dissecting a startup : efarm - innovations in the farm-to-home supply chain

Management • Venkata Subramanian Founder & Managing Director:

MS (Computer Science), University at Albany, NY , B.Arch , IIT Kharagpur (1995) , India

12 years of experience in IT industry , lead key accounts in BFSI for Wipro, Satyam in USA. Very strong expertise in analysis & design of complex systems , portal development , back office operations.

Responsible for overall strategy , technology and public relations

• CEO : Srivalli

MBA , B.Com Taxation

8 years experience in Sales, Marketing, & Operations. Has run two start-ups and organised fund raising for NGOs as part of CSR programs.

Responsible for operations, business development, finance, administration

• Manager, Sourcing & Logistics : Sankara Krishnan

Over 35 years of Hands on experience in logistics & rural entrepreneurship

Extensive practical experience in trucking operations, farming, rural businesses

Responsible for sourcing, transportation, delivery• Manager , Customer Relations : Yamuna

M.Phil , M.A , B.Ed, B.Sc

Retired head from Doordarshan Kendra, Chennai

Over 35 years experience in media , public relations, heading public sector organization• Consultants and advisors from leading agricultural universities, management schools, government and industry

Combination of different background ,skills and experience to provide creative perspectives to solving key problems

Our Vision •Bring people together through creative use of technology platforms ('connecting the dots' ) to form socio-economic-webs•Create successful entrepreneurial, social enterprises which are profitable and sustainable•Make corporate social responsibility our core business model and differentiator •Measure success not just in financial growth , but also in the social growth in the areas we serve

Matchbox Solutions

eFarm

An eBay for Farmers !?

Sahee jawaab : None of the above !

Pure corporates – Failing on greed and personal egos

Pure govt. initiatives – Failing on corruption & bureaCRAZY

Pure NGO/NPO – Driven by passion, but lack sustainability and

governance

Working for a social cause DOES NOT MEAN we need to be

making LOSS The middle path : Social + Business goals

The middle path : Social + Business goals

The actual demand and supply data for any produce (which is MOST

fundamental to any sustainable business) is not reliable /accurate , leading

to over production and wrong crop selection.

Price discovery through auctions or local mandis are an eye-wash

Bagging/packing of produce is not standardized,

Too many middlemen, too little value addition – Resulting in High wastage

(over 40%), black marketing and price escalations of over 300%

Transportation handled by independent truckers who also operate through

brokers

Several existing storages and cold rooms under utilized

There is little or no IT usage/Post harvest science

End buyers – High prices, Poor quality

Lorry drivers – The missing link

Small retailers – Bullied out, Ignored , Slumdogs ?

There is no ‘single’ entity owning responsibility of entire chain

The systems are usually closed, vendor specific or too complex that

predominantly it’s reach and volume is limited

They cater only to the top 5% of the income/social bracket , and that too in metros.

Hence the effects aren’t felt at the ‘bottom of the pyramid’.

In some cases, it has resulted in a David v/s Goliath fight where the large retailers

are trying to completely by-pass existing traders and small time vendors, leading to

stiff resistance and negativity

Big investments made . But Recession has hit retail

Farmer’s market – Utopian vision but Unrealistic

Loan waivers – Insult to Injury

Frequent changes in administration & executives derail plans

Foreign funds & agencies – vested interests

A ‘click and mortar’ entity with primarily : A B2B technology platform which forms the

core of the system (like eBay, alibaba) and A distribution, fulfillment system which blends

well to the vagaries of Indian conditions (Dubbawallahs, Shakti, Amway)

A ‘glue’ between the various stakeholders in the system, the ‘network’ IS the company

Setup a level playing field. Don’t compete with any of the existing players

nor become a threat to anyone’s livelihood.

FarmersCooperativesCollection centers

Village ICT kiosksPhone boothsMobile operators

StorageWarehouses

Value added resellersSorting , Grading , Processing, Packing

Small Independent transportersIntra-city small tempos

KiranasSelf Help GroupsHawkers

eFarm

Bulk buyersExporters

Logistics Fleet operators

NO

Organised retail penetration less than 2%

Local street side vendors/push carts have last mile connectivity to

customer

Demand Supply prediction – In a constrained situation

Current examples – Train, bus, movie tickets

Gradual change in mindset – From walkin,to phone-in, to paper, to

email to online forms

YES ! But with a BIG PLUS points

Examples of “System” as a middleman

Marriage market : broker v/s Bharathmatrimony

Travel booking : Agents v/s Yatra.com,IRCTC

Prices are arrived at based on fair negotiations and in advance

All grades (High/Medium/Low) produce is picked at different rates and

matched with suitable end customer preferences

By reducing wastage across the chain , farmer gets price from more

quantity sold

Pick-up is done from farm or from local collection centers , reducing

transportation costs to farmer

Payments are made in full upon delivery , through transparent means with

proper paper bills

Data about current demand, price levels, buyer preferences, projected

volumes available for aiding in planning phase

For bulk buyers :

Collapsing multiple middlemen improves efficiency and accountability

Assured availability, quality, less price fluctuations

Less wastage owing to pre-sorting

For retail buyers :

Farm fresh quality at reasonable prices (about 20% cheaper on avg)

A trust worthy, safe , honest place to shop

“Gabbar singh kehkar gaya

Jo dar gayaa , Who Mar Gayaa”

Reality :

Only brokers/agents make money

High risk game, Uncertainty across chain

Value addition brings more revenue for everyone

Value added resellers

Intermediaries – Sorting, Grading, Packing, Transporting

Storage – Dry / Cold

Processing – juices, extracts, powders

Distributors

Retailers – many formats

Quick calculation :

Chennai population : 8 million

Avg. consumption : 250 gms

Volume : 2000 tonnes (400 lorries inflow Koyambedu)

Value : 3 crores per day

1% penetration

= 3 lakhs T.O. per day = 9 crores per annum

Only core operations are directly staffed

Rest through entrepreneurs, self help groups

Pilot completed

Retail operations using mobile trucks

8 tonnes per month

10 member core team , 10+ advisors , 100+ extended team

Phase I : Pilot (Status – Completed)

Aug 15 to Oct 15

Thiruvanmiyur, Valmiki Nagar (Chennai)Volume : 2 tonnes per week , Turnover = Rs 30000/weekGoal : Road test of the concept in immediate vicinity, capture

detailed lessons learnt and feedback, achieve break even

Phase II : Stabilisation (Status – In progress)

Oct 15 2008 to Mar 15 2009

Across 5 sample neighbourhoodsVolume target : 4 tonnes per day , per locality Turnover target : Rs 75000 per day, per localityGoal : Regularise operations, Identify and fix gaps,

Demonstration-cum-training centre in base of all wholesale/retail activities, Data analysis and systems enhancements.

Phase III : Growth– Mar 15 2009 to Dec 15 2010

Goal : Metro wide growth (Chennai), Deeper sourcing channels, hub and spoke operation in Tier II cities

Phase IV : Expansion (2011 – 2013)

Goal : Expand to other metros/regions , Cross region sourcing & delivery

People issues :

Agri industry has been on a slow/negative growth .

Both farmers and end retailers want to quit

Initial adoption and understanding amongst the buyer community may

be slow

Finance issues :

Payments and Collections.

Environmental issues :

• Weather, calamities affect sourcing

Percentage on each transaction

made (~10%),

User Registration fees and database

listing

Franchisee fees for retailers (Based

on typical daily order volume) ,

Training

Systems integration /consulting

Advertisements in retail vans/push

carts/web portal

Year 1

Year 2

Expense Distribution

15%

20%

13%7%

39%

1%

5%

Sourcing

Distribution

Sales & Marketing

Technology

HR

R&D

Misc

Expense Distribution

15%

20%

13%7%

39%

1%

5%

Sourcing

Distribution

Sales & Marketing

Technology

HR

R&D

Misc

“Socially conscious” Investor

Domain expertise and network

Talk in Rupees and not Dollars ;-)

Be a ‘team member’ not JUST a ‘share holder’

TATA NEN Hottest startups :

Judges and public feedback

Repeat customers, Referrals

Investor interest

Press coverage – NDTV , Hindu, startups.in, Kumudham

High end produce – Organics (OO44)

Pricing study

Standardised collection/bagging

Processed food items

Building volume & scale on buyer side

Self help groups – issues

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