New York-born Ajaita Shah came to India in 2005 and has been working in villages for over a decade
or Ajaita Shah, last year’s lockdown in rural India was weird. “Are you kidding me,” wondered the founder of Frontier Markets, a rural women-assisted social commerce platform. What baffled Shah, who started the business in 2011 and gradually spread operations across the hinterlands of Rajasthan, Bihar, UP and Odisha over the last decade, was the feedback from most of her 3,000 women salesforce. The sahelis—women salesforce, who started working for Shah from 2015 onwards—made a strong pitch: “We need to start selling washing machines this wedding season.”
New York-born Shah found the idea ridiculous. The entrepreneur who came to India in 2005 and has been working in villages for over a decade—the first six years were spent in the microfinance industry—washing machines didn’t make sense at all. “Well, you need water supply and electricity for washing machines,” she argued. The sahelis, though, stuck to their guns. The digitally-skilled rural women influencers, who showcase products, assist with e-commerce purchases, and collect insights on customer demands, reckoned they had a finger on the pulse of rural India. Washing machines, they pointed out, were selling like hot cakes in the wedding season.
There was another item on the wish list of sahelis: Cattle feed. The logic was simple. Lockdowns across the four states meant that the men were confined to the fields. The task of looking after the cattle fell on the women, who would have to travel a minimum of three to five km to buy a bag of 50 kg feed. “Why can’t we deliver it at their doorsteps,” asked one of the sahelis.
Cut to May 2021. Frontier Markets has sold over 6.3 lakh bags of cattle feed to over a lakh women customers since the last lockdown. In value, it amounts to Rs 72 crore. The interesting part is the stickiness. “The doorstep delivery ensured consistent monthly orders over the last one and a half year,” smiles Shah, who expanded her sales force to 10,000 women in a year. The icing on the cake, though, is the washing machine. Shah reached out to a couple of consumer durable makers, told them the requirement of a rural consumer and asked for the best possible price point. Samsung agreed to take the plunge. “It was the best-selling consumer durable last year,” beams Shah. The reason, she lets on, is obvious: It’s a status symbol. Rural India, too, is aspirational, and yearns for products and services that an urban buyer consumes.
Frontier Markets is not only changing the way villages buy products and services, it’s also changing the way business is done across the hinterland by building a sales force of women armed with smartphones and rich consumer insight. The company, which only sold solar energy products such as torches, lanterns, cook stoves, home-lighting systems like fans and mobile chargers run by solar power for the first seven years, has widened its portfolio by adding more products and categories over the last three years.
The diversification has helped Shah grow the business. Gross revenue has nearly trebled from Rs 5.5 crore in FY15 to Rs 16.3 crore in FY21, and gross merchandise value during the same period has touched Rs 94 crore. In terms of the variety of products sold, the data gives an insight into the buying pattern of a rural customer. Frontier Markets has sold over 15,000 smartphones, 2 lakh consumer durable appliances from televisions to washing machines, 2.5 lakh agri products and tools, 8.15 lakh clean energy products, and 25,000 digital financial services.
Bharat has been on a shopping spree, and investors backing Shah’s venture could not have asked for more. “Using an all-women rural sales force is not just about empowerment. It’s a good business,” reckons Virginia Tan, founder of Teja Ventures, a venture capital fund that invests in women-led and women-owned ventures. Women micro-entrepreneurs, Tan underlines, are able to leverage their social capital and sell effectively to village households empowered digitally for real time data on consumption and fulfilment. “We have seen Frontier Markets grow from strength to strength, despite the challenges of the pandemic,” adds Tan.
Back in 2011, it was quite challenging for first-time entrepreneur Shah. Adding to her woes was the foreign accent of the Indo-American girl whose parents moved from Jaipur to the US in 1981. Starting her venture from Rajasthan was more like a homecoming for Shah, who flagged off Frontier Markets by selling solar energy products. But why solar? “It was the huge elephant in the room that nobody was addressing,” she recalls. Electricity, or the lack of it, was one of the big issues in the desert state, and solar was well-suited to solve the problem.
A stint in microfinance came handy in terms of approaching the problem. The experience of working in the villages for over six years, Shah underlines, taught her to look at things from three lens. The first was to find out the needs of the villagers, whether it was healthcare, water or energy. In the process, she also discovered core challenges of the rural population, and what would make them risky to an investor. The second lens was to know the pain points in terms of services the rural folk accessed. Quality, affordability and convenience were some of the most frequently talked-about issues. The third was to look at a business proposition that was a win-win for Bharat and the entrepreneur. “If nobody makes money, everything falls apart,” she says. The social business had to have a social impact and make business sense. It can’t be one at the cost of the other. “Balancing these three things was always challenging,” she recalls, adding that a thorough preparation was required to start a venture in rural India.
Shah did her homework. The target for the entrepreneur was to plug five gaps. The first was awareness. Rural families did not have knowledge of quality solutions. Second was access. The hinterland didn’t have easy access to quality durables. At times, the closest place to get products was 50-100 km away. The third was trust. Most rural families had access to low-quality solutions or zero after-sales service which would create scepticism among them. Then came the product-fitment gap. Most of the companies did not understand the rural customer well. So solutions were not customised. And last was the local livelihood gap. There were not much job opportunities for women. “Frontier Markets’ mission was to usher in an easy life” she says.
The task, though, was easier said than done. Social business was a nascent concept. It was either looked upon as a charity or not-for-profit venture. Impact investors too didn’t have an appetite to place heavy bets on a business where making money was a challenge.
There was another problem. Till 2014, the venture kept on selling solar products and solutions to men. A third-part audit in 2015 to examine the social impact of the venture turned out to be an eye-opener. Though 70 percent of Frontier Markets’ 80,000-odd customers were women, Shah and her team was talking and selling products to men. The insight gave birth to the concept of saheli, and from 2015 Frontier Markets turned into an organisation led by a women sales force. “This was the first pivot,” says Shah.
The second pivot came next year, when Frontier Markets reduced its dependence on imports. Most of the solar products were of Chinese origin. The company decided to rope in Indian makers and gave them consumer insights to make customised products. Demonetisation in November 2016 pushed the venture towards its digital avatar. Sahelis were armed with smartphones, and taught a digital way of transaction. From 2018, Shah started adding more products. The business galloped, more sahelis came on board and Frontier Markets set its sights on a more ambitious target: One million sahelis covering 3 lakh villages over the next five years.
Shah contends the target is realistic. What gives her confidence is the performance of the company during the second Covid wave. “We are much better placed as compared to the first wave,” she claims. Reason: Frontier Markets didn’t have agri products and essential services like food grains last year. Last April, she informs, the company did a business of Rs 50 lakh, and this year we clocked Rs 9.2 crore during the same month. In fact, in May too the numbers crossed the Rs 9 crore mark. Agri and essential services, she says, have seen an uptick this season. “We are driving change, creating impact, making money and posting profits,” she says.
(This story appears in the 18 June, 2021 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)