faced the odds and not just met their roti kapda makaan needs, but also thrived in a situation like this. If we can highlight these stories, and that these things are possible not only in the city but elsewhere as well, that could be a step in the right direction,” he said.
Providing the platform for sustaining growth
Sandeep said that another step to provide such opportunities to small businesses, manufacturing enterprises, retailers and the entrepreneurs starting out – which make about 80 million of these small businesses and contribute 40 percent of the GDP – is to create a platform for them to sustain the current impact.
“All of us in this group have a critical role to play in that,” he said.
When asked about what can be done to clamp down on needless importing, and manufacturing locally, he explained how Prione’s private labour programme helps in creating a platform where a large online peer helps in the marketing and branding for local manufacturers to grab a greater market share.
Taking the example of the home utilities sector such as mixers, pressure cookers, etc., he said that large brands like Prestige and Hawkins had most of the market share.
“We came across this brand called Fabiano from Rajasthan whose product quality was the same. And their average selling price is 50 percent less than these big brands.” With the help of the programme, the brand slowly took a larger market share from less than 5 percent to around 30 percent of all the pressure cookers sold on Amazon.
Market linkage is key
Ashish said that while there has been a lot of potential for value addition in food processing, market linkage, the need for greater entrepreneurial energy and business acumen have been the missing links.
“Previously, the food and food processing space was supply-side driven. Now there is a lot of demand looking out for supply and significant de-globalisation to take place over the next few quarters at least.”
Ashish added that to address this gap, Jumbotail has a similar platform where smaller brands get access to 25,000 kiranas in South India. “There is going to be a level-playing field by taking smaller brands that have a great product and a differentiated offering and providing them the market linkages,” he said.
Getting farmers to adopt the entrepreneurial mindset
When asked about how to inculcate the entrepreneurial mindset in farmers to carry out the direct selling of their produce, Avinash said that the current times are ripe to connect farmers with the people, and provide training. “For example: How do farmers grade, pack and label their produce? In this age of marketing, the farmer does not know all these things. That, and maintaining relations with people. Providing training in these aspects could help the farmer flourish in the future,” he said.
Giving an example, Avinash explained how he convinced farmers that this is the best time to access the market.
“People had the produce, but gathering the permissions from the government, the police… there were so many problems. I spoke to many of the authorities and convinced them that this is the good opportunity for farmers. I said: If you give them the necessary licences and permission, the farmers will be able to sell and deliver their produce in the city directly to people’s doorsteps. This will solve the problem of crowding,” he said.
Avinash added that he first had to convince the Superintendent of Police (SP), as securing his approval meant getting permission to enter the city. “We first started supplying produce to the SP, and he gave us permissions because he liked the idea,” he said, on a humorous note.
Avinash also said that there should be more people who can connect people who can help each other. He added that the initiative, which first started with four vehicles, now has around 120 vehicles in Satara. Farmers are now able to make thrice what they made earlier by cutting out the middlemen. The initiative has since successfully been carried out in other villages and towns of Maharashtra like Solapur, Akola, and Barshi.
Moving towards a more collaborative and compassionate way of commerce
Ashish added that it is possible for more crises to evolve in the future, so there is a need to become more resilient, and that decentralisation is a step towards this resilience. “Advocacy and policy making is central to these things. And there is a huge opportunity to revamp the Agricultural Produce Market Committee (APMC) Act and make them more farmer- and consumer-friendly as public sentiment will back it,” he said.
Sandeep said that the best way to help the small businesses is to carry out the ‘Three Cs’ “Collaborate together. Be compassionate towards the consumer, and SMEs, to drive commerce. We can figure out dedicated events that can do something for SMEs along the lines of big Indian sales by e-commerce companies. We must see if there are any support measures we can provide like giving up on margins or solving the supply problem. Can large companies plug the supply problem? Can we give them access to a platform and improve their labour efficiency?” he said.
Madan concluded the discussion by saying that he hoped the talk will mark the birth of CC-Commerce: A collaborative, compassionate commerce for the benefit of all stakeholders.
Coming soon: Why development experts believe supporting mass entrepreneurship is crucial to our survival.