Wednesday, March 30, 2011

field report from west bengal

First off, a big apology to anyone who has been checking my blog frequently enough to know that I am massively behind in posting. I have been on the road for most of the past three months, and have many experiences and findings to relate. Getting these up quickly is a priority for me over the next few weeks, so I promise frequent posting.

Last month I set off to West Bengal to visit ONergy, a budding Calcutta-based solar lighting company working with communities in the Sundarbans and other remote regions of West Bengal. I was incredibly lucky to be joined by my childhood friend Rachel for the adventure, so together we set off on a 20-hour train ride from Delhi to Calcutta, accompanied by two loud-cell-phone-talking berth mates with overpowering body odor.

We spent a day exploring Calcutta, graciously hosted by ONergy’s founders, brothers Piyush and Vinay Jaju, and Vinay’s wife Ekta. Calcutta was the India I’d originally imagined; crumbling, once-white British colonial buildings sighing in Calcutta’s heat, overrun by tropical flora and poori wallahs stirring boiling pots of oil.

From Calcutta we headed out into West Bengal’s rural villages, accompanied by ONergy’s engineer-cum-tour guide, Mahendra-da, who met us at the local train station and promptly translated Rachel’s name to “Wait-ah.” I was simply “Madame.” The names would stick for the remainder of the trip. “Wait-ah, Madame, please come, you take the ladies car.”

It was my first ride on a local train, and though I like to think myself savvy at Indian train travel at this point, I was entirely unprepared for the life-and-death battle that ensued in the rusting, dirt-encased ladies car. We were early enough to secure seats for the ride out, awkwardly squeezing our cucumber sandwiches past old ladies’ bare stomachs pressing against our knees as we watched Calcutta’s traffic and chaos dissolve into the Bengali countryside.

De-boarding the train, however, was among the most terrifying experiences of my life. In India there no expectation that train passengers will be let out before others board. The train hadn’t even come to a stop, and the masses of saree-clad village women, vendors selling hair elastics-toothbrushes-Indian flags, and even some male passengers (in the ladies car?!) poured into the train, ruthlessly shoving me back into the center as they tried to squeeze an impossible number of passengers into the train car, which looked as though it would unhinge any minute. I had no escape route. Just as it seemed all was lost, and I was doomed to ride in the ladies coach forever through West Bengal, I felt a surge of adrenalin, desperately clawed my way through the masses blocking the train door, sending ladies, vendors, and creepy-men-in-the-ladies-car flying, and leapt onto the train platform. I wish I could say that it was just in time before the train pulled away, but alas, despite the desperate stampede, the train wouldn’t pull away from the station for another ten minutes. We found Mahendra’s grinning face in the crowd. He was entirely unphased.

From the train station we boarded the preferred mode of transportation in rural West Bengal – flat carts (or, as Rachel named them, “pallets”) attached to a bicycle or motorbike, usually over-piled with passengers hanging their feet off the side. Our journey into the Sunderbans involved a bicycle-pulled pallet, a motorized pallet, an auto rickshaw, another motorized pallet, and finally a boat to the island where we would set up residence in the examining room of a local NGO hospital. We luckily arrived at the hospital unscathed, despite no less than four crashes between our motorized pallet and other vehicles passing on the narrow paths.

It’s difficult to relate the landscape of West Bengal and the Sunderbans, as it’s unlike anything I’ve seen before. Water is everywhere. Thin channels of water lining raised cart paths. Rice paddies with perfect alternating rows of bright green stalks and muddy water. Fishing nets on the side of small pools abutting mud hut villages, surrounded by beautifully constructed towers of hay. Not a bad backdrop for several days of visiting small villages to interview ONergy’s solar lighting customers.

Now, a brief overview of ONergy’s distribution model, which I’ll say right away is among the most impressive and well-designed of the many organizations and companies I’ve gotten to know over the past seven months. Vinay, Piyush and Ekta did substantial market research and groundwork to develop their delivery model, which has continued to evolve over the past year as the company has expanded.

Most distinguishing about ONergy’s distribution model are the incredibly close relationships the Jajus have cultivated with local NGOs and microfinance institutions. These relationships, which are rooted in trust and mutually beneficial agreements, have allowed ONergy to tap into the NGOs’ extensive networks in each region where the company operates.

ONergy employs a “hub and spoke” approach, with three “renewable energy centers” (RECs) that serve as regional hubs for promotion, sales, training, inventory stocking, installation, and after-sales service. Each of these RECs, which are staffed by several locally-based employees (“field staff”), serve as a platform for building relationships with local NGOs and for training local “rural entrepreneurs” (REs) to promote ONergy’s products, conduct commissioned sales, and provide post-sales servicing. I find it’s easier to view the model graphically. Here’s an overview of the company’s model, which as of now includes three RECs in three different regions of West Bengal.

ONergy provides training and financial incentives (I’ll get more into that later) to the NGO, and in return the company gains access to the NGO’s networks, such as self help groups or MFI collectives. These networks are extremely valuable; convincing a poor rural customer to buy a solar lighting product requires a lot of trust, which the NGOs have built over many years. Marketing its products through an existing trust network is enormously helpful to ONergy. Both the NGO staff and ONergy’s own employees promote the company’s products through these networks. If it has an MFI arm, the NGO is also responsible for loan collection from customers who buy the products on credit.

In addition to working directly with the NGO to promote its products, ONergy’s field staff train “rural entrepreneurs” (REs) to sell products on a commission and provide post-sales service to existing customers. REs can be identified by the partner NGO, or by ONergy staff. These REs either engage with the NGO to promote products through the NGO network, or work directly with their local communities to educate potential consumers about ONergy’s products.

ONergy’s model is a hybrid business/nonprofit approach, and the company's success so far can be attributed to the strong, trusting relationships it has established with prominent, regionally-focused NGOs. The approach seems to be working so far, but I wonder about scalability when a business model is highly dependent on the participation of nonprofits, which obviously have a number of competing priorities beyond solar lighting. Still, ONergy continues to grow, and I’m looking forward to watching it expand its impact in West Bengal and other regions of eastern India.

the basics

I recently presented on my research at the Fulbright conference in Goa. It was a great opportunity to digest my research and relate my findings as of yet, and it inspired me to return to some of the basics I initially covered on my blog.

I've drawn from two key reports to shape the framework through which I am evaluating companies' distribution strategies. I’ve already mentioned the Lighting Africa report, which describes different distribution models for solar portable lighting products in Africa. Earlier this week the Centre for Development Finance (CDF), a Chennai-based research think tank affiliated with the Institute for Financial and Management Research, released a new report on distribution challenges for India’s rural Base of the Pyramid population. It’s a very digestible report and definitely worth a read, and it does a great job of mapping out distribution models in India's solar lighting market.

As I have already discussed, I am focusing on two of the three key pillars (accessibility + liquidity + affordability) of solar lighting delivery, as described by Mayank Sehksaria of Greenlight Planet. In its report CDF describes a more specific set of components that are critical to product distribution in the rural BOP market. Four key components from CDF's list fit neatly into Mayank's framework:

I’ll begin by narrowing in on the “accessibility” pillar first. Both Lighting Africa and CDF describe general channels through which an organization can promote, sell, and deliver its solar lighting products to rural BOP consumers. Rather than recreate the wheel, I’ll borrow from these two reports to categorize the three main distribution models employed by India's solar portable lighting entrepreneurs.

Distributor – retail channels: A company sells its solar products through traditional distributor-retail channels through which most normal “fast moving consumer goods”* (i.e. soap, toothpaste, etc.) are channeled.

Proprietary distribution: A company has its own salaried or commissioned sales force that promotes its products and facilitates distribution from stock rooms or warehouses.

Institutional partnerships: A company partners with another entity to promote, sell, and even deliver its products. Such partners can include:

  • NGOs (and affiliated self help groups)
  • Cooperatives
  • Microfinance Institutions (both for- and non-profit)
  • Distribution companies
  • Other rural-focused companies
  • Rural banks

While some companies are focusing their strategies on specific channels, most are trying out a little bit of each. I’ve mapped some of the companies I’m looking at to the different models they are implementing:

Some of these distribution channels also play a role in the “liquidity” component of the delivery model. For example, microfinance institutions (MFIs) can help with both the promotion and distribution of products as well as consumer financing. Self help groups (SHGs) are another useful channel for both product promotion/distribution and financing; companies can partner with an NGO to gain access to its SHG networks, and in turn train an SHG member to promote and sell its products. Ideally, when members are convinced to buy the product, they have a ready loan facility through the SHG to purchase the product. Rural banks can also serve as distribution and financing channels.

*According to Wikipedia, FMCG are “products that are sold quickly and at relatively low cost. Examples include non-durable goods such as soft drinks, toiletries, and grocery items.”