Making
ITwork
S
Sivakumar discusses the nuances of the e-Choupal project, which today
reaches out to more than a million farmers in over 11,000 villages
through 2,100 kiosks across four states
For
several reasons, a large majority of the people living in rural India
get locked into the vicious low-income and low-expenditure cycle.
Serving these markets would first mean creating conditions for higher
incomes for people, rather than engaging in competitive marketing
to get a larger share of their small wallets. ITC’s e-Choupal initiative
leverages the real power of Information Technology (IT) to transform
the agricultural economics of rural India.
This
novel and interactive transaction, which is an efficient fulfillment
channel virtually integrates the entire farm-produce value chain to
plough back a larger share of the consumer spend to the farmer.
Coupled
with the distribution processes tailored to meet the needs and challenges
of consumers at the bottom of the economic pyramid, the benefits accruing
from the e-Choupal initiative turn into a competitive and modern marketing
infrastructure for rural India. There is an assured potential for
scaling up the model, with its ability to enmesh the corporate objective
of creating shareholder value with the social aim of empowering the
rural masses.
VIRTUAL
VERTICAL INTEGRATION
The
e-Choupal idea cuts through the basic and historic problems crippling
Indian agriculture: fragmentation of agricultural land holdings, the
difficulty of access to those holdings, high levels of illiteracy,
all of which make agricultural extension work unviable, making it
difficult and daunting to adapt and apply the findings of laboratory
research to agricultural cultivation. The e-Choupal makes use of the
physical transmission strengths of the current intermediaries – the
only efficient option in the context of India’s weak infrastructure,
making them an integral part of the value chain.
Yet,
by using the real-time multicasting ability of the Internet, these
intermediaries are bypassed to deliver information and market signals
directly to the farmer to enhance the long-term competitiveness of
their businesses. As a part of the e-Choupal, ITC has set up Internet
kiosks in villages.These
kiosks are managed by the farmers, selected from within the community
and trained, and are known as sanchalaks.
At
the kiosks, the sanchalaks help the farmers readily access the different
agricultural crop-specific websites that ITC has created in the relevant
local language. The farmers can learn online the best farm practices
for their crop, the prevailing prices and price trends for the crop
in the Indian and world markets, the intricacies of risk management,
and the local weather forecast. Individual farmer thus get the benefit
of expert knowledge for the cultivation of their crops.
e-Choupal
leverages the seamless workflow capabilities of IT to virtually integrate
several bestin- class players along the chain and offer the services
on a single platform to every farmer. The farmers can order quality
agricultural inputs online.
The
virtual aggregation of such demand effectively reduces the cost of
these inputs, again bringing the power of scale to even the smallest
of farmers. e-Choupal links the Indian farmer to the consumers in
local and global markets, by leveraging ITC’s competencies in branding,
marketing and distribution.
Unlike
in the alternative mandi channel (where a farmer discovers the price
for his produce after he has incurred costs of transportation, and
therefore ends up selling even if he is not happy with the price),
e- Choupal helps the farmer to take an informed and empowered decision
(because the price is known in the village itself). In the process
many unproductive activities like multiple transportation, handling
and bagging, which are otherwise inevitable in the traditional supply
chain, are eliminated, ploughing back a larger share of the consumer’s
pie to the farmer.
Thus,
through the virtual vertical integration (V21) model of supply chain
management, e- Choupal secures the scale benefits for India’s agricultural
economy without displacing the small farmer.
3-D
CHANNEL
On
the ground, e-Choupal is proving to be a unique 3-D marketing channel
for many products and services consumed by rural India. The changes
sweeping the marketing discipline in the backdrop of the increasing
consumercentricity of today’s world are well known.
For
instance, while superior products and distinctive functional benefits
are the necessary starting point for success in the marketplace, the
experiential dimension is becoming a critical differentiator.
Process
benefits, which make transactions between the buyer and seller easier,
quicker, less expensive and more pleasant, support this dimension.
A third dimension, personalisation, now successfully employed by a
few marketing companies, will be the only sustainable differentiator
in tomorrow’s world. The relationship benefits which reward the willingness
of consumers to identify themselves and reveal their purchasing behaviour
laid the foundation for this dimension for ITC.
contd...
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