Showstoppers: Narendra Kumar Ahmed and (right) Pria Kataria Puri

Who will buy it?
Why resort wear, you would ask? Narendra Kumar Ahmed, one of India’s noted fashion designers explains with his customary ease (he was once the fashion editor of a noted fashion magazine, after all), “Resort wear is what India needs now. The smart casual outfits are what we Indians wear most of the time anyway, at parties or on our travels. And usually comprising of flowing, unstructured silhouettes, these clothes also hide any body-shape flaws you might have. So, yes, the future of resort wear is especially bright for a country like India.”

Where should you look to sell?
Trade shows
Trade shows are your best bets because it is at these that the maximum number of serious buyers is to be found. “I attend at least three to four trade shows every year, all over the world. The good thing here is that you get a number of buyers clustered together and they have all come with the intention to buy. If you can satisfy them with your collection, they will buy,” says fashion designer Anupamaa Dayal.
Also, resort wear being something everyone can wear the world over, you can attend whichever trade show suits your budget. “Clothes in the resort wear line can be worn on the beaches of Thailand, Malaysia, in the glamorous South of France, Monaco, in Spain and Morocco as well as for a night out in Dubai, Las Vegas or Sydney. It is this very universal appeal that has made the market for resort wear so big all over the world,” explains Manish Malhotra, the ace designer whose show was the Grand Finale of the IRFW, held at Goa’s Marbela Beach Resort.

Fashion weeks
These are also events which buzz with a number of serious buyers. In India, a lot of hype is generated around the fashion weeks held in Mumbai and New Delhi, as well as the smaller ones held at Kolkata, Chennai etc.
In fact, there are some designers who complain that there are far too many fashion weeks being held today and overkill is spoiling the impact India has on the global market.
However, the main fashion weeks still draw a lot of interest. These fashion weeks also encourage new and talented designers in segments like GenNext and Emerging Designers categories, which are watched with equal interest by both buyers and India’s top designers. Check out the relevant websites for more information.
Shop-in-shop
If Anita Dongre can, so can you. She is one of India’s most acclaimed fashion designers, yet Dongre, and many others like her, have found an easy and captive market in shop-in-shops. With shopping malls springing up a dime a dozen in all parts of India, and big retail chains occupying pride of place in these malls, you can market some of your merchandize, especially your prêt line, from such places.
Resort wear being something all of us can wear, even casual footfalls at these stores can result in a purchase for your brand.

What you need to look out for
First of all, be sure of what you create. “Differentiate your product. That holds true for all innovations to be successful and it is no different in the fashion space,” says Dayal. Shivan and Narresh, a promising duo whose collections have been drawing widespread acclaim in recent times, adds, “There are so many fashion designers in the market today and they are all trying to create something new. But if you understand what the people are going to buy and ultimately wear, you have a ready market which will stay loyal to you. With resort wear this becomes much easier since you are working without structure limitations. The usually free-flowing form helps in creating outfits which will have a universal appeal.”

Target: All age groups
Which brings us directly to the understanding of your market. Resort wear is in the lucky space where everyone is a possible client. It does not have a gender or age bias, thanks to the flowing silhouettes and clutter-free fabrics which are mostly used in these lines. With such a wide target base to choose from, the world is your oyster. “If Indian designers come up with their own resort wear options, you won’t need to grab the latest Armani or Cavalli outfits. Why should we depend on Western concepts of designer wear when we have such a vast talent pool here from which we can find the best resort wear options?” says Ahmed.

Destination weddings market
We don’t talk of big fat Indian weddings for nothing. Just arranging for the ceremonies in a marriage hall near your house is passé now. Five-star properties, especially in places like Goa, Thailand or other resort destinations, is what the young brides and bridegrooms prefer nowadays. This necessarily means a fresh new wardrobe not only for the main marriage party, but also the bridesmaids, close friends and cousins etc. And when a marriage is taking place in a beach resort, you obviously need resort wear. “I have so many clients dropping in to my store and picking up resort wear off the shelves. The price tags are also pocket-friendly, considering you just pay Rs.7,000-Rs10,000 for a designer outfit in this category and have something exclusive to wear to the special occasion,” explains fashion designer Babita Malkani.
Adds fashion designer Asmita Marwa, “Today, everyone wants to look different at a wedding. You spend a lot of extra money in taking a wedding to a destination like Goa or Thailand, so you also want to look your best there. And resort wear being more pocket-friendly than the heavy and intricate wedding sarees etc, this has really picked up in India. The fabrics used also suit our climate well, so that you are not sweating all the time the pheras are going on.”

Know your ingredients
A good chef always knows exactly what ingredients to put in the gravy. As a fashion entrepreneur, you must also know what fabrics, cuts and motifs work in the segment you wish to make your mark in.
At her show at the IRFW, Malkani’s outfits were inspired by her recent holiday to Ibiza and consisted of rich, soft and flowing fabrics like lycra, silk, georgette, crochet and chiffons.
In fact, even the silhouettes are of prime importance in the world of high fashion, so you must know which structures will catch the eyes of the buyers. In resort wear, what works best are jumpsuits, kaftans, drape dresses, sheer kurtas teamed with bikinis and cropped pants. But vary the silhouettes according to your creative bent and you could come up a winner with a different set altogether. Like Anupamaa Dayal, who showcased a number of sarees on the resort wear ramp. “Why not? It is just a different twist to a traditional Indian garment. The whole word is in love with our six yards of magic, so I felt I must experiment with the saree and give it a new look and feel with this collection,” explains Dayal.

Designer dreams: Dhara Thakkar takes a bow with a model at the IRFW

Designer swimwear gaining popularity
The Indian beaches are not really full of patrons flaunting designer swimwear, but that can happen in the next few years. “Indians are conservative by nature, true, but today they are more willing to experiment with what they wear to the beach. They are more health- and figure-conscious and want to look their best when they travel,” explains Shivan and Narresh.
Adds fashion designer Pria Kataria Puri: “You can specialize in swimwear and come up trumps in your business today. In our line, the biggest high is in experimenting with different options and letting your creative urges flow. So long as your creations are wearable, you will always find takers for your business. Just remember, innovation and ideation is key here.”

So, go ahead and board the fashion wagon

Beach diva: Showstopper Sushmita Sen with designers Shantanu and Nikhil

Ahmed has an important point to make on the sidelines of the IRFW. “The government needs to understand the importance of generating more buzz around such fashion weeks to attract more business. We need to make a property out of a resort week. Goa is such a natural destination. We have so many people here any time of the year. But we need to make it an overall attraction, maybe hold an art exhibition, a musical night and other events around the resort fashion week so that more people come and that will attract more designers as well as buyers,” says Ahmed.
As Anupamaa Dayal sums up, “I am not a fashion entrepreneur just for the heck of creating nice clothes. These clothes I make need to sell too. So, create well, understand your buyers and manage to sell your product and keep the profits rolling in. Ultimately, you are also an employer and responsible to your team too. India has so much unemployment problems. Do your bit, employ people in your organization and generate wealth for them and ultimately, for yourself.”

For Social Causes: Nandu Madhava, CEO, mDhil

Cashing in is IIT Kanpur graduate Kunal Sinha who sold his IT firm Tech Unified to launch Healthcare Magic in February 2008 (self-funded Rs.46 lakh as seed capital, subsequently funded by Accel in 2009 for an undisclosed sum), a website connecting doctors with patients 24/7, along with five co-founders. Business reasons were two-fold: scale and convenience. “Everyone falls sick, at least twice a year and often patients aren’t driven to meet a doctor, though they wouldn’t mind speaking to one for peace of mind,” says Sinha, Founder and CEO, Healthcare Magic. Metros, he observed, have a large migrant population propelled by a spurt in job opportunities, thereby creating a hidden need. “Not everyone has a family doctor, nor are doctors available easily,” he points out. Alongside, access to top doctors is difficult because of a huge load on the system apart from being a time-consuming activity for patients given bad traffic, distances and fast-paced lifestyle. These factors, plus growing internet penetration not only in metros but tier II and III cities too, and low entry barriers in the healthcare industry gave him a viable business model. “There are no super specialists available in tier III cities; accessibility is a factor here,” he points. “The nearest specialist will be based in next big town.”
Healthcare Magic’s focus is clear and it’s not a substitute for a doctor. It simply aims at helping patients know their case better. “We are just complementing what doctors do, to give patients educated information on their case,” reiterates Sinha. His findings on the lack of healthcare information in India came from perspective of both doctors and patients. On the latter, he mentioned people are intimidated when meeting top doctors at big hospitals. Long queue of patients gives them limited time too. “People just end up getting prescriptions and can’t get peripheral questions answered,” he says. Healthcare Magic thus deems to be the system providing more information to a patient either before meeting a specialist or after. Thanks to the power of the internet, the startup began getting queries from patients outside India (60 percent of traffic today), by default, and currently has a network of doctors across the globe as well: over 2,000 registered domestic doctors/specialists and 300 from overseas with the U.K., the U.S., Australia and Pakistan as major contributors. “When a patient asks a question, a doctor anywhere in world can answer it,” states Sinha.
From a doctor’s point of view, they seemed to get several cases which could’ve been handled at a primary level, thereby putting a load on them. In metros, he says, there’s a trend for people to visit only specialists and quite often patients from smaller towns travel here for simple cases. “The mind-set is that big cities have better solutions,” notes Sinha. Overall, most patients aren’t well informed about their condition, and even if they can afford visiting doctors, it takes away quality time from serious patients. To get the portal up and active was a chicken and egg situation and so founders opted to provide free services to patients for 12 months while they paid doctors from own pockets. “No one was comfortable taking a medicine recommended by a doctor over net, but comfortable to get answers,” he recalls. Since the startup wasn’t aiming to be a treatment company, but a provider of information, it worked well. Healthcare Magic today has 60,000-70,000 visitors who visit the portal daily for its content and 400-500 health queries to doctors are asked per day on the back of a 4-lakh registered user base. “You don’t need registration on our site, so not a specific indication,” he points out.
Patients are promised answers within 24 hours and are charged between Rs.150-Rs.600 per case with an allowance of two to three free follow up questions. The startup’s revenue model works on revenue sharing, taking a percentage of doctor’s fee. So far it gets an even mix of users from across India with the only exception of higher ratio of female-related cases, which is 60:40. “65-70 percent people come for first opinion, balance for questions to corroborate with a specialist,” observes Sonal Verma, Head of Medical Content, Healthcare Magic. “Kind of questions received were far more intricate, going by initial expectations,” she adds.
“Technology is the answer to provide healthcare information,” says Dubey who refers to tele-medicine initiatives by major private hospitals. These, he says, have been used for marketing and reaching out to patients in small towns and villages only. “Government has 500 tele-medicine centres across 400-500 districts,” says Dubey, adding there have been no successful business models in PPP owing to challenges around last mile connectivity, and power shortages in rural areas.
Harvard graduate Nandu Madhava’s decision to come back to India and run his own venture with a definite social impact was largely propelled by factors affecting health scenario in India too. He launched mDhil in 2009, a firm providing basic healthcare information to the Indian consumer via text messaging, web browser and digital video. “We chose mobiles as they have a higher penetration in India coupled with the move to faster data networks like 3G,” says Madhava, CEO, mDhil. While researching perception of risks around diabetes in low income groups, Madhava’s interaction with a certain Tamilian gentleman in Chennai was a general indicator of low-level of information among most, especially on the preventive side. “Though his father died from heart disease and mother from diabetes, his lunch consisted of heaps of rice drowned in ghee followed by a pack of cigarettes,” quips Madhava. When questioned on his risk to diabetes, Madhava was met with a predictable response. “God will determine.” Once they presented reasons that put him at a higher risk, this mid-40-yearold man sat back to think.
Another big takeaway was that people assumed infant mortality, HIV and the like only affected bottom of pyramid. “While it does affect them in a big way, these problems among others affect people across the pyramid,” says Madhava. Awareness on taboo topics like family planning, sexual health, birth control was even scarce. “Parents don’t talk to children about it and doctors highlighted the abuse of morning after pills by girls not realizing the side effects, only because they don’t know of other birth control techniques,” he adds. “With a population of 1.2 billion we’ve got the reproduction part right, but need the information around it,” retorts Madhava.
mDhil’s content broadly focuses on sexual and reproductive health, women’s health, diet and nutrition. “Diabetes and cardio vascular diseases are growing at 8-11 percent annually,” points Dubey.
“In India, if you look at data usage to be downloaded, the growth is not linear but exponential,” cites Madhava. “That enables all sorts of different businesses.” When mDhil began operations they worked with carriers, Airtel being the biggest partner till date. “I question even how much longer carriers will have a hold on the system with 3G, it creates an easy way to reach markets and we can’t change the wave that’s happening,” he states. Currently, its text messages reach 3 lakh subscribers across carriers. Its views per day for health videos has grown from 40 in January 2011 to 4000 in October 2011 with 35 percent of video views taking place on mobile phones and 75 percent of all video traffic from India and regional countries.

Dubey cites wellness services as an opportunity for entrepreneurs in this space to include prevention programs. Wellness services market (including products, retail) has picked up growth in last five years. “However, any business must start in urban areas so entrepreneurs understand the challenges ahead and develop models which can penetrate into smaller towns to meet unmet needs,” says Dubey.
For sake of sustainability and additional revenue channels both mDhil and Healthcare Magic have B2B verticals. The online portal has 23 corporate clients who provide this service free to staff. The value for corporates is statistical data on health conditions affecting employees and health and wellness index for employees. Likewise, mDhil has a partnership with pharmaceutical giant Biocon for a diabetic drug, Insugen. All diabetics using this drug now get 30 days of SMS content on diabetes through a health card that captures all personal medical records.
Looking ahead, Healthcare Magic hopes to increase its network of doctors to 10,000 in the next two years and also connect patients with doctors offline while mDhil will be foraying into video content in Hindi by end of the year.
Optimistic on mobiles as a channel to disseminate information, especially to lower level of pyramid, Dubey concludes saying: “Firms needs to develop a business model to sustain themselves here and that is the tough part.”

Later that year, the firm was approached by another startup to license an entire stack for its construction vertical. The company, which worked with civil engineers on public works systems, did not have any product but a whole lot of documentation to put work flow together. “We found our platform and their construction vertical was a perfect fit,” says Sreenivasan, Founder and CEO, Aurigo Software Technologies.

Sreenivasan jumped at the opportunity, acquired the startup, merged its construction expertise with his technology platform, and re-launched Aurigo’s product for the construction vertical, in the process making it a niche player in the almost trillion-dollar global industry.

Thereafter the Aurigo entrepreneurs researched various vertical drivers ready for mobile software, and ultimately narrowed it down to industries with least technology adoption. “Construction and infrastructure were potential spaces for us to work on, according to our research,” he explains.

This was in the U.S. After the entrepreneurs shopped for funds to close the buy-out, they entered Phase II, which meant looking for survival tactics. A low-cost R&D center was set up in 2003-’04 in India. Moreover, since infrastructure has been the second largest economy driver in India after agriculture, this meant money. According to Sreenivasan, despite being one of the oldest industries in the world, the methods and tools used in India are still archaic.

“While design has evolved nicely for architects and designers, the software needed to be managed. Execution is also a big problem,” he states. Once a project is designed, the execution is still managed with inch tapes, calculators, clipboards and spreadsheets, he says. Aurigo has broken this phase, from design to ribbon-cutting, into different sub-phases with his product suite Aurigo BRIX. Broadly, they cover cost estimation, facility management and inspection. The product integrates multiple applications including program and project management, scheduling and facility management applications on one enterprise platform.

“Aurigo can manage the entire supply chain of partners throughout the lifecycle process of a project on just one collaborative platform,” claims Sreenivasan. Aurigo BRIX can estimate the cost of a project and even compute historic data. With the competition getting global, bidding amounts are no longer small, hence there is a need for a product like this, feels Sreenivasan.

“Estimation and bidding are extremely critical in today’s world, you can’t go with primitive tools,” he says. “Projects come with a fixed price; if not completed in time, people end up making no money and that’s where we come in to help.”

In a study conducted by NICMAR (National Institute of Construction Management and Research) for Aurigo, it was found that every project initiated by the government of India between the years 1992-2009, had a cost overrun of 17-18 percent and on an average took 20 months longer to complete. “Our applications bring down the cost of project completion by six percent; while the time taken is reduced by around 17 percent,” emphasizes a confident Sreenivasan.

Interestingly, the technology startup has solutions for any stakeholder in a project. So whether it’s the actual builder executing a project, or the owner (could be a hotel, a software company or even power plant), Aurigo has tools for both sides. “When people bid for a project, the owner needs a base reference price to compare it with,” explains Sreenivasan. Similarly, once work on a project is initiated, Aurigo’s software applications allow for real time collection and transactions of data through its system that is also integrated with GPS and GPRS.

“Digitized data is captured on site and the supervisor knows exactly what’s happening and can approve sanctions accordingly,” he says. With one person on the field, this system has enabled a finance manager at another remote location without him knowing it, according to the entrepreneur.

Once completed, the asset needs to be maintained through its lifetime, which requires a certain level of quality and this too is possible with Aurigo’s product stack. The firm’s product suite, BRIX, has about nine different products, each one catering to a phase of construction. Typically, clients take six products and above from the stack and they can be configured to suit individual customers.

Today, the company has clients across North America, Canada, Middle East, Africa, India, Singapore and Malaysia. Unlike many entrepreneurs who are usually oblivious of competitors, Sreenivasan has been well-aware of that fact that Aurigo doesn’t stand alone. A lot of small ecosystem applications provided by vendors like SAP, Oracle and Microsoft exist abundantly for ERP (Enterprise Resource Planning), scheduling software, document management software and project management. The firm has been very careful not to tread on these vendors, instead duct-tailed into these applications.

“ERP automates four M’s of business processes—men, material, machine and money. It doesn’t automate estimation and contract management,” he explains. “Our product is complimentary and we have built connectors to MS and SAP platforms.”

Aurigo in fact has a go-to market strategy with these vendors, selling its products worldwide together. It makes sure it doesn’t tread on them. After reviewing many ERP systems like Oracle, Delhi-based RDS Project Ltd. finalized on Aurigo because they had a construction industry specific module which was easily integrated with the Microsoft AX product.

“Although Aurigo is a startup, we felt comfortable with their implementation, team’s commitment, flexibility to our needs, and the hand-holding that they promised during the implementation of ERP in our organization,” says Mayank Goyal, Director, RDS Project Ltd. They are currently deploying it at a pilot project in Maharashtra. “BRIX is a fairly user-friendly software which covers most of the aspects from a general construction company’s perspective,” adds Goyal.

While in India and the U.S. Aurigo follows a direct sales strategy, in Singapore and the Middle East it is still experimenting with channel sales. It currently earns through a conventional revenue model, a charge for entire software plus an annual maintenance fee. Alongside, it is experimenting with software as a service model, where the firm can earn on a per user, per month basis. This is meant primarily for smaller businesses with less access to capital, and Aurigo is currently testing it.

Looking ahead, Sreenivasan is aiming for 100 customers in the next two years and is expanding his sales and marketing team in India. Aurigo will also set up a helpdesk based out of Bengaluru for all its customers worldwide. He anticipates a lot of traction from power and ports sectors and is confident of the boom in India. “We are ahead of the game and confident of our abilities,” he signs off.

©Entrepreneur July 2010

Still, over the last few years, there are many multi-brand online retailers that have entered the market with moderate achievements in terms of traffic as well as orders. These would include eBay, HomeShop18, Rediff Shopping, Indiatimes Shopping, Future Bazaar, and our hot startup this month, FlipKart.

As you would have probably noticed, save the last one, all others aforementioned are backed by major business houses. Suffice to say that this means that a new entrant in the sector has higher entry barriers, at least in terms of competition, size, logistics and inventory, and any market penetration would have a high turnabout time. Playing with the big boys on their turf is a recipe for disaster.

But then, why not create your own niche turf, like Mumbai resident and former filmmaker Derek Affonso has with his startup Smart Art? This is an online store that sells the likes of cult movie posters, pop culture prints and reprints of high-end art pieces.

Create your own turf
Online businesses have an advantage over businesses in the real world—they all have the same 13 inch monitors as our windows to the customer. It is a level playing field; one where an entrepreneur can keep some turf for him.

Affonso is one such entrepreneur. Back in 2008, he and his wife were looking for some prints to do up their daughter’s room. After a bout of constant searching, Affonso realized that there was really no one-stop shop for buying such pieces.

And like every entrepreneurial story, the lacunae gave birth to an idea. “The idea was to create an online store where one could shop for popular posters, art and the like without having to visit a hundred real world stores,” he says. “It was also important that the pieces offered were of high quality, given that the target audience for such products would be the upper middle class and above.”

Today, smartart.in stocks over 15,000 pieces of movie posters, sports memorabilia prints, reprints of major art works and other major pop culture pieces. The prices for these pieces range from Rs.600 to around Rs.50,000, depending on the quality of paper, size, and cultural value, of course. The most important thing to note here is that Affonso’s company is the only one doing this in India. Outside of India, there are the ‘All Posters’ and other companies, but they do not cater to the Indian market. If you want a Monet for your living room or a classic Andy Warhol print for the study, you can only go to Smart Art for it.

Affonso tells us that the exhaustive inventory covering everything from movies to sports to abstracts to photography allows him to offer people the ability to do up entire spaces and not just walls. “So, a customer coming to the online store can, at one go, choose prints for the living room, the bedrooms, the study and the kids’ room.”

Though he does not speak numbers to us, Affonso tells us that the biggest indicator of his success is that a good chunk of his business comes from tier II and tier III towns. “Only an online store could have allowed a niche offering like mine to reach these places,” he says. “Now someone in Jamnagar can get a Gustav Klimt print sitting at home and not by scouting at a hundred stores in the metros.”

Affonso also tells us that he has not spent anything on advertising beyond a little on Facebook and the launch releases. Most of his marketing is via word-of-mouth, he tells us. Much like Pearl Uppal’s fashionandyou.com, an online invitation-only sales portal that does flash sales of high-end brands like Gucci, Prada and the like.

There is nothing like a good discount
Be it shopping in the real world or virtual, customers love their discounts and sales. Nothing gets the women of India going like a good sale, does it? However, many online stores tend to price their products higher than in the real world, trying to accommodate back-end and logistics costs within the margin.
So is there a place for heavy discounts in the world of online retail? Uppal seems to think so. Formerly in the business and operations units of internet giants like Yahoo and Rediff, Uppal began her entrepreneurial journey setting up Fashion and You with co-founder and serial entrepreneur Harish Shah in August 2009.

The portal follows a private sales model that has been previously implemented successfully in Europe and North America. Here, customers get access to private flash sales, lasting upto a maximum of 24 hours, of private brands such as Louis Vuitton and D&G at hugely discounted prices, sometimes knocked down by 80 percent. Uppal explains that this allows premium brands to make use of perishable inventory without diluting the brand itself. “High fashion is a perishable commodity. What is hot now will not be hot three months later,” she tells us. “At the same time, it is also an aspirational commodity for the growing Indian upper middle class.”

Making the two converge at the platform of affordability is what Uppal and her team accomplish with Fashion and You. “The supplier is also sure of what audience he is reaching out to because to be able to shop at the store you need to be able to bank online and also have high bandwidth internet access and that is typically a luxury afforded only by the upper middle class in urban towns.”

Fashion and You’s recommendation model also makes a future case for what can be termed as social shopping. It already has 250,000 users, according to Uppal, and most of them are on by referrals. This means that typically there can be a set of people, known to each other in the real world, shopping together online.

“This would allow us to offer deals to closed user groups. This is like deals within deals, making the experience of shopping on sales akin to the real world where you would typically shop with your regular shopping partners.”

That makes it easy to understand why the maximum investment for the company goes into shooting the clothes, shoes and accessories in a professional studio to get the closest-to-real feel for the customer. Shopping is a visual experience and there cannot be any shortchanging there. Experience is what Delhi-based Exciting Lives is also selling to its patrons in what can be called a do-it-yourself model.

The customer’s choice
To sell what the customer wants is taken to another level by the founders of Exciting Lives, Rohit Saxena and Nisheeth Srivastava. A few years ago, the founders were looking about for gifts when they realized that not much was on offer but the ubiquitous and boring. In 2007, the duo formed excitinglives.com, which stepped away from the traditional e-commerce models in online gift stores to offer experiential gifting services. “Experiences include hot air balloon rides and golfing trips,” Saxena tells us. Some have even been wilder—like the Combat Flight experience.

“Apart from offering our own customized experiences, we offer what the customer wants in terms of an experience,” he adds. The company works in partnership with different agencies and individuals to create these experiences as wells as products. It also creates experiences completely on its own. As both are sold online, a lot of customers come in from recommendations from previous customers, according to Saxena. And that is always a good sign for an online business.

The experiences are currently available to customers from urban towns, given their high need of quality and consistency, according to Saxena, though their products go to tier II towns as well. Saxena tells us that customers love the fact that they can ask for experiences themselves rather than buy what is available off the shelf. “They can get really wacky,” he says. “The wackiest one would not be fit to print.”

There is still room for you
New entrepreneurs in the online space must take heart and knowledge from the aforementioned three, Justin Tok, an online business consultant with Singapore-based Dassler Business Intelligence tells us. Tok explains that the three have differentiated themselves from the regular e-commerce models by the way of space, sales models and deliverables respectively. “Too often, online entrepreneurs go looking to be the next Jeff Bezos (founder of Amazon),” he says. “What most don’t realize is that he first created a space for himself selling books and everything followed later.”

Tok further emphasizes that the Indian online retail sector is bound to grow and there is space for more entrepreneurs provided they come with a differentiator to their model. “First, you must understand that Indians do not buy online—that is their nature,” he says. “India’s e-commerce figure stands somewhere close to Rs.23 billion against the entire retailing industry’s Rs.18,473 billion. So to be able to tap something out of this market, you must not be an imitator but an innovator.”

Further, Tok explains, entrepreneurs must be able to demonstrate that they are serious about their business. Transaction security must be of the highest standards and the website should be user-friendly rather than impressive in design. “An effort must be made to sway customers from the offline models to the online model—and that is a function of targeted marketing,” he adds. India, Tok tells us, will have the world’s third highest number of internet users by 2015 and to be able to tap that number, entrepreneurs will have to begin now than wait for the ride to begin.

©Entrepreneur July 2010

Sadly though, I cannot remember the last time I had it. It was just so long back. Why did I stop having it? I can’t remember. Maybe it was my mother’s constant bickering about the hygiene bit. Maybe I just grew out of it. I can’t seem to put a finger on it. Most probably, says Mumbai-based entrepreneur Sachin Jain, it was a combination of both. “An increasingly educated, health-aware population slowly weaned itself away from the street food of our childhood,” he says. “Plus, it was also less savvy in a wealthier India to be enjoying golas off a cart against sipping shakes and coffees in imported concepts of coffee shops and fast food restaurants.”

He is right. In a growing economy, with more disposable income and the influx of aspirational brands like McDonald’s and KFC, Indian fast foods, typically street foods, have been left behind at least in urban India. And this trend is spreading to the next rung of Indian cities, too.

Jain is, however, trying to change that in a small way with his chain of gola stalls under the brand name of ‘Go Gola’. The brand, which was established at the end of August 2008, this Mumbai chain offers the humble baraf ka gola in a cleaner, savvier avatar for the current generation of foodies.

“Everybody has loved golas, be it the elderly of our generation or Indians currently in their 20s,” he tells us. “It is the taste that always stays with you.” But to appeal to the current generation of children and more importantly their parents, the gola, as do other Indian fast foods, need to have changes made in both production and presentation.

Presentation is everything
It’s a well-known adage in the Indian food and beverage sector that presentation is everything. Indians are known to eat with their eyes first, the tongue next. Hence, the function of marketing in relation to Indian street food has gained more importance than before. Gone are the days when your chaat corner would not even have a takeaway menu.

In the increasingly competitive fast food sector with the likes of Subway and KFC now trying to go pan-India, entrepreneurs selling Indian fast food need to up their game. And for that, you don’t always need the big money. Jain himself found a unique way to catch eyeballs. His logo for Go Gola, then known as Gogola, was designed exactly the way as the logo for Google, the search engine behemoth.

“It immediately caught the casual passerby’s attention,” he says. “People were compelled to come to the stall to at least check out what this was all about and then, maybe even try out a gola.” Though Jain changed the branding after a year, the branding had caught sufficient enough eyeballs for the chain to be now very well-known in Mumbai.

Branding is what helped T. Ganapathy, Founder and Chief Managing Director, Dosa Plaza chain of fast food outlets, also take a step up from being just another South Indian chain in Mumbai. Ganapathy’s story in itself is very inspirational and worthy of an entire book of its own. Having come to Mumbai from Tamil Nadu in the early 90’s, an abandoned Ganapathy worked himself up from being a dishwasher to setting up the first Dosa Plaza in 2003. “I used to run a south Indian eatery at Vashi station (Navi Mumbai) and this mall was coming up right next door,” he says.

“The staff working at the mall, including its marketing manager, would eat at my eatery at that time. They helped me set up my first fast food joint inside the mall.”

Once inside the mall, however, Ganapathy realized that an image of a clean south Indian restaurant would not be good enough to attract eyeballs. He would need a change of image. He then approached, at the advice of the mall management, an young creative agency at that time called Think WhyNot, which gave the restaurant its big makeover. Prem Sagar Dosa Plaza became Dosa Plaza, the logo was changed to be more vibrant and colorful, a character called Dr.D to represent a wizard chef of sorts was created and everything from cutlery to uniforms was reinvented. This was the actual game changer, according to Ganapathy.

His humble south Indian eatery was now branded on the lines of a McDonald’s, a brand he had studied for long, to be more appealing to its customers. The footfalls steadily increased and a trickle soon resembled a rush.

Today, there are almost 32 Dosa Plazas in Mumbai out of the 80 all over India. There should be about 150 by the end of the year, says Ganapathy. There are also two franchises in New Zealand. Ganapathy believes most entrepreneurs in the field of Indian fast food did not adapt quick enough to a changing paradigm, like he did. “The modern Indian consumer may eat at the small eatery in the bazaar, but what he really aspires to are the malls and the multiplexes, today’s new hangouts.”

Location. Location. Location.
Ganapathy is right. Urban Indians now increasingly shop and eat at malls, especially in northern India. Given that malls offer the average consumer shopping and eating under one air-conditioned roof, the idea of going somewhere else to eat is mostly rejected. It is also a question of the consumer’s income. With the average Indian earning more and more every year, the number of people visiting high traffic locations such as malls and multiplexes is always going to be increasing.

While older shopping hubs like South Extension in New Delhi, Colaba Causeway in Mumbai and M.G. Road in Bengaluru are still attracting footfalls, they don’t give fast food chains as much relative exposure to the consumer as a mall would. Even the upstart Go Gola is awake to this reality.

“We tried many locations before we settled on our current 10 locations in Mumbai,” Jain tells us. “Almost all of them are located in malls and multiplexes while a couple are in regular, but high traffic retail locations.”

Jain tells us that besides offering a steady flow of repeat as well as casual consumers, malls also lend an air of credibility to those chains which are offering Indian fast food, which is essentially street food served in a different ambience.

Jain might have a good point here. The modern, urban consumer cares a lot more about what standards of quality the chain possesses and when they see a chain in a reputed mall, there is always the feeling that if its in this mall, it must be safe and of good quality. But the question of quality goes beyond what the location has to say, says Jain. A lot also needs to be altered in the preparation to be able to offer what Indian consumers want.

Make Mine Good and Many
While the average Indian consumer may have become savvier when it comes to eating out, he does still care about getting the bang for his buck. And in today’s age it means two things, safety and variety. Go Gola’s Jain was always alert to this line of thought when he started out selling an item that was traditionally sold off cart using regular water, colored sweet syrups and burlap-covered slab ice.

Knowing that today’s parents keep an eye out for safety and quality in what their children eat, Jain made a big change away from the traditional gola in terms of hygiene.

“We use mineral water and ice made from mineral water. The syrups are made from fresh fruits. Our staff wears gloves and there is a high level of hygiene maintained at the stalls.”

Consequently, Jain has observed that a majority of his patrons are from the age group of 8 to 16. “Parents, who once loved the golas themselves, know that their kids are safe when they eat at a Go Gola outlet. And when a parent recommends your offering to his children, it is always a big bonus.”

Wanna be a McDesi?
There is clearly a lot of space in India for entrepreneurs operating in the fast food space. According to estimates by the Worldwatch Institute and other organizations, the entire fast food industry in the country is growing at almost 35 percent to 40 percent a year. But the growth has largely been concentrated to the metros and there is large room for growth in tier II and tier III cities where the masses live.

Kiran Nadkarni, Founder and CEO, East West Ethnic Foods Pvt. Ltd., the company that runs the Kaati Zone brand of fast food outlets, says entrepreneurs would need to pick the right format for penetration into untested towns. “In the urban scenario, where outlets may be stands or kiosks, which may provide no shelter or seating, are apt given the high real estate rates,” he says. “But in the second-rung cities, the quick service restaurant [QSR] format would work far better given the low real estate rates and the aspiration value they offer to people in these places.”

Whatever maybe the format though, Nadkarni emphasizes that no degree of success can be achieved if the back-end operations of the chain is not efficient and stable. He explains how for Kaati Zone, which was set up in 2004, the company has taken its time in expansion for the first five years, primarily to fist firm up the back-end operations of sourcing, production and distribution.

“We currently have 15 outlets, including one each at the international and domestic airports in Mumbai,” he adds. “Now that we know that our operations at the back-end are firm, we can expand out outlets.”

Dosa Plaza’s Ganapathy is well aware of this requirement. On the cards for his firm is a central distribution system on the lines of brands like KFC that will ship pre-packaged masalas and mixtures to both franchisees as well as the owned outlets.

New entrepreneurs in this space, however, should stick to the three-point mantra for all formats and cuisines, Nadkarni tells us. “Quick service, consistency in the product and moderate pricing are the three things they must stick to. Only then will they make it beyond the first five years of operations.”

©Entrepreneur July 2010

But the Turakhia brothers, who had already freelanced as internet consultants, were confident of the industry and co-founded Directi, a web products company. They had a three-pronged strategy to build a global internet business, sell web-related products, and to maximize the potential of any time spent developing it. “With a products-based company our processes don’t change and the product is 100 percent renewable,” says Divyank, President and Co-Founder, Directi.

Today, the company sells to 230 countries worldwide across two primary lines of business: web infrastructure services (under sub-brands LogicBoxes.com, ResellerClub.com, PublicDomainRegistry.com, .pw, Accreditation.com, and WebHosting.Info) and internet media: primary brand Media.net (sub-brands include Skenzo.com, BigJumbo.com, DomainAdvertising.com, MediaInvestments.com).

So with personal funding of Rs.25,000 from their parents, the brothers ventured onto an entrepreneurial path with Directi during an era when BSNL monopolized the internet in India. They spotted domain name registry, web and e-mail hosting, the first three basic requirements for any SME, as a primary opportunity soon after ICAAN broke the monopoly of Network Solutions in this space.

“We realized that everyone was ultimately going to get online, it was just a matter of time,” says Divyank. And indeed it was. Back then domain name registration was priced at $70. However, another company OpenSRS charged $10 a year. Finding an opportunity to break in, Directi became resellers for them. Good sales numbers soon gave it the accreditation required to become independent sellers.

Soon its business Logicboxes was born, in 2001, as a software solution provider to domain registrars, ISPs, datacenters and even to web hosts. The goal was that anyone who becomes a registrar can use the software, the client here being a reseller who gives the company access to a network. Till date Directi has registered four million domain names, and has over 200 customers and has been the only consultant to register 950 registrars worldwide. Since inception it has always followed a reseller-based model wherein it partners with companies who in turn sell to other companies.

The brothers did not go the ‘customized’ route, so web designing was not an option. Instead, they developed a do-it-yourself kit to build a website. Around the same time, domain advertising was booming with an established market value of $500 million. Directi found another golden opportunity and made a foray here with its first venture in the internet media industry via the domain advertising vertical.

Skenzo was born in late 2005 as an exclusive traffic monetization program. According to Divyank, the domain advertising vertical in the internet industry represents $1.2 billion of the $50 billion spent on internet advertising each year globally. At that juncture the company maximized on its sole competency, technology, and utilized the segment with three solutions in the same space—domain, domain advertising and BigJumbo.com.

Over the last 12 months it has monetized 19 million names, predicting directing navigation more accurately each time. Skenzo has become one of its fastest growing businesses and has become one of the top five largest domain advertising companies worldwide. Today Skenzo is the largest company (under parent firm Media.net) in the space worldwide in terms of headcount (250+), managing an inventory of 20 billion ads.

“We started late but have managed to grow faster than everyone else,” claims Divyank. The brothers are betting big on this business vertical which they hope will be a full-fledged media company like MSN and Google one day, giving people a chain of products to be online.

Divyank’s dateline
At 18: Net worth of over $1 million
At 21:   More than 1,00,000 customers
At 23: Net worth of over $100 million
Now at 28:  Net worth of over $300 million (valued by private equity funds)

©Entrepreneur May 2010

Puri always hoped to be more than just another businessman, even setting audacious goals for himself at times. But he has been far ahead of his peers in gauging the next technological trend. By setting benchmark prices in the recordable CD and DVD segment, Puri has single-handedly and doggedly made his company a household name.

Coming from a family of landlords in Lahore, Puri studied in Delhi and then earned his degree in chemical engineering from the Imperial College in London. “I knew I could not work for someone else,” says Puri. “When I was very young, I always knew I had to start something of my own, even if it meant trading. My parents were very well-to-do landowners, but I did not want to live off their money. I love challenges; I feel a person will vegetate if there are no challenges.”

Upon returning to Delhi, Puri joined an American oil company and worked there for nine months, picking up invaluable knowledge on commerce and business. Relocating to Kolkata, he took up a job as an assistant executive at Shalimar Paints. But eight months later, he was sure that he wanted to start out on his own.

“It was not a very easy thing to do, as I did not have money [at the time],” Puri recounts. “When I resigned in 1965, my father supplemented [my income] to a certain degree, and I started trading to build capital.”

Puri’s formula was simple. Leveraging his friendship with people in Kolkata, he bought on credit as well as sold on credit, but on a lesser credit time. This meant that he always had some money as his margin, and was able to repay his debt on time.

Not being a finance man, Puri says his business plans were average at best; for him, the critical issue was always to repay his debts within the stipulated time. “After trading for a year, I was impatient to start something on my own,” says Puri.

Puri started operations in a modest manner, manufacturing steel windows in a small, rented factory. “I made a little bit of money and progressed to aluminum. Talking about it takes three to four minutes, but in reality, it took me a decade,” he says.

From aluminum windows, Puri moved on to hard core manufacturing with aluminum wires, aluminum rivets for MIG aircrafts, pipes and overhead transmission wires. Despite a turnover of about Rs.2 crore and profits of about Rs.40 lakh, Puri thought it wise to move out of West Bengal. “Labor problems aside, there was no electricity in Kolkata for 8-10 hours each day back then. By the 1980s, I decided to leave Kolkata,” he says.

Relocating to Delhi, Puri was back in action. He founded Moser Baer India—a time recorder unit—in 1983, in technical collaboration with Moser Baer, Switzerland. Puri held 51 percent stake in the company, and Moser Baer, SA, the remaining. “We soon found that it didn’t have a very large market. So, I sought advice from an old friend of mine who was working at IDM.” IDM had evolved from IBM.

At that time, Puri was just about managing sales of Rs.14 lakh-Rs.15 lakh and needed something to help spur sales. “My friend walked round to his office and returned with an 8-inch square piece, which he called a ‘floppy disk’. I had no idea what it was, since computers were a novelty at that time.”

Inspired by the possibilities, Puri got in touch with Xidex Magnetics, the American producers of the floppy disk. Soon a technical collaboration agreement was inked. In 1988, Moser Baer India moved into the data storage segment by manufacturing 5.25-inch floppy disks, and was manufacturing 3.5-inch micro floppy diskettes (MFD) by 1993. In 1999, Moser Baer India set up a 150 million unit capacity plant to manufacture recordable compact disks (CD-Rs) and recordable digital versatile disks (DVD-Rs). More was to follow.

With India being the largest producer of movies in the world, Moser Baer gradually began buying movie rights. “Three and a half years ago, we started buying movie content,” says Puri.

“Within 11 months, we had bought out 30 percent of the movies in India. Till date, we have bought out about 45 percent of the movies. We are the largest IP holders and sold at a game changing price of Rs.28 and Rs.35, which increased volumes to 75-80 million pieces a year. We will soon record 120-150 million pieces a year.”

So, what’s next for Moser Baer? Puri says Blu-rays are leading the way into the future; five years from now, Blu-rays will have a higher speed and will be followed by holographic disks of about 250 gigabytes. Today, Moser Baer is the only company outside Japan to manufacture Blu-ray discs. “Being ahead of the crowd ensured our success,” Puri says.

But, is Puri spreading the company too fast? How viable is betting too much in a sector where technology is evolving faster than ever?

©Entrepreneur May 2010

The domestic chocolate market has been long dominated by Cadbury and Nestle, both international companies (who together hold 90 percent of market share), followed by Amul and Campco. But a new breed of independent chocolatiers are fast creating a niche for themselves making customized chocolates, and reaping sweet benefits in this sector.

Fast growth
“The chocolate industry has grown 18-20 percent in the last three years,” says B.K. Gurbani, President, Indian Confectionery Manufacturers Association. Unlike the rest of the confectionery industry, which comprises hard-boiled candies, gums and toffees, chocolate is expected to continue growing at the same rate.

For chocolatier Rashmi Vaswani of Bengaluru-based Rage Chocolatier, the entrepreneurial opportunity arose from a clear gap in the market. She saw there was no one selling any domestic premium quality chocolates.

Vaswani turned her hobby of chocolate-making into a business by improvising on her recipes. Starting Rage Chocolatier in 2006 with an investment of under Rs.1 lakh sourced from her father, Vaswani’s topline in 2009-’10 was Rs.5.5 million. With production capacity of 70 kg per day, Vaswani’s 11 chocolate flavors are priced between Rs.1,200/kg (regular), Rs.1,500/kg (sugar-free) and Rs.1,800/kg (truffles).

For bulk gifting occasions like weddings, birthdays and baby showers, Rage Chocolatier also customizes to every preference of a customer. Vaswani says that good packaging can increase the cost by 40-200 percent depending on how expensive/detailed the customization/packaging is.

TAKE ON CHOCOLATE: Chenddyna Schae of Jus' Trufs

Similarly, Chenddyna Schae of Bengaluru-based Jus’ Trufs found her passion way back in 1990 when her first job as a confectionery graduate had her just wrapping chocolates in Taj’s pastry kitchen. But she didn’t want to be part of the hotel line. “I had the bug to be an entrepreneur,” says Schae. Her first venture, Black Magic Chocolates, wound up operations soon as it functioned as a home-based business through word-of-mouth sans marketing.

After a 10-year hiatus from work (while raising her kids), Schae launched Jus’ Trufs in 2001, with an initial self-funding of Rs.10,000. Offering 30-40 flavors sold as bulk gifting options, today her topline is Rs.60 lakh. Schae secures 25 percent revenue from each vertical—corporate, retail, e-commerce and individuals. Her price points are Rs.1,200/kg (chocolate-coated biscuits, lollipops, soft centered/crunchy truffles); Rs.3,000/kg (Belgian pralines and sugar-free Belgian); Rs.2,500/kg (dark chocolate).

Fantasie trip
While Vaswani and Schae got into the business to indulge their passion, Zeba Kohli of Mumbai-based Fantasie Fine Chocolates, which was launched 65 years ago by her grandfather as a firm to hire underprivileged women, found the business thrust upon her as no one else in the family was inclined towards it.

From being the official distributors of Lindt in India to producing 500 kgs of chocolate a day, sold across six of its upmarket stores in Mumbai, Kohli’s Fantasie offers consumers the power of choice through a number of flavors and gifting options.

CORPORATE TIES: Zeba Kohli of fantasie Fine Chocolates

Giving people a power of choice is R.B. Mangharam of Mangharam Foods Pvt. Ltd. in Bengaluru, who has been making chocolates for the last 15-17 years. As an initial supplier to supermarkets, Mangharam decided to start the ‘chocolate project’ to encourage people outside Bengaluru to become chocolatiers. This included a kit comprising chocolate-making machines, moulds and a two-day course in the art of making chocolate.

“My machine can produce 10-15 kgs of chocolate a day—it is capable of generating a monthly profit of Rs.30,000 for entrepreneurs,” he claims. So far, over 200 aspirants (mainly homemakers) have sourced machines and know-how from him.

Corporate gifting
Corporate gifting is a vertical almost all chocolatiers have tapped into for sustainability and big profits. “We’ve catered to companies like IBM, GE, Cisco, ICICI Bank and Vijaya Bank,” says Mangharam. “Mithais have become too common and have a shorter shelf life, so these companies prefer chocolates for gifting,” says Mangharam.

Till date, Jus’ Trufs has customized chocolates for 200 corporate firms with a production capacity of 40-80 kg a day, going up to even 80-100 kgs a day during peak gifting season. Schae’s clients range from MNCs, real estate firms, banks and even the airport where she stocks 150-250 gm sized-packets of her sugar-free line.

Vaswani, too, has a set of 8-10 corporate clients, like Honda and Prestige, who place orders every month. Over the last three years, she has catered to about 50-60 companies.

The whole concept of corporate gifting was reportedly introduced by famous U.S. brand Ferrero Rocher, says Schae. “Corporate firms upgraded from Cadbury to Ferrero Rocher, but now even that has become outdated,” she laughs. “Everybody wants something unique today.” Kohli, too, caters to the corporate world with 2-3 airlines, over 12 five-star hotels and more than 50 restaurants to whom she supplies cooking chocolate. In all, Fantasie has 200 corporate clients on its list.

Going online
Chocolate today is being sold online, just like any other commodity, and established chocolatiers didn’t take long to adapt to the new media. In 2004-’05 Jus’ Trufs set up its e-commerce site, with six or seven ranges to create a collection for a season, plus some standard options.

Schae developed her own recipe for a longer shelf life  without preservatives. “Couriering chocolates is an art, and we needed to develop good packaging to protect it,” she says. Rage Chocolatiers generates 10 percent of its orders from its website, which is maintained by an outsourced partner. Though a small portion of its customer base, Vaswani has reached out to 10 cities.

In your neighbourhood
The chocolate industry is still at a very nascent stage in India, given that we’ve had mithai and neighborhood bakeries for generations. But it is growing and will continue to grow with more Indians traveling and living abroad.

Retail success
And here lies the scope for customized chocolatiers to enter the retail market, although difficult to penetrate, given that mass market brands like Cadbury have conquered chunks of shelf space. Vaswani uses hypermarts as selling points for Rage’s chocolates, where they are placed in the premium segment.

“Though we cannot compete with international players like Lindt, we definitely have more experience than other home-made chocolates,” she states.
Schae is certain of one thing: she doesn’t want to compete with Cadbury and Nestle as a mass market brand—she prefers being a customized chocolatier.

Apart from entering other cities like Hyderabad and Chennai, Jus’ Trufs’ first company-owned store will be ready by June 2010, serving chocolate-based beverages and snacks. Once ready, she is aiming to increase production to 100-200 kg a day. Kohli’s strategy is slightly different. She is planning to open Fantasie stores in the south first (Chennai, Bengaluru and Hyderabad). “People in South India are sure of what they want; they don’t take to fads easily,” she feels.

Flip side
Whatever the market potential, this industry is plagued with huge expenses on advertising, low margins and price sensitivity. Indian chocolatiers also need high quality packaging material and a good cold storage distribution system for maximum efficiency, given climatic conditions.

Market share
Given the size of the industry, Gurbani feels everyone will have their own slice of market share over time. Indian brands are now at par with their international counterparts. So, it’s not a tough business to get into, as long as you get your logistics in place and maintain necessary standards of quality. The secret recipe for success is go improvise, go customize!

What you need to be a chocolatier
* 8 moulds: Cost ranges between Rs.500 (basic) to Rs.30,000 (big moulds)
* 1 chocolate making machine: Cost ranges between Rs.10,000 to Rs.1.5 lakh
* Chocolate project course fee: Rs.30,000

The chocolate industry in India
Market value: Rs.3,000 crore
Volume by tonnage: 65,000-70,000 tons
Expected growth: 18-20 percent
Challenges: Perishable product, poor distribution network, rising milk prices

©Entrepreneur May 2010

“I was doing up my house and needed a specific table for it,” she says. “When I couldn’t find it in the city, I went on the Internet where I chanced upon bamboo furniture. Till then, I had never seen or heard of bamboo.” That search led her and her husband Prashant Lingam to set up Bamboo House India. The company is a social enterprise that promotes the use of bamboo as an eco-friendly substitute to wood, steel, iron and plastic and also generates livelihood for artisans in the bamboo sector.

“The search for that table let us understand this plant and also the skills of people in the tribal areas who work with bamboo,” Lingam says. “Till then, we thought bamboo was only good for scaffolding.”

This search and eventual fascination came for Kappagantula at a time when she had just got married and was looking for a new career. It was her husband who pushed her to start exploring the world of bamboo furniture and whether there was a business model there. The two scoured the Internet for more information on bamboo cultivation and furniture and were eventually led to Professor M.P. Ranjan, Head of the Centre of Bamboo Initiatives at the National Institute of Design, Ahmedabad.

“It was Professor Ranjan who introduced us to the amazing world of bamboo furniture and a community in the village of Katlamara, Tripura, on the India-Bangladesh border that made amazing bamboo furniture, but was languishing in neglect,” Lingam adds.

Kappagantula decided that she would take up the community and work with them to manufacture bamboo furniture. She initially thought she could establish a link up with them and then the process of ordering and manufacturing could be set up. However that turned out to be more than just a long shot.

“There were many barriers,” she recalls. “The villagers spoke only in their native dialect. There were no phones, mobiles or the Internet. No courier went to these village and even postal services were rudimentary. The roads to the villages went through insurgent territory.”

But Katlamara was important to the duo’s business plans. The village is home to perhaps the best bamboo species in the world—Thrystostachys Oleverii. It offers the best range, height, growth and flexibility to make everything from handicrafts to bamboo housing. Government apathy, however, had left the artisan community and trees in a state of rot.

“The neglect actually opened up doors for another party—us—to come in and give these artisans a second shot at livelihood,” Lingam says. “It took us four months, a couple of trips, and countless meetings with the community elders, but we finally caught a break there. My wife’s mastery of Bangla helped.”

The duo managed to get seven main artisans back to their trade by offering a compensation of around Rs.30,000 for six months with no delivery commitments, and further agreed to buy whatever they produced—at their prices. The channel was now open. The couple would call once every week at the sole telephone 80 kilometers from the village to relay orders and for the artisans to communicate any of their issues.

“The groundwork was also put up by Aruna in training the artisans,” Lingam says. “She taught them how to use a laptop, e-mail and the Internet. Also, the artisans were making very rural focused products like baskets. Aruna exposed them to more urban designs that would sell well to the city clientele.”

However, even though the couple had got the supply side fixed, they were really not sure what kind of bamboo furniture would be accepted as it was still a nascent concept. Lingam says that they conscientiously decided to spare some time first and research the market. They went across India, talked to furniture showrooms, attended exhibitions and even set up a website to provide information on bamboo and why it makes for good, reliable furniture.

All of that culminated in the opening of their first showroom, Bamboo House, at their home in January 2008. A second showroom has also been opened recently in the more upmarket area of Banjara Hills in Hyderabad. The response to the showrooms has been great—enough for the couple to consider ramping up their production from 400 pieces a month to over a 1,000 a month. “The response has been great and, in fact, we have had 90 franchise enquiries and more from overseas,” he adds. “But we want to take it slow as we realize that we still have several constraints that need to be opened up.”

Funding is one of them, according to him. Till date, he has invested over Rs.10 lakh of his own. Lingam has also approached many organizations that are sitting on funds meant for the promotion of bamboo, and lobbied hard with them for grants that would help market these artisans’ products.

Even as Bamboo House is working on setting up exclusive bamboo showrooms, it is also working on commercializing IIT-Delhi’s bamboo bowbeam technology for rural housing. Also on the cards is a manufacturing facility for bamboo pole-based housing structures, a bamboo pole-based furniture manufacturing unit in Andhra Pradesh, and a bamboo mat training and production unit in the duo’s city. However, these plans may take a while, as they are dependent on certain government grants. “Our business is scalable, but not rapidly scalable,” Lingam adds. “Even with our relatively high margins, break even is not close.”

Bamboo House’s biggest roadblock:
The Indian Forest Act of 1927, which classifies bamboo as a tree, not grass. That ruling means that it cannot be harvested and then transported elsewhere. In addition, the Act rules that the bamboo belongs to the tribals of the area. This means that only they can harvest it. This further means that Lingam and Kappagantula’s expansion plans will always be choked by a much-throttled supply.

©Entrepreneur May 2010

Potential
India, with the second-fastest GDP growth in the world and set to become the third largest economy in the world by 2050, is effectively a rural economy. After all, 70 percent of the population and 94 percent of the country is under rural cover, as per an ASSOCHAM report. According to Census 2001, this amounts to 31.18 lakh square kilometers with 6,38,588 villages in India falling in 612 districts.

According to data provided by the 64th round of NSSO, the average monthly per capita consumer expenditure in 2005-’06 in rural India was Rs.625 as compared to Rs.1,171 in urban India.

The moves
It is an essential lesson in marketing to not put all your eggs in one basket. The entire gamut of white and brown goods has found a place in the rural market, and industries are now actively looking to tap this segment. In this scenario, companies should change their marketing strategies and offer products especially designed for these markets, with suitable price points.

Mawana Sugars is a case in point. The company has one of the best geographical penetrations in north India amongst all sugar brands. Though packaged sugar is still an urban phenomenon and does not get onto rural shelves as such, Mawana Sugars is continuously working on its expansion plans in rural towns, keeping in mind the huge potential of that market.

“Rural markets are loyal to brands, unlike urban customers, who are more willing to experiment. We work with our distributors to cater to their peripheral markets and see that Mawana is available in as many towns and villages as possible,” says Surjya Meher, Vice-President, Retail, Mawana Sugars.To penetrate the rural markets and the catchment areas around towns, Mawana first introduced a small LUP (Low Unit Pack), priced at Rs.5, and managed to successfully penetrate stores that never sold branded sugar packs.

“Rural consumers got their first interaction with our brand and once they were familiar with our product, it was easy to introduce the larger packs. This strategy also helped us increase the number of outlets serviced. In the long term, we intend to introduce packs that induce trial and conversion,” says Meher.

“At the moment, sales in towns with an under-50,000 population are negligible. But we understand the potential. These are virgin territories, and we expect the market to surprise us the moment our brand offers value for their money. We are working on these strategies and will soon make our products affordable in rural India,” adds Meher.

While such strategies are easier to implement for FMCG products, it is very difficult in case of electrical products. For example, a fridge cannot run on battery. “We are now test marketing ‘Chota cool’ refrigerators, which can function on 12V current. We are targeting the rural markets with such special products because what works successfully in the urban scenario do not always find takers among the rural masses,” says Kamal Nandi, Vice-President, Marketing, Godrej and Boyce.

Nandi says his company is focusing on consumers at the bottom of the pyramid by offering them low-cost refrigerators. “We looked at consumers at that level and found that their storing habits are very different from that of people in urban India. Their prerequisite is cooling rather than storing. So, a refrigerator meant for rural areas should be high on cooling, since people in rural India prefer to eat fresh food and do not preserve leftovers,” adds Nandi.

Hindustan Unilever Ltd. (HUL) believes in ‘straddling the consumer pyramid’, too, and targeting the rural markets that contribute significantly to the overall FMCG market. According a HUL spokesperson, rural India presents enormous potential for growth—both in terms of penetration and consumption across the categories it operates in.

“As a market leader, HUL has led this growth through its range of products and market innovation. Our portfolio—which includes pre-mium brands for the affluent, value-for-money brands for middle-income consumers and affordable quality products for low-income consumers—provides us with a well-entrenched capability to leverage the opportunity in rural areas,” says the HUL spokesperson.

Focus on maintenance
The key attribute of a rural market is that while designing the product, one has to keep in mind the budget of the consumer. Manufacturers have to understand that they will be able to satisfy consumers’ needs only at price points that would make sense in a rural setup.

“Product maintenance should also be a key focus area of manufacturers looking to succeed in rural areas. People in rural India generally have a fixed budget for maintenance. Any product sold here has to be high on efficiency, so after-sales services need to be a priority area for companies and entrepreneurs operating in rural areas,” says Nandi.

Challenges
The challenges faced by rural marketers are manifold. Difficulty in physical distribution due to the widespread nature of rural geography, channel management, promotion and communication, poor infrastructure, uneconomical market sizes and consumer profiles limit the reach to rural market. So it becomes essential for the industry players to design creative solutions to achieve success in rural markets.

“Challenges are high for marketing branded sugar in rural markets, as the product is price-sensitive. Open sacks of sugar are unhygienic; that’s probably the route to market. We need to educate consumers on product hygiene. Since our product is high-volume and price-sensitive, our biggest challenge is managing the deliveries and cost. Servicing rural markets sometimes becomes unviable and sales volumes do not justify the aggression,” says Meher.

For electrical and electronics goods industries, which are driven by electricity, the rural markets pose basic problems. “Most of our products cannot run on batteries, and since many villages lack electricity, we cannot operate in those areas,” rues Nandi. The key to successfully operating in rural India seems to lie in going down to the grassroot levels and understanding the needs of consumers there, while keeping in mind infrastructure restrictions.

Make friends
According to the ASSOCHAM, the organized private sector has traditionally not enjoyed a good rapport with low-income groups in urban as well as rural areas. Therefore, to enlarge the role of the private sector in rural development, a shift in the mindset of rural people needs to be brought about. The corporate sector needs to change its preconceived “hostile” image to that of a “friendly” one.

“Project Shakti is a prime example of how we are increasing our rural market by reaching out to new consumers who are otherwise not touched by the more established distribution systems,” says the HUL spokesperson.

Next: HUL’s Marketing Initiatives in Rural India ->>>