Study of distribution channel of retail organization

-Chinmay Bande (A-65),MKT

‡ITC is large Indian conglomerate with diversified business in packaged consumer goods, hotels, paperboard and packaging, information technology and agri-business; with annual sales of US $ 5 billion and a market capitalization of US $ 18 billion.
A c c e s s I b I L I t y Turnover per market

Reaching rural customers


‡About 68% of these markets remain untapped mainly due to inaccessibility ‡It is uneconomical to access a large no. of small villages with very low population density spread over large geographical area ‡Limited storage facilities ‡Large no. of intermediaries and their low capacity to invest in business These things make the task of reaching rural consumers very complex. And existing system is as1. Haats (periodic village markets): no. in India about 42,000-one haat covers 20-50 villeges-300 outlets-visited by more than 4,500 people 2. Mandis (agri-market): set up by state govt.-6800 in India-each catering 0.14 million people 3. Rural fairs (melas)

e-Choupal concept
‡ITC s e-Choupal is an example of how a commercial venture can provide a channel for knowledge and opportunity, bringing global resources and practices to Indian villages as well as higher incomes for farmers, and helping create the conditions for many other enterprises to cater to the rural market. ‡1999-volatile world of agri-commodity trading ‡Project Symphony ‡3rd Oct.1999-first e-Choupal ‡Elements of e-Choupal:-Sanchalak, Samayojak -PC, printer & UPS -VSAT connection -Solar panel -Mobile e-Choupals -Training

e-Choupal services
‡Relevant & Real-time Information Commodity prices, Local Weather, News Customised Knowledge Farm Management, Risk Management Supply Chain for Farm Inputs Screened for Quality, Demand Aggregation for Competitive Prices & Efficient Logistics Direct Marketing Channel for Farm Produce Lower Transaction Costs, Better Value through Traceability ‡Marketing Services Market Research, Brand Building, Product Demonstration Governance services Bhoomi Health with Private Health Service Providers Apollo Education ILFS Choupal Sagar services Soil Testing, Medical facilities, Bank & Insurance, Entertainment, Cafeteria, Petrol/ Diesel Station

What s in it for ITC
Better supply chain for ITC s Food & Agri-Businesses Costs, Quality, Traceability Access to the Rural Markets Through a Virtuous Cycle created by Larger Incomes , and founded on Trust that is built New ITES Business Opportunities Health, Education, Entertainment, e-Governance Shareholder Value through Serving Society Also, the infrastructure serves as a reliable delivery mechanism for resource development initiatives (e.g. water management) Rural market research

Impact of e-Choupal initiative ‡ITC-IBD s turnover has grown from Rs.300-3000 crore ‡There are currently 6500 e-Choupals covering 38,000 villages and catering to more than 4 million farmers ‡It has also set up rural malls Choupal Sagars at warehousing hubs where farmers have been brining their produce to deliver after selling to ITC. There are 24 Choupal Sagars already up and running ‡This network is now being used to sell non-ITC products to the villages ‡ITC procures 80% of its procurement via Web Channels ‡IBD was just another non-core activity within ITC group and it was on the verge of being divested. Today , however, IBD is one of the core business of ITC

References:1) ITC website
2) Book Rural Marketing by Pradeep Kasyap & Mr. Raut 3) Book Breakthrough Innovation by Mr.Poras Munshi

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