Spring 2014 IBD FTMBA students Carmela Aquino, Dora Chai, Chasen Goudeau, Charles Guo, and Nate Wojck are in India working with SAP Labs India.
The road to the heart of the city teased us with twinkling night-lights in the distance, as we made our way past midnight into this strange, foreign town that would be home for the next 3 weeks. We would come to learn over the next few days and weeks that Bengaluru, or Bangalore as it was once called by the British, was once known as a “pensioner’s paradise” – for its relatively cool climate compared to the rest of the country.
These days, it was known more for being the technology capital of India, home to sprawling campuses of many of the world’s largest technology firms. We walked into Bangalore anticipating another version of Silicon Valley on the other side of the globe. We were not prepared for what we came across, a city that was both developed and yet steeped in so much tradition, both modern and yet traditional, and altogether unpredictable. What we learned over the next three weeks was that this would be a theme rippling across our experiences in India .
After 5 months of planning and 24 hours of travel, our team had finally arrived in Bangalore to carry out fieldwork for SAP Ganges, a project incubated by SAP Labs India, the research and innovation arm of SAP. For the next 3 weeks, we would be working with the SAP Ganges team to serve India’s unorganized retail industry, which is composed of several tiers of mom-and-pop shops, or kirana stores. They are small shops that sell a rich variety of consumer packaged goods and bulk items such as rice, and could be found on practically every corner of most Indian cities. India’s 8 million plus kirana stores account for more than 90% of the country’s multibillion retail industry, far outpacing the reach of modern big-box outlets, presenting immense opportunities and daunting challenges at the same time.
Reaching Indian Retail’s Last Mile
Our team had been preparing for this project for months, with numerous weekly phone calls with our project stakeholders from SAP, both in Palo Alto and Bangalore, and our IBD coach. We had interviewed subject matter experts and industry professionals to gain initial insights into our task. We had conducted research on best practices that could be applicable for the project. But the bulk of our work had to be done in-country, as it was only through fieldwork that we could find ourselves truly gaining the understanding needed to answer our questions. How could SAP truly help bring light to the whole unorganized retail value chain? How could we help bring SAP technology to kirana storeowners, many of whom had relied on pen and paper their whole life to account for their business?
Upon reaching Bangalore, we met with the entire SAP Ganges team. The diverse background of the team members, and more importantly, their shared passion for SAP Ganges impressed us. Many of them had switched into the project initially as volunteers. With the help of many of the members of the team, we set out to validate our initial hypotheses in the field by talking to kirana owners, CPG distributors, organized retail players, and CPG companies
The true highlight of the project was speaking with kirana owners, who surprised us with how unique they all were in their aspirations for their businesses and the practices they maintained that kept their businesses alive and thriving. Still, we found that many common things remained – many of these shops would have been around for more than a decade and had developed close community relationships. It has been customary for many Indian households to call the nearby kirana shop to pick up ingredients or household items, over going to a modern supermarket. It was also customary for many of these shop owners to offer revolving lines of credit to loyal customers, to be settled at the end of the month – offering a unique credit service that could be challenging to maintain.
These kirana shops keep themselves stocked by relying on their distributors, who would visit the shops on a weekly basis to take orders and fulfill them by ordering from the CPG companies. Since each distributor was dedicated to only one CPG brand primarily, any given shop could be dealing with more than 40 distributors. Accounting is done primarily through pen-and-paper, and shopkeepers rely on their books, intuition, and memory to estimate how much inventory is in their shop and how well they are doing financially. Still, these methods are not foolproof. SAP Ganges, with its all-in-one Point-of-Sale device offered a better way for these shop keepers to keep track of their sales, manage their customer credit lines, and keep stock of their inventory. But would shop owners be amenable to it? Our work lay in understanding how to reach SAP Ganges’ target kirana storeowners with the message that would truly appeal to them.
Along the way, we were surprised by many things. We had assumed that certain aspects would be more important than others in selling the SAP Ganges solution. And yet kirana owners would surprise us with how they valued some things over others, and completely disregarded certain aspects that we had initially surmised to be important.
For instance, we initially thought the price of the device was too high for kiranas to fully absorb. However, throughout our interview process we learned that many of the upper-tier kirana owners were receptive to the price and possessed a willingness-to-pay that was much higher than what we assumed. We quickly learned that these storeowners saw value in one of the device’s most subtle features, which was the ability to print a receipt and give it to their customer. Phone orders are extremely popular in India, and shopkeepers spend significant time handwriting their bills for their customers. SAP’s solution would allow them to more quickly prepare these bills and provide a more professional invoice than the handwritten alternative. As a result of our discovery and understanding of the value of being more professional for shop owners to compete with emerging organized retailers, we decided to focus our messaging on selling SAP Ganges as “the next generation of affordable point-of-sale technology that promises simple and professional business management.”
On the contrary, we were also surprised by how many storeowners were unreceptive to change. Many of these kirana owners had worked in their shops for decades. To them, technology was an unnecessary distraction from their current business operations. Even though we could see the value, in particular the efficiency, that SAP Ganges provides, we began to understand why these owners were resistant to adoption. Given the success of their business to-date, they didn’t see the need to invest in a device to make their business better. These owners also have yet to be exposed to the modern technology and retail systems of the United States and other developed countries; therefore, they couldn’t even imagine the benefits that such a technological solution could deliver.
Ultimately, we knew we needed to be sensitive to the kirana owners’ behaviors and practices and couldn’t force a product onto them. Therefore, we decided to focus our marketing efforts on a specific target segment of kirana owners that could envision the benefits SAP Ganges would provide them.
The interviews and visits were immensely helpful in that they provided us a first-hand exposure to SAP Ganges’ target customers, the unique role they play in the Indian society and the transformation India’s retail industry has been going through. Through our visits to the distributors and a local wholesale market, we came to appreciate the entrepreneurial spirits of Indian businesses, from the likes of the Reliance Industries Limited and Tata Group that touch every aspect of Indians’ life to Mr. Raghuram M.V.’s small distribution company which supplies packaged goods to thousands of kirana stores in Bangalore.
Not Just Work
Outside of our 5-day work schedule, our team still found time to hang out and explore India. During our first full-weekend we took a trip down to the southern state of Kerala, which was recommended to us by our client. They told us about the houseboats we could rent to explore the Kerala backwaters. These boats were decked with full kitchens, bathrooms, and bedrooms. We could stay overnight and our boat staff would cook for us while exploring the waters. Our client introduced us to a friend who owned one of these boats and we moved quickly to finalize our transportation plans to Kerala.
We decided on hiring a driver to drive us down to Kerala and back over the weekend. Drivers in India are pretty affordable, and hiring one is much better than trying to navigate the insane driving in India. Flights to Kerala last only about an hour, but since we planned the trip on such short notice, flights were expensive and we would’ve had to figure out transportation once we landed. Little did we know that the trip to Kerala would take 14 HOURS one-way! We left late Friday night in order to beat the traffic and didn’t arrive to the houseboat until about 2:00pm on Saturday. Granted we stopped to see elephants along the way, but the trip lasted much longer than originally anticipated. Not to mention that driving on Indian highways at night is one of the most terrifying experiences ever. Once you get to Kerala, the highways become one lane in both directions. In the middle of the night, our team woke up to find ourselves driving head-on with another car on the highway! At the last minute our driver would swerve back into his appropriate lane, all in an effort to pass the slow-moving car that was in front of us. It was like a crazy game of chicken, waiting to see which driver would flinch first in order to avoid a head-on collision. This practice of passing up others on the highway was the norm in India, and only us Americans were the ones who seemed to be terrified. We learned how to deal with this by just closing our eyes while we were in the car—ignorance is bliss right?
Kerala was amazing, however. Once we boarded our houseboat, our captain took us to a remote Indian village where we spent $50 on live crab, prawns, and fish. This much seafood would’ve cost over $100 in the States. Our cook prepared the best meal for us as we rode the backwaters and drank Kingfisher (one of India’s most popular beers). During the night we docked, played games, laughed, and listened to the rain while sitting on the deck of our boat. It was such a relaxing experience, aside from the mosquitos, that brought our team closer and gave us a deep appreciation for India.
Beyond Kerala, our team got to explore Goa, New Delhi, Agra, and Mumbai. We didn’t know how huge of a country that India is, and one needs more than a month to explore all that it has to offer. As a team, we found Mumbai to be such an incredible place. We were disappointed that we only got to spend one night there (for work purposes) but we were able to get a glimpse into how amazing it was. Our client took us to the Gateway of India, where we posed for photos after being heckled by a photographer. (Indians are very persistent!) We saw the Taj Hotel and ate dinner at Leopold Café, both sites of the devastating terrorist attacks that Indians refer to as “26/11.” Mumbai was the last trip that our group would take outside of Bangalore, and it marked an incredible end to our exploration of India.
Our departure from India was bittersweet. While we were excited to return to warm showers, consistent electricity, and American cuisine, we knew that we would never be able to experience India the way we did again. IBD was a once in a lifetime opportunity that allowed us to fully immerse ourselves within the richness that is India.
Despite India’s complicated and long history of British governance, we were impressed by how resilient the people of India are. Practices and customs that we observed on our trip dated back to India’s early history, and there are very few societies that have been able to maintain their cultural integrity throughout hundreds of years.
There was never a dull moment in India. Every street, corner, temple, market, and car-ride was a surprise that kept us so intrigued. There were so many moments that our team would sit in silence while in traffic just observing what went on before us in the streets. We asked many questions in order to get a better understanding of what we were seeing, but we left knowing that there are just some things we won’t understand about India.
We left India with all sorts of feelings and thoughts. It is chaotic yet it is vibrant with abundance of life. It is blessed with thousands of years of history yet exhibiting enormous potential reclaiming its historical prominence in the world. It could be overwhelming yet you can always expect to be greeted with a friendly smile. It is such a rich place that is so indescribable, and no one will understand how different of a place it is until you visit.
We loved India, and we hope India loved us back.