ESSMART BRIDGES THE DISTRIBUTION GAP IN INDIA BY BEING A ONE-STOP SHOP MODEL FOR MANUFACTURERS AND RETAILERS.
What big bet are they making?
Essmart gives rural customers access to life-improving technologies by linking producers and end-users through local retail stores. Essmart is a last-mile distribution company for a catalogue of innovative, durable, socially impactful products, such as solar home lighting and fuel-efficient cooking appliances. Essmart’s Sales Executives drive on routes into villages and build relationships with existing local retail stores. Sales Executives offer three vital services to the shops and their end customers: education about life-improving products through demonstrations; physical distribution of products to the shops; and facilitation of after-sales service, which gives customers the confidence they need to adopt an otherwise new and unfamiliar product. Essmart’s model benefits all links in the supply chain, as endusers gain access to low-cost technologies as well as information on sustainable product use, shop owners get reliable product deliveries and earn margins on items sold, and manufacturers gain access to the market. Essmart also offers consultancy services for product developers (market research and feedback on pricing etc.).
What challenge is the big bet solving?
A large variety of life-improving products have been developed, but are not obtaining their potential benefit due to lack of usage. The purchases of rural households are constrained by the supply in local retail stores, which in turn is limited by the retail owners’ connection to product developers. Essmart fills this gap in the supply chain by offering a catalogue of quality products in the local retail stores.
How is the Big Bet innovative?
Essmarts bridges the distribution gap by leveraging existing infrastructure in the value chain. The business model relies on established trust-based relationships between local retail stores and their consumers to deliver life-improving products to end-consumers. The one-stop shop model for manufacturers and retailers, enables that one can buy in bulk from the former and distributing it on demand to the latter. By being a single point of contact, this model provides a flow of information from customers to producers, facilitating continuous improvement of products. Essmart also incentivizes retailers by offering higher margins than on other goods, and uses live demonstrations to illustrate the benefits of the products.
What is the current situation?
Since starting operations in October 2012, Essmart has established 6 distribution centers is the region of Tamil Nadu. In addition to a facility manager and office administrator, each center has 4 sales executives covering a 60-kilometer radius. The 42 employees service 1,100 retail shops, of which 350 are classified as “active” (purchased in the last 60 days), offering over 100 different types of products, with total sales to date reaching 27,000 products. Essmart has developed their own app-based logistics management system that addresses the constraints in rural areas (e.g. lack of data connection). Within the next quarter, Essmart is establishing two new distribution centers in Karnataka and plans to expand to two additional southern states by the end of 2018, conditional on obtaining the necessary funding.