Born in New York, Ajaita Shah came to India in 2005 and has worked in villages for over a decade.
For Ajaita Shah, last year’s lockdown in rural India was odd. “You’re kidding me,” wondered the founder of Frontier Markets, a social commerce platform supported by rural women. What has confused Shah, who started the business in 2011 and has gradually expanded operations into the hinterlands of Rajasthan, Bihar, UP and Odisha over the past decade, are comments from most of its 3,000 sales women. The Sahelis, women in the sales force, who started working for Shah from 2015, made a strong argument: âWe have to start selling washing machines this wedding seasonâ.
Shah, born in New York, found the idea ridiculous. The entrepreneur who came to India in 2005 and has been working in villages for over a decade â the first six years were spent in the microfinance industry â washing machines didn’t make sense. âWell, you need water and electricity for the washing machines,â she argued. The Sahelis, however, stuck to their weapons. Digital-savvy rural influencers, who showcase products, help with online shopping and collect information on customer inquiries, felt they had a finger on the pulse of rural India. Washing machines, they pointed out, sold like hot cakes during wedding season.
There was another item on the Saheli wish list: feeding the cattle. The logic was simple. Closures in all four states meant men were confined to the fields. The task of tending to the cattle fell to the women, who had to walk a minimum of three to five kilometers to buy a 50 kg bag of feed. “Why can’t we deliver it to their door,” asked one of the Sahelis.
Cut to May 2021. Frontier Markets has sold over 6.3 lakh of sacks of feed to more than one lakh of clients since the last lockdown. In value, it stands at Rs 72 crore. The interesting part is the grip. âHome delivery has ensured consistent monthly orders over the past one and a half years,â smiles Shah, who has expanded his sales force to 10,000 women in one year. The icing on the cake is the washing machine. Shah contacted a few manufacturers of consumer durables, explained to them the demands of a rural consumer, and asked for the best possible price. Samsung has agreed to take the plunge. âIt was the best-selling durable consumer good last year,â Shah beams. The reason, she leaves, is obvious: it’s a status symbol. Rural India is also ambitious and aspires to the products and services that an urban buyer consumes.
Frontier Markets is not only changing the way villages buy products and services, it is also changing the way business is done in the hinterland by creating a sales force made up of women armed with smartphones and a in-depth knowledge of consumers. The company, which only sold solar energy products such as torches, lanterns, stoves, home lighting systems such as fans and mobile chargers powered by solar energy for the first seven years, has expanded its portfolio by adding more products and categories over the past three years.
Diversification helped Shah grow the business. Gross revenue almost tripled from Rs 5.5 crore in FY15 to Rs 16.3 crore in FY 21, and the gross value of goods in the same period has reached Rs 94 crore. In terms of the variety of products sold, the data provides insight into a rural customer’s purchasing pattern. Frontier Markets has sold over 15,000 smartphones, 2 lakh of durable home appliances, televisions to washing machines, 2.5 lakh of agricultural products and tools, 8.15 lakh of clean energy products and 25,000 digital financial services.
Bharat went shopping and the investors who support Shah’s business could not have asked for more. âUsing an all-female rural sales force is not just about empowerment. It’s a good deal, âsaid Virginia Tan, founder of Teja Ventures, a venture capital fund that invests in businesses run and owned by women. Women micro-entrepreneurs, Tan points out, are able to leverage their social capital and effectively sell to village households digitally empowered to obtain real-time data on consumption and development. âWe have seen border markets grow stronger and stronger, despite the challenges of the pandemic,â adds Tan.
In 2011, it was quite difficult for the first entrepreneur Shah. Added to her woes was the foreign accent of the Indo-American girl whose parents moved from Jaipur to the United States in 1981. Starting her business in Rajasthan felt more like a homecoming for Shah, who pointed out the markets. cross-border workers by selling solar energy products. But why solar? âIt was the huge elephant in the room that no one was addressing,â she recalls. Electricity, or the lack of it, was one of the big problems in the desert state, and solar power was well suited to solve the problem.
A shift to microfinance proved to be helpful in addressing the problem. The experience of working in villages for over six years, Shah points out, has taught him to look at things from three angles. The first was to know the needs of the villagers, be it health care, water or energy. During the process, she also discovered the main challenges facing the rural population and what would make them risky for an investor. The second objective was to know the weak points in terms of services to which rural people had access. Among the most frequently raised issues were quality, affordability and convenience. The third was to examine a win-win business proposition for Bharat and the entrepreneur. âIf no one makes money, everything collapses,â she says. The social enterprise had to have a social impact and have a business sense. It cannot be one at the expense of the other. âBalancing these three things has always been difficult,â she recalls, adding that extensive preparation was needed to start a business in rural India.
Shah did his homework. The goal for the entrepreneur was to fill five gaps. The first was awareness. Rural families did not know about quality solutions. Second, access. The hinterland did not have easy access to quality durable goods. Sometimes the nearest place to get products was 50-100 km away. The third was trust. Most rural families had access to poor quality solutions or poor after-sales service, which would create some skepticism among them. Then came the product-fit gap. Most businesses did not fully understand the rural customer base. The solutions were therefore not personalized. And the last was the local livelihood gap. There weren’t a lot of job opportunities for women. âThe mission of Frontier Markets was to pave the way for an easy life,â she says.
The task, however, was easier said than done. Social business was a nascent concept. It was either considered a charitable or non-profit enterprise. Impact investors also didn’t want to bet heavily on a company where making money was a challenge.
There was another problem. Until 2014, the company continued to sell solar products and solutions to men. A third party audit in 2015 to examine the company’s social impact turned out to be an eye opener. Although 70 percent of Frontier Markets’ roughly 80,000 clients are women, Shah and his team were talking and selling products to men. This idea gave birth to the concept of saheli, and from 2015 Frontier Markets evolved into an organization led by a female sales force. âIt was the first pivot,â Shah says.
The second pivot came next year, when Frontier Markets reduced its reliance on imports. Most of the sunscreen products were of Chinese origin. The company decided to bring in Indian manufacturers and gave them consumer information to make custom products. The demonetization in November 2016 pushed the company towards its digital avatar. Sahelians were armed with smartphones and learned a digital mode of transaction. From 2018, Shah started adding more products. The business galloped, more Sahelis came on board and Frontier Markets set their sights on a more ambitious goal: one million Sahelis covering 3 lakh villages over the next five years.
Shah maintains that the target is realistic. What gives him confidence is the company’s performance during the second wave of Covid. âWe are much better placed compared to the first wave,â she says. Reason: Frontier Markets did not have essential agricultural products and services like food grains last year. Last April, she informs, the company achieved an activity of Rs 50 lakh, and this year, we recorded Rs 9.2 crore during the same month. In fact, in May, too, the numbers broke the Rs 9 crore mark. Agricultural and essential services, she said, have seen a slight uptick this season. âWe drive change, create impact, make money and show profits,â she says.
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(This story appears in the June 18, 2021 issue of Forbes India. You can purchase our tablet version at Magzter.com. To visit our archives, click here.)