Sabziwala seeks to redefine the value chain for fresh produce in India by creating an inclusive and integrated supply model, which delivers quality fresh produce directly sourced from farmers to consumers through existing retail infrastructure in urban areas.
We are using currently available retailing infrastructure of all types (push carts, street vendors, kirana and general stores, milk kiosks etc.) as the sales platform for the product in a partnership with retailers
Sabziwala provide high quality, pre-packed, sorted, graded, weighed, priced and labelled F&V through the partner retailers.
Despite its position as the second largest producer of fruits and vegetables (F&V) in the world, India suffers a highly fragmented supply chain for fresh produce, leading to:
- High level of wastages (up to 30% in some cases)
- Multiple handlings by several intermediaries, cascading transaction costs and loss of quality
- Demand-supply mismatch
- Price volatility and lack of transparency
- Poor returns to producers and high costs to consumers
There is no significant integrated supply chain model for F&V anywhere in the country and the marketing network consists of thousands of unorganised traders, agents and vendors, each handling small volumes. Multiple handling of produce from the farmgate to the consumer adds to costs, damages quality and nutritive value and contributes to wastage. Despite steadily growing consumer demand and rise in production, the F&V segment presents a picture of inefficiencies in postharvest management, poor infrastructure, and lack of transparency and low levels of satisfaction among users all along the value chain. Organised retailers in India have not attempted to integrate the F&V supply chain, with prohibitive urban property prices, poor backward integration and regulatory hurdles combining to deter any major investment in building a scalable model for F&V marketing.
India is poised to leapfrog the “supermarket” phase of retailing (just as it bypassed the landline phase in telephony directly to the mobile age and jumped the desktop PC revolution to enter the internet era through smart phones). Real estate prices in major cities rule out the growth of supermarkets to service the retail industry. However, India has a unique advantage in legacy retail infrastructure of easily accessible neighbourhood shops run by millions of small entrepreneurs. These outlets carry dozens of lines of inventory, boast high standards of customer servicing and provide essential competition in the market to prevent monopolies from developing in the retail sector. However, over 99% of these outlets deal in “dry goods” i.e. packaged items with varying shelf life.
In the F&V marketing space, there is no model anywhere in the world which even approximates the volumes currently handled for retail consumption in India (over 290 million MTs in 2015). Thus, India has to build its own sustainable and scalable model of F&V marketing. As per NSSO data, around 55% the population reported itself to be primarily vegetarian. This presents a unique challenge to create an efficient F&V supply chain as well as an unparalleled opportunity. Given the price sensitivity of food items, an additional goal would be to create a supply chain which is cost-effective and sustainable both in economic and environmental terms. A third objective to build a large enterprise in the F&V segment would be inclusiveness, since the overwhelming majority of producers at the backend are small and marginal farmers who currently receive barely 25-30% of the final consumer price in the case of F&V. In brief, the need is to create a model which is inclusive, sustainable and scalable.
Enter Sabziwala. The enterprise approaches the challenge of F&V marketing with the following assumptions:
Farmers, vendors and consumers have to be recognized as key stakeholders and must all gain from the proposed model.
Direct sourcing and quality control at the farmgate is the secret to control cost and quality and ensure a fair sharing of value with producers.
The last mile solution being provided by vendors of all categories (push carts, street-side hawkers, general and kirana stores, milk kiosks etc.) can be leveraged to build an economically viable and socially sustainable business model, avoiding the need to create new and expensive retailing infrastructure.
The customer will recognize quality and stable pricing as market differentiators and move towards a branded F&V product, something that does not exist at present in the urban context.
In one sentence, Sabziwala seeks to redefine the value chain for fresh produce in India by creating an inclusive and integrated supply model, which delivers quality fresh produce directly sourced from farmers to consumers through existing retail infrastructure in urban areas.
The specific advantages of each category of shareholders are:
Long term buying of all produce; segregation at the farm gate, premium for higher quality
Transparent price discovery and fixed time limit for payments
Average realization goes up by 10-15 % over a medium term period of 12- 15 months
Contract farming, assistance for technology sourcing and upgrade
Total solution to sourcing of the quality product: provide packed produce as per the need place of business; reduction in physical drudgery
App and ICT- enabled support improve connect to customers; increase trust through fixed prices; processes larger number of customer due to lower transaction time per sale
Unsold material recovered from vendor for sale in institutional channels
Earnings increase as vendor increase efficiency, new product line like organic/low input produce attract additional customer
Assured quality and competitive price; end to haggling with vendors
Can request home delivery through mobile app/telephone from familiar dealers/vendor; no need to visit congested market, negotiate traffic, contribute to and suffer pollution
End to the lumpy purchase once or twice every week; buy daily in similar volume, fresh quality
Remain connected to familiar vendor; not dealing with a new and familiar actors or process