Rural India wants branded white goods
Chennai-based Inthree Access Services was founded in 2013 by R Ramanathan, Karthik Natarajan and Narayanan on the firm belief that rural India is more than willing to buy branded white goods. The company has pioneered the concept of assisted commerce in the rural space. “Rural India is not a dark hole, as urban Indians think. There is a huge white space in the rural markets. People don’t understand that the rural customers are aspirational and they have disposable income to buy consumer products,” says Ramanathan, who is also the CEO of the company.
Under the Boonbox brand, the company now reaches 3 lakh villages across India. “We provide products and services to consumers who live in tier-3 and tier-4 towns, and villages. Their demand has been unfulfilled as they have lacked access to these goods.” Since inception, Boonbox has sold over 60 lakh products worth over Rs 450 crore to more than 30 lakh households spread across 3 lakh villages in 16 states of the country. “Most of our customers are women and they want refrigerators and washing machines. Rural India also wants smartphones and TVs. Our hashtag is #NewRural.”
“All FMCG products don’t reach villages,” adds Ramanathan. Distribution stops at places with a population of 20,000. What Boonbox is doing is to address this huge access problem. “There is a middle class in the smallest of villages with disposable incomes far higher than what one thinks. A lot of families make Rs 30,000-40,000 per month as they take up multiple jobs. Their expenses are limited, unlike city dwellers. Customers here are very assured and they know what they want.”
There are 6.5 lakh villages in the country and 87% of them have a population of around 2,000. Most of them do not have connectivity in the last 50-odd km. Indian rural network is very different from that of the rest of the world. There are more problems than advantages. “We converted these problems into opportunities, mostly through technology,” says Ramanathan.
The company first created an assisted commerce platform (boonbox.com) that is multilingual and easy to access. Boonbox has B2C elements built-in. It has appointed affiliates who are well-connected across villages. Rural communities do not place trust easily. The affiliates, who come from within the community and can connect with the people, are equipped with tablets installed with Boonbox mobile apps.
Boonbox affiliates show the available products to rural customers through its Champ app, which works as a catalogue and an order-taking mechanism. The associates collect the money from them and place the order through Boonbox. “The orders come to us through bank transfer. The products are delivered directly to the customer through Boonbox’s hub-and-spoke logistics network,” Ramanathan says.
The shipment delivery can be traced to the smallest hamlet through the app. Reliable addresses are lacking in these places. People give vague directions. They would say that their house is near a temple. Using route tapping and geotagging technologies, safe delivery is assured. The app, which is in a local language, is loaded on to the smartphones of delivery boys, who are also local. “The customer’s photograph with the product and her identity proof is sent to us,” he says. Arrangements have been made to demonstrate the product on arrival.
Boonbox covers 6,900 PIN codes, of the total 12,000 PIN codes in the country. The top-three product categories in demand are mobile phones (which account for 40% of the company’s revenue), consumer durables (30%) and kitchen home appliances (another 30%). The rural customer is very sure of what she wants, is brand-conscious, and orders largely premium brands across categories. She does not want what she has not seen on television.
The popular mobile brands are Samsung and LG. In fact, Boonbox is the largest rural partner for Samsung mobiles and has been so for the last three years. For consumer durables, the major brands customers prefer are Samsung, Panasonic, LG and Whirlpool. “The Indian male doesn’t wash clothes; it’s usually women who want washing machines,” he says. In addition, their popular kitchen appliance brands are Prestige, Preethi, Premier, Jaipan, Hawkins, and Butterfly Gandhimathi.
Ramanathan’s interest in the rural commerce space was triggered when he was working for the TVS Group. He got an opportunity to interact with the late management guru CK Prahalad, who laid down the business strategy for the cluster, and convinced him about the philosophy of gaining dominant market share even in remote geographies, which Prahalad termed as “depth domination.”
When Ramanathan, Natarajan and Narayanan set out on their own, Tamil Nadu was in the grip of an acute power crisis, with 12-hour power cuts. They decided to sell solar lamps through post offices. “We were selling them over the counter and they flew off the shelf,” he adds.
Inthree Access was launched with funding from the Indian Angel Network, followed by $4 million from Ventureast, Orios Venture Partners and IAN Fund. Discussions are going on for a fresh round of funding. The company finished 2017-18 with a turnover of Rs 200 crore. It hopes to end this year with Rs 500 crore, and also hopes to double its top line by 2020.
Ramanathan says a tremendous opportunity lies in the sheer scale that rural India offers. The company started out in Tamil Nadu and Karnataka. Now it covers the South, the East and most states in the North. It has just entered the West by starting out in Vidarbha in Maharashtra. “We have to create a commerce ecosystem where none currently exists,” he says.
The road ahead lies in understanding consumer needs and improving the company’s technology, logistics and customer connect backbone to serve them better across geographies. Inthree Access is now designing subscription models relevant for the rural consumer, and is creating loyalty and membership programmes to build long-term value for customers.