By Anusha Ashwin
Last mile reach! That is the near term as well as long term target for any e-commerce company. Although, the line between rural and urban India is fading, not many accomplished e-commerce players in the industry have reached consumers in rural parts of India, it just figures in their long term plans. The rural populace in India still travel a distance to nearby cities to purchase basic, luxury and FMCG products. It is proved that consumer demand for FMCG products are not just limited to urban India but there is a steady increase in demand, especially electronic gadgets, appliances and cosmetics, from the evolving rural population. Internet certainly has penetrated into rural, remote and very remote parts of India, but the e-commerce industry has not generated significant revenues from selling in rural India.
In an attempt to cater only to rural India and completely taking out urban India from its radar, Chennai-based Boonbox exploits its expertise in the hub-and-spoke model of logistics in delivering everything under the sun to villages in India that has a population less than 50,000. Boonbox is an exclusive rural e-commerce platform created by well-established Inthree Access. Boonbox’s primary business is to source and sell almost everything from consumer durables to FMCG to the rural customer. Incorporated in 2011, Boonbox was founded by financial experts Ramachandran Ramanathan and Kartick Natarajan. Both Ramanathan and Natrajan quit large financial organizations to establish Inthree Access. They quit at the time when, at their previous roles, they both discovered a large untapped segment in rural India that has guaranteed money-back potential.
In their maiden effort, Ramanathan and Natrajan launched Inthree Access Services in 2004 to distribute solar lamps, smokeless stoves, and micronutrients to households in semi urban and rural locations in India. From that point, their experience paved way to progress deeper into the rural markets and they gained confidence in spinning Boonbox in 2011.
Capturing the rural markets
Analyzing the length and breadth of the country Ramanathan could visualize business generating from 650,000 Indian villages. Statistically indicating, he says that about 850 million consumers inhabit these villages, which is about 70 percent of Indian population. These villages are spread over 3.2 million square kilometers and around 10 per cent of these villages have a population of over 5,000 and about 55 per cent have a population of 500 people or less.
“On the word go, Kartick and me did not want to do what everyone else is doing. We knew we were good at selling and managing finances, but we did not want to run any race. Rural market is typically one of those dark unchartered territory of India, where factors like last mile reach, poor connectivity, etc., forces marketers to choose urban and metro areas. So, we opted for the rural area where a large white space was perceived and we knew it will give us the opportunity to develop the business model that’s unique and we were confident that it offered us a no competition area,” Ramanthan initiates the conversation.
When the duo launched their business they not only sold solar lamps to rural consumers but they also designed and formulated consulting-marketing strategies for marquee clients like Nokia, Samsung, Heinz, Godrej and other popular FMCG brands. Ramanathan’s Inthree started offering rural project implementation services, such as designing and implementing projects that help corporate customers and institutions reach their products and services to their target audience in the rural and bottom of the pyramid customer space. These clients then urged Ramanathan to get into selling in the same rural markets that they were analyzing.
Between 2008 and 2009, the consulting experience taught them to venture directly into catering the B2B vertical. They devised a strategy to work along with existing rural FMCG aggregators, rather than churning an entire new model. They first tied up with micro finance operators, India Post and NGOs as aggregators to distribute products. With this model, Inthree soon became successful in distributing solar lamps, smokeless stoves, water purifiers and micronutrients to households in rural parts of India. By 2010, Inthree’s strength in distribution was realized and the company earned significant revenues by distributing major branded products to the rural community. As Inthree pioneered in selling solar lamps and water purifiers, customers made direct demands to sell mobile phones, computers, peripherals, consumer durables and everything else that an urban customer would aspire for.
Ramanathan at this point felt the swelling demand for larger brands from the young rural community. “The demand for next-gen mobile phones, tablets can be evidently co-related to the penetration of digital media and the influence of cable television advertisements. My partner and I knew that it was the right time to cater to the wants of the rural consumers rather than just catering to their needs. The rural consumers were on par with their demands with any urban consumer and we felt “their want” to own high-end phones, durables and modern goods was increasing but they did not have access to its purchase. That’s when we launched an exclusive e-commerce website, BoonBox to enable villagers gain access to commodities and gadgets,” indicates Ramanathan.
Creating Boonbox as a spin-off
In 2011, Inthree devised and incepted a hybrid e-commerce model called Boonbox. “Boonbox was primarily incepted to be a major part of the rural e-commerce that is customer-driven. We placed Boonbox at a pivot where the company enables and caters to majority of the rural consumption. From catering to just B2B segment, Inthree scaled-up to catering to B2C through Boonbox. We moved focus from customer wants to customer needs. We launched both the B2B as well as B2C verticals in Boonbox. We also decided to work on an assistance sale model with the help of our Boonbox App, because the rural customer is unlikely to go to the internet and click. Rural retailers would need somebody to click on their behalf and take the order,” explains Ramanathan.
Ramanathan and his team created Boonbox to enable customers to place orders online on its portal boonbox.com and they also created a Boonbox App. Boonbox then forged alliances with many leading manufacturers of consumer durables, appliances, electronics, mobiles, gold & silver manufacturers and distributors, furniture, apparels, etc. “We have almost 80 prestigious brands associated with us in various categories who have expanded their brand presence in rural India through Boonbox,” indicates Ramanathan.
How does Boonbox work?
As step one, Ramanathan created an e-commerce platform (www.boonbox.com) that is multilingual and easy to access by the rural community. Boonbox’s portal has both B2B and B2C elements built into them. In the B2B segment, Boonbox’s sales team reaches out to the retailers in rural areas. The retailers have direct tie-ups with manufacturers to buy and sell products to rural customers. Boonbox books orders based on the retailers’ need. Boonbox agents then collect the cash and supplies products through its hub and spoke logistics arm.
In the B2C model, which was recently improvised in 2015, Inthree has identified influencers at Panchayat level in villages and has appointed these as Boonbox Associates. They are given an android tablet with Boonbox app. The app is an e-catalogue where in coordination with the suppliers, the product and inventory details are directly integrated through an API. The Boonbox Associates show the app-based e-catalogue loaded in the tablet to consumers and book orders in the app, collects cash and transfers them to Inthree. Boonbox’s sales team periodically meets the rural retailers to take orders, collect the money and delivers the list of products they want at their doorsteps in case of B2C and at the retailers shop in B2B.
“The primary business at Boonbox is to source and sell almost everything from consumer durables to FMCG to the rural customer. Most of these villages do not have any last mile connectivity and each village cluster is unique. So, based on the geography and existing network Inthree has set up a hub and spoke logistics network to reach out to these villages. Through this network Inthree delivers the products to the end consumer. To provide after sales support Inthree has set up multilingual call centers. In case of any issues consumers contact these call centers either directly or through Boonbox Associates. Call centers in turn coordinate with the respective suppliers to sort these out,” explains Ramanathan.
Explaining more on the app’s advantages, Ramanathan further says, “All orders are taken only through the Boonbox app. It can be best defined as an assisted sales app. A unique feature of the mobile app is that it can work as well as process orders even in areas without Internet network but one has to be a Boonbox associate to place an order. Boonbox sells only the products of its partners. Any manufacturer or wholesaler with a good product portfolio needs to enroll as a partner with Boonbox. After evaluation Boonbox will add their products in its portal and start selling. Boonbox has created its own hub-and-spoke logistics network to deliver products directly at the doorsteps of the rural consumers as many of the villages lack proper transport and connectivity.”
Quoting about his successful model, Ramanathan says, “We have almost 80 prestigious brands associated with us in various categories who have expanded their brand presence through Boonbox and created a completely different market for their products, and these numbers are growing exponentially every month. For Samsung alone, Boonbox has enabled selling 10,000 mobile phones in rural India. Inthree’s Boonbox is the most trusted partner for Samsung’s rural market business in South India. Close on heels is Intex brand of mobile phones, for whom Boonbox has registered significant number of orders.”
Since its inception in 2011, Boonbox has sold over 1.5 million durables worth around Rs 1 billion to more than 1 million households spread across 15,000 villages in 4 states. In the B2B segment, Boonbox caters to more than 1,040 retailers across southern India. So far, the company has been successful in taking large brands to rural areas of Karnataka, Andhra Pradesh, Telangana, Tamil Nadu and Kerala. Currently, Boonbox has expanded its e-commerce services from the 4 southern states of India to 7 states including West Bengal and Odisha.
Cash positive, slow-steady expansion
Inthree’s Boonbox certainly has the right revenue generation model in hand. The company has been cash positive since inception. “We have always been positive in terms of unit economics. Revenues for the company come from the margins. For every transaction made Boonbox makes a margin on the sale, and the margins set for rural market is higher than urban areas,” expresses Ramanathan. Apart from making margins on selling on in the e-commerce portal i.e., Boonbox, Inthree makes revenues by rendering consultancy on rural strategies in marketing and distribution of products for industry biggies. Recently, Boonbox tied up with B2B wholesaler Metro Cash and Carry, where Inthree will handle rural e-distribution for the wholesaler’s clients.
In the mid-years of operation, Indian Angel Network backed Inthree with significant funds. In this interaction, Ramanathan expressed his intention of firming up plans to raise Series A funding of $4-6 million and he said he is in talks with several potential investors for the funding round. He intends to use the funds to establish a Pan-India presence and slowly grow to house one warehouse in every state; create more rural employment and enable deeper penetration of its client’s products. In long term, Ramanathan aspires to slowly penetrate and replicate his rural e-commerce model in other unexplored Asian communities and may be even Africa in the coming years.