NATIONAL INSTITUTE OF FASHION TECHNOLOGY

Department: Fashion Management Studies

Subject: E-commerce, Fashion Promotion mix & Social Media

Marketing

Topic: Create an innovative e-commerce business model for a

social enterprise addressing the needs of stakeholders

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 ACKNOWLEDGEMENT

We consider ourselves very fortunate to get an opportunity to do a project which would help us
to gain so much of knowledge. We would like to express our sincere gratitude to Assistant
Professor Dr. Rishikesh Kumar for providing their continuous guidance and suggestion
throughout the project without which the completion of this project would not be possible. We
would also like to thank our friends and family for their continuous encouragement through the
completion of this project.

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 TABLE OF CONTENTS

S.No TOPICS PAGE NO.

1 Introduction (Agriculture)
2 Farmers suicides in India
3 Agriculture sector in India
4 E- Commerce In Agriculture

5 Agri e- commerce
6 E- commerce business model
7 E- Commerce value chain

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 AGRICULTURE IN INDIA
INTRODUCTION
Agriculture is the primary source of livelihood for about 58 per cent of India’s
population. Gross Value Added by agriculture, forestry and fishing is estimated at
Rs.18.53 trillion (US$ 271.00 billion) in FY18.
The Indian food industry is poised for huge growth, increasing its contribution to
world food trade every year due to its immense potential for value addition,
particularly within the food processing industry. The Indian food and grocery
market is the world’s sixth largest, with retail contributing 70 per cent of the
sales. The Indian food processing industry accounts for 32 per cent of the
country’s total food market, one of the largest industries in India and is ranked
fifth in terms of production, consumption, export and expected growth. It
contributes around 8.80 and 8.39 per cent of Gross Value Added (GVA) in
Manufacturing and Agriculture respectively, 13 per cent of India’s exports and six
per cent of total industrial investment.

MARKET SIZE
India is the second largest fruit producer in the world. Production of horticulture
crops is estimated at record 314.7 Million Tones' in 2018-19 as per third advance
estimates.
During 2017-18* crop year, food grain production is estimated at record 284.83
Million Tones. In 2018-19, Government of India is targeting food grain production
of 285.2 Million Tones. Milk production was estimated at 165.4 Million Tones
during FY17, while meat production was 7.4 Million Tones. As of September 2018,
total area sown with kharif crops in India reached 105.78 million hectares.
Total agricultural exports from India grew at a CAGR of 16.45 per cent over FY10-
18 to reach US$ 38.21 billion in FY18. In FY2019 agriculture exports were US$
38.54 billion. India is also the largest producer, consumer and exporter of spices
and spice products. Spice exports from India reached US$ 3.1 billion in 2017-18.
Tea exports from India reached a 36 year high of 240.68 million kg in CY 2017
while coffee exports reached record 395,000 Tones in 2017-18.
Food & Grocery retail market in India was worth US$ 380 billion in 2017
(India brand equity foundation, 2019)

FAREMRS SUICIDES IN INDIA

Farmer suicides in India refers to the national catastrophe of farmers
committing suicide since the 1990s, often by drinking pesticides, due to their

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inability to repay loans mostly taken from banks and NBFCs to purchase
expensive seeds and fertilizers, often marketed by foreign MNCs. As of 2018,
in Maharashtra alone, more than 60,000 suicides had taken place, with an average
of 10 suicides every day.
The National Crime Records Bureau of India reported that a total 296,438 Indian
farmers had committed suicide since 1995. Of these, 60,750 farmer suicides were
in the state of Maharashtra since 1995, with the remainder spread out in Odisha,
Telangana, Andhra Pradesh, Madhya Pradesh, Gujarat and Chhattisgarh, all
states with loose financial and entry regulations.
India is an agrarian country with around 70% of its people depending directly or
indirectly upon agriculture. Farmer suicides account for 11.2% of all suicides in
India. Activists and scholars have offered a number of conflicting reasons for
farmer suicides, such as high debt burdens, poor government policies,
corruption in subsidies crop failure, public mental health, personal issues and
family problems.

Fig. 1 Farmer suicides graph

(wikipedia, 2019)

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AGRICULTURE SECTOR IN INDIA
Indian is an agriculture based country, where more than 50% of population is
depend on agriculture. This structures the main source of income. The
commitment of agribusiness in the national income in India is all the more,
subsequently, it is said that agriculture in India is a backbone for Indian
Economy. The contribution of agriculture in the initial two decades towards the
total national output is between 48% and 60%. In the year 2001-2002, this
contribution declined to just around 26%. The aggregate Share of Agriculture and
Allied Sectors, Including agribusiness, domesticated animals, and ranger service
and fishery sub segments as far as rate of GDP is 13.9 percent during 2013- 14 at
2004-05 prices. Agricultural exports constitute a fifth of the total exports of the
country. (L, 2015)
 Agriculture in India is one of the largest sources of livelihood of its
population
 Around 58 % population of India depends on Agriculture
 The Indian food and grocery market is the world’s sixth largest, with retail
contributing 70 per cent of the sales
 Average growth rate for the agriculture and allied sectors is estimated to be
4.1 per cent for 2016-17
 140.7 million hectare area is available for Major agricultural products
including sown- rice, wheat, oilseed, cotton, jute, tea

E- COMMERCE IN AGRICULTURE
The agricultural sector is one of the few remaining sectors where e-commerce is
yet to have a significant impact. There are several reasons for the agri supply
chain is often controlled by well-entrenched Intermediaries (middlemen); the
logistical challenge of handling perishable products is complex; and most
Consumers still prefer to buy groceries in-person rather than online, given the
inconsistent physical appearance of fresh produce, especially fruit and
vegetables.

Major e-commerce platforms are expanding their online offerings to include

grocery products. Amazon has launched its online grocery delivery service,
Amazon Fresh, in select regions of the US, UK and Germany. Other major e-
commerce platforms, including Alibaba, Flipkart and MercadoLibre, also sell
groceries online.

(Association, 2019)

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NEED OF AGRI-BUSINESS IN E-COMMERCE

 Traditional agricultural value chain involves multiple intermediaries

between farmers and consumers
 Farmers sell their products to middlemen
 Products then passes through multiple intermediaries before reaching the
end customer
 As a result, farmers receive only a small portion of the price paid by the
end consumer as each intermediary in the value chain earns a margin.

AGRI E - COMMERCE
 Agri e-commerce businesses have an online platform, which provides
market linkages between buyers and sellers.
 Agri e-commerce businesses have staff working on farmer acquisition, as
well as marketing and customer care.
 Quicker transaction process due to reduced dependence on cash-on-
delivery.
 Reduces the workload of the farmer, which incentivises them to sell
produce through the online channel.
 Reduce expenditure, some agri e-commerce businesses introduce
commission-based wages, whereby they pay staff per order checked and
packed.
 Quality control steps enable agri e-commerce businesses to target buyers,
including supermarkets, which place high importance on product
standardisation.
 Agri e-commerce businesses undertake warehousing of produce in
addition to the operational functions
 Mobile operators have been central to the adoption of mobile-enabled
solutions in the agricultural sector.
(Association, 2019)

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 Fig. 3 Percentage of internet user prefer the mobile payments

E- COMMERCE MARKET IN AGRI-BUSINESS

Agri e-commerce – the buying and selling of agricultural produce online – can
address notable challenges and inefficiencies in the agriculture supply chain by
streamlining farmers’ access to the customer and creating new links between
steps in the value chain. This is especially true in developing countries where
online platforms can enable farmers to bypass intermediaries and sell directly to
agri businesses, retailers, consumers and other customer groups, leading to
increased efficiency of the supply chain and generating fairer incomes, as well as
a transaction history for farmers.

 Agribusiness e-commerce is an emerging opportunity in rural area

 National infrastructure (such as roads) in addition to delivery services and

purpose-built facilities (such as warehouses) allow e-commerce
agribusinesses to transport produce between farmers and buyers more
cost effectively.

E- COMMERCE BUSINESS MODEL

To assess the emerging business models in agri e-commerce, it is important to

understand the characteristics of agriculture produce, the different farmer and
customer segments, and the potential operational functions of an agri e-
commerce service. These factors underpin the cost structure of the service
which, along with reliable revenue streams, impacts the sustainability of e-
commerce business. (Association, 2019)

 To maximise the emerging opportunity, agribusiness e-commerce

businesses require sustainable business model

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  The choice of business model depends on the operational functions

 It also depends on factors such as product category and the strategic

objectives of the business.

 A sustainable business model balances these considerations to build trust

and increase user loyalty.

 Revenue will be generated through mark-up and membership fees

 It will work as an aggregator model which connects the farmers and retailer

 Farmers directly sell their product to e-commerce and then it goes to

retailer

 Agri e-commerce company can predict the demand of market

 It can notify the farmers also to which product need to be produced more at
what time

Fig. 4 Agri E- Commerce

business model
AGRI E-COMMERCE FACILITIES

• Insurance of goods
• Fast delivery to retailers
• Same time payment made to farmer
• Remove intermediaries helps to meet supply and demand on time

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E- COMMERCE VALUE CHAIN

Fig. 5 E- commerce value chain

 Farmers, particularly cooperatives and large-scale farmers, have contracts to

sell directly to agri businesses. This is most common for cash crops, such as
sugar, tea leaves, cocoa and beans, which often serve as raw materials to be
processed into edible food.

 Farmers are part of a group owned and operated by farmers that produce
similar produce. Through working together, farmers attract new buyers and
increase the price they receive for their produce. It also enables them to obtain
cheaper agricultural inputs.

 Farmers sell their produce at farm gates to middlemen, who then incur the
costs and risks associated with moving the product to buyers in other
geographical areas. This accounts for the largest proportion of sales by
farmers, but it is also the most inefficient way for farmers to sell their produce.
This is because the value chain involves several middlemen between the
farmer and consumer, who each take a margin, meaning farmers receive only
a small proportion of the final price paid by consumers. Prohibitive transport
costs, and lack of infrastructure and storage results in a high risk of post-
harvest wastage and deters most farmers from bypassing middlemen and
selling directly to the market or consumers.
(Association, 2019)

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E-COMMERCE OPERATIONS FUNCTION

The various farmer, buyer and agri produce segments, agri e-commerce
businesses may need to perform a variety of operational functions to bring their
proposition to market. We have split functions into three categories: farmer,
buyer and corporate.

Fig. 6 E- Commerce
operation function

(Association, 2019)

BENEFITS OF AGRI E- COMMERCE

Agri e-commerce presents a range of economic benefits to farmers in the form of

improved income and livelihood.

 Reduces wastage
 Higher Income
 Financial inclusion
 Direct communication
 E-commerce services can have a direct positive impact on adjacent
services, notably mobile services and logistics.
 Improve digital literacy

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CHALLENGES IN AGRI E- COMMERCE

 Cost of using a delivery company, though most agri e-commerce

businesses recover this from buyers
 Incur higher staff costs to manage logistics and payment processes
 Quality control activities increase staff and travel costs
 Rising operational costs through employing additional staff to manage
orders in warehouses
 Educating our business to farmers
 Adaptation of e-commerce business by farmers
 Logistics

SCOPE OF AGRI E- COMMERCE

 There is a great scope for e-agribusiness in agriculture, especially in

horticulture and processed products.
 Mango, grapes, spices etc. has large demand in national and international
market.
 Farmers get up-to-date information about the market and can sell their
produce through the electronic medium.
 Reduces the workload of the farmer, which incentivises them to sell
produce through the online channel.

(Slideshare, 2018)

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 CONCLUSION

 It will remove the intermediaries and make it easy to trade

 Helps to meet the supply and demand on time
 Farmers will be benefitted
 Faster delivery services will protect the goods from perishing
 Generation of employment

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 BIBLIOGRAPHY

 Association, G. (2019). E-commerce in agriculture. Retrieved from www.gsmaintelligence.com:

https://www.gsmaintelligence.com/research/?file=acf1acd95e118bc54d7f24604461e56b&dow
nload#targetText=Agri%20e-commerce%20also%20increases,d

 India brand equity foundation. (2019, July). Retrieved from www.ibef.org:

https://www.ibef.org/industry/agriculture-india.aspx

 L, M. (2015). Agriculture Role on Indian Economy. Business and Economics Journal.

 Slideshare. (2018, 05 10). Retrieved from www.slideshare.net:

https://www.slideshare.net/mayank291/2070517023?from_action=save

 wikipedia. (2019, 9 2). Retrieved from www.wikipedia.org:

https://en.wikipedia.org/wiki/Farmers%27_suicides_in_India#targetText=In%202012%2C%20th
ere%20were%20745,estimated%20population%20of%20205.43%20million.&targetText=As%20
per%20National%20Crime%20Records,suicides%2C%205%2C650%20were%20farmers%20suicid
es.

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