Creating Customer Satisfaction and Profitable Value Chain with E-Commerce in Rural India free essay sample

A case based approach Sanjeeve Verma1 ABSTRACT We live in a world increasingly propelled by technological change. The thrust lies in a quest to make our lives better, simpler and more productive through electronic commerce (or E-commerce). Agriculture in India has been identified as one of the great promises of e-commerce; the high level of fragmentation present in the supply chain, large volumes traded, and homogeneous products only reinforced the expectations. Electronic commerce (e-commerce) is relatively new to the agricultural industry, and affects such aspects of the organization as its strategy, processes, customer relationship, information technology, and business culture. E-commerce markets are expected to be more transparent and more perfectly competitive than physical Digital inclusion and electronic connectivity can be a tool to empower rural India. Some of the demonstrated opportunities includes Akshaya (Kerala) for education, webhealthcenter. om for general health, e-Choupal, Tara Haat, Drishtee, NDDB, etc. for leveraging economic gains, Bhoomi, eSeva, Gyandoot, Lokvani, NEGP, etc. toward creation of electronic governance, SARI in Tamilnadu, n-Logue in many states, and NIC centers in the North East as multipurpose tele-centers to name a few. Some of the recent initiatives in this area also include Lifelines, which is a digital inclusion program helping rural communities in India to become a part of the digital society. It is a voice-based service for village communities and helps them to become a part of India’s fast-growing digital society by providing them information related to agriculture, animal husbandry, horticulture, fisheries, dairy sciences and post harvest technologies. In the sphere of voice-based agricultural advice, there is government – assisted Kisan Call Centre (KCC). This is a nationwide tollfree Question Answer system accessed via the number 1551 but only from BSNL/MTNL landlines. The service provides â€Å"real-time† responses to queries from farmers and currently averages 50,000 calls per month. There are a couple of other agricultural-based information services in India like â€Å"e-Sagu,† where the agricultural expert delivers advice by getting the crop status in the form of digital photographs and other information. The farmer is charged annually on per acre basis. Presently 30 villages are covered in pilot. Agriculture is vital to India. It produces 23% of GDP, feeds a billion markets, conditions that should attract more consumers and thus increase demand. Through case studies, this article analyzes the factors influencing customer’s satisfaction and profitability in rural value networks through adoption of e-commerce strategies. This study will also assess how Internet adoption and the use of e-commerce strategies impact rural development and the overall sustainability paradigm in India. Key Words: Electronic Commerce, Rural Retailing, Information and Communication Technologies (ICT), Customer Intelligence, Customer Satisfaction, Economic Competitiveness. JEL Classification Number: Q13 people, and employs 66% of the workforce. Because of the Green Revolution, India’s agricultural productivity has improved to the point that it is both self-sufficient and a net exporter of a variety of food grains. Yet most Indian farmers have remained quite poor. The causes include remnants of scarcity-era regulation and an agricultural system based on small, inefficient landholdings. The agricultural system has traditionally been unfair to primary producers. Soybeans, for example, are an important oilseed crop that has been exempted from India’s Small Scale Industries Act to allow for processing in large, modern facilities. Yet 90% of the soybean crop is sold by farmers with smallholdings to traders, who act as purchasing agents for buyers at a local, governmentmandated marketplace, called a mandi. Farmers have only an approximate idea of price trends and have to accept the price offered to them at auctions on the day that they bring their grain to the mandi. As a result, traders are well positioned to exploit both farmers and buyers through practices that sustain systemwide inefficiencies. There is a huge gap in rural India when it comes to timely and relevant information exchange. Farmers account for 65 percent of the workforce and many find it very difficult to get access to the sort of information they need. Research on ICTs for development has frequently pointed to shared access models as critical enablers of sustainable development and digital inclusion (Haseloff, 2005). In development discourses, they are viewed as tools that most fit the demands of integrated development in resource strapped nations (Keniston and Kumar 2004, Kumar 2004). These provide fillip to communities residing, along a spectrum, on the verge of poverty to the verge of modernity. Ranjan Chaudhuri2 1 2 Sanjeeve Verma, Ph. D. ; Assistant Professor (Marketing), National Institute of Industrial Engineering, Mumbai, INDIA Ranjan Chaudhuri, Ph. D. ,Assistant Professor (Marketing), National Institute of Industrial Engineering, Mumbai, INDIA October 08 March 09 | 51 Literatures also discuss at length the specific challenges to this vision and the role of appropriate ICT in rural areas (Colle and Roman, 2003, Dragon 2002). While all of these make for strong arguments, ICT for electronic commerce in rural emerging market regions merit attention. Through case studies, this article analyzes the factors influencing customer’s satisfaction and profitability in rural value networks through adoption of ecommerce strategies. This study will also assess how Internet adoption and the use of e-commerce strategies impact rural development and the overall sustainability paradigm in India. Issues in Indian Agriculture Agriculture is economically and socially vital to India. It contributes 19% of the GDP, feeds a billion people and employs 66% of the workforce. Agriculture’s share of GDP has shrunk steadily but at 19% it remains a critical component of the economy. Despite this economically vital role, Indian agriculture has until recently been regulated in an archaic fashion that limits its productivity. Non-optimal farming practices and capricious weather patterns left post-Independence India with an underperforming agricultural sector, acute food shortages, and dependence on food imports. Legislation from this period brought heavy government intervention in agriculture, including control of land ownership, input pricing, and regulated of product marketing. Produce could only be sold in government-recognized locations to authorized agents. Processing capacities, private storage, futures trading and transport were restricted. The result was corrupt and inefficient systems, in which starvation existed alongside granaries overflowing with food stocks of over 60 million metric tons. At the same time, the unprofessional business environment made the sector unattractive to modern companies nuances that apply to consumers makes heterogeneity a key issue for marketers. These problems make customization costineffective and difficult to execute. n Weak Infrastructure: Given the weak infrastructure in terms of road connectivity, etc, most companies today do not service village-level outlets directly. This has given rise to a passive distribution network where companies service wholesale dealers at a small town (10-15K population) level here village retailers visit periodically (typically on a weekly basis) to buy stocks for their outlets. Such a system makes tracking sales and brand penetration at village level difficult. The endemic constraints that shackle this sector also include excessive dependence on the monsoon, variations between different agro-climatic zones, among many others. These pose their own challenges to improving productivity of land and quality of crops. The unfortunate result is inconsistent quality and uncompetitive prices, making it difficult for the farmer to sell his produce in the world market. Internet technology has provided the possibility for cost reduction and demand enhancement along the food supply chain through the use of e-commerce. Automation has the capacity to substantially reduce transaction and procurement costs. Ecommerce can improve firm efficiency by reducing inventory levels, transportation costs, and order and delivery time.