Project Shakti and ITC e-choupal

I’ve been wanting to write this since long but I haven’t been able to find a lot of proof about the facts that I’m to pen down right now…

During my graduation I did a rural market survey on FMCG products and stuff like that. It was more like a formality to be completed, but since my group was one excited lot, we went to somewhere close to a thousand different households and asked about their lifestyle and got questionnaires filled. It was like a weeklong trip to the insides of small villages where the population is not more than 2000.

In the process of getting questionnaires filled and going from one household to another, I became extremely interested in the rural markets, and the consumer behavior of these people. We used to travel in an SUV that we’d hired for a week. And the very fact that people used to start peeking out of their households when they saw an SUV coming gave us the feeling that their life was so rigidly and extremely simple, that even a car filled with 6 students is enough to generate curiosity amongst the village people.

Many thought that we were there to sell something, and before we opened our mouths they used to tell us, “nahi nahi… kuch nahi chahiye” and rushed to close their front doors. But we had to knock back and tell them that we are here to ask a few questions and not sell anything. And a response to that would usually be a question like… are you from the population survey? After getting all these issues sorted out, we would get down to making them answer the questions in the questionnaires.

And most often than not, if the questionnaire was being answered by the mother or father, they used to call their children to respond to the questions, especially for soaps and shampoos. This again was pretty fascinating since the toddlers popped brand names like crazy. They precisely knew which actress endorsed which brand and how it smelled and all that. Usually the mom would end up saying that she sometimes let the children handle which soap to buy and which shampoo to buy. Sure they had their preferences, but kids were the biggest lot who were open to trying new brands.

So the scene was something like, the elderly male usually remained aloof from all this decision making. Give him a Lifebuoy anyday and he’ll be happy. The elder female made decisions with regards to washing soaps and salt (in fact most women didn’t buy branded salt since they had this myth that since branded salt was whiter than the normal one, it had more harmful chemicals), and many a times, the kids made decisions on which soap to buy.

In fact at some houses there were 2 different soaps being used. The locally made soap was used by the elders and branded ones by the kids. But in all cases, kids were much more receptive to brands, and much better risk-takers than the rest.

Now, moving away from the questionnaire part, we went back and started hunting for previous research to support our research. In the process we came across ‘Project Shakti’ and ‘e-choupal’, two concepts headed by 2 of the biggest consumable marketers of India, HLL or Uniliver and ITC respectively.

But what was even more surprising was that out of all the districts that we went to in the ahmedabad vicinity, no-where did we find an instance of either Project Shakti or ITC’s e-choupal. Maybe because of the fact that we had taken convenience sampling. But I also remember that we used to take permission from every village’s Sarpanch before we went ahead and did our survey. And none of the Sarpanch’s also talked about these 2 initiatives while briefing us.

When I went for my post grad @ SP Jain Dubai | Singapore, I came across cases on ITC e-choupal, and Project Shakti on a frequent basis. CK Prahalad in his book, Fortune at the Bottom of the Pyramid also talked about ITC e-choupal, and I was pretty impressed about it.

I worked out some costings, and found that even though the installation cost for an e-choupal was considerably high, the returns it gave were able to recover the costs of the installation in just a year’s time. Just a year’s harvesting was all that was required to recover the costs. At that rate, I felt essentially ITC’s e-choupal should be running in full gear and must be getting implemented at various places simultaneously. But I never heard news about its progress. While it’s a pure success in the case studies, it really doesn’t seem to be the case in reality. I couldn’t confirm it completely. But even the supply chain professors who came to teach said that the situation has become more like ‘all fart and no shit’… which only leads us to the point that companies are probably not willing to commit to large amounts of money to an initiative like e-choupal. The technology and the infrastructure might be available, but trust between the corporations and BoP people still doesn’t seem to have been established to make e-choupal a success.

Same applies for Project Shakti. Unilever made a smart move to position Project Shakti as a CSR kinda initiative from the very beginning. So even if the project bombed, it wouldn’t be called as a failure. And the project did bomb. Thus, Project Shakti does still remain very much a CSR initiative.

Sad no?!

3 comments:

Miken Jain said...

excellant analysis as usual brother, but to add to a few facts, the e choupal venture of ITC is more of a sourcing gamut, meaning these guys are into sourcing their raw materials for their FMCG requirements more than that of their social service or even money making venture as you worked out on your calculations. Now, with this background, have a look at the paradigm shift in the distrubution of potatoes and wheat that has happened in the past one year, moreover, the growing demand of wheat might even have forced the company to go for global sourrcing of wheat in the markets, so we find relatively lesser number of e choupals in Gujarat. The regions where your researhc was based, was cotton, saunf, til and tobacco growing region, only tobacco was of use to ITC which was directly sourced through other sources and other products had very good price discover mechanisms like Unjha markets. So, the less number of choupals as well.

Finally projcet shakti targetted increasing the distribution reach in certain areas which was not required in the districts covered by you in the research.

Hope it adds a few dimensions to the post!

Jay khodiyaar ma!

Rupa Shankar said...

I've been doing some research on how companies are building brands by building brand communities using social networks. I believe that e-Choupal has been excellent for ITC not just from a supply chain perspective but also from a brand-building perspective. When you think about what value do brands offer to people, you see the functional and tangible attributes but also the emotional connection that is a result of trust. The e-Choupal initiative helps to build trust towards the ITC brand in the minds of farmers. It's a way for ITC to provide functional/tangible benefits to Indian farmers through the technology and in return, farmers emotionally connect with the ITC brand.

Unknown said...

If we are happy to conclude that ITC e choupal was more of a brand building exercise or just a sourcing platform would be wrong on our part.
ITC started with E choupal to cement it's supplier base and to stabilise the fluctuating prices of commodities.
ITC e choupal started with a major focus on soyabean and then ventured into other commodities.
We can decipher the fact that this was also done for their fmcg products because Aashirvad soya fortified atta has all the ingredients necessary that are being sourced from the choupals.

Though ITC has, for the moment halted the expansion of the choupals, this in no way gives an outlook that they are going to do away with it.

Regards
Arijit Ghosh
Rural Management
XIMB