3A Bazaar: Retail Markets on Wheels

Posted by Andrew Meyer on January 30, 2008

Driving through rural India you will run into thousands of village corner shops (or shacks) carrying everything from tea to rice to fruit to basic medicines and ointments.

These rural corner markets are all run by entrepreneurs that live on very small profit margins (as they usually get their stuff via a middleman's middleman or make the long, expensive trek into a nearby city to buy their inventory).

All the retail they carry are packaged in really small portions. This is because their customers (fellow village residents) all make very small daily wages, if any (probably under $2 per day).

I was reading Sagar Gubbi's blog over at Social Edge and I came across a recent post he wrote about 3A Bazaar.

3A Bazaar is so amazing.

Here's why: They saw that modern retail wasn't penetrating rural India so they decided to create an innovative retail solution: Retail on wheels.

Here's how it works: 3A Bazaar packs their large vans full of retail items like grocery, personal care, health products, cosmetics, household items etc and drive from village to village on a routine basis serving rural customers straight from their vans.

They have over 10 vans and they serve over 700 villages each with less than 10,000 population on a daily, weekly, or monthly basis.

This benefits rural areas for many reasons:

1) Benefits both the rural BOP (bottom-of-the-pyramid) customer and the corner market entrepreneur by bringing them cheaper, quality products direct (cutting out the middleman).
2) Cuts out the expensive opportunity cost of traveling to the city or another rural village to buy your items
3) Allows modern retail to reach rural India since they don't have to build unsustainable brick-and-mortar stores (this was a big reason they didn't penetrate rural India before)
4) Rural customers are already "educated" on retail products due to the phenomenal prevalence of TVs (and plenty of TV ads) in their small, "rustic" village homes. This means that retail companies don't need to spend more advertising money on these new rural customers and can instead offer better prices (because of greater economies of scale).

I'm pretty sure plenty of readers are saying to themselves, "Isn't this bad for the local entrepreneurs with their small corner shops?"

I don't think so. In fact, I think it's better for their business.

Here's why: They now have access to better, cheaper inventory instead of buying their inventory from cutthroat middleman or wasting a business day traveling to the city and back for reasonably priced inventory.

You might also be thinking, "But... now that the local entrepreneur's local customers can buy directly from 3A Bazaar's vans why would they buy from the local corner market?"

Oh, they definitely will keep buying from their local corner market.

Here's why: Most rural villagers make under $2 per day. This means that they live financially from day-to-day.

They can't budget and buy inventory for the long term. They focus on the short term. They spend their money on whatever they need for that day (sometimes week).

And, guess what?

3A Bazaar's vans aren't going to be sitting in their local villages every day. They will still depend on their local entrepreneur's corner shop when they need to buy something for their immediate short term need.

Here are some other cool things that 3A Bazaar plans to do:

1) Organize health camps
2) Provide technical expertise to farmers
3) Provide info on education
4) Enhance the savings

Again, you might be thinking, "Isn't 3A Bazaar just trying to bat their eyes at the media and bloggers like you with these good-but-not-profit-raising intentions?"

Maybe. I think its just smart, good business.

Here's why: Smarter, healthier and more educated consumers is win-win for both companies and consumers. It translates well to both 3A Bazaar's bottom line and the rural consumers' bottom line.

Expect to find plenty more posts on this blog for the "Under-$2-Crowd."

Other cool Social Edge blogs to check out: Kiva Chronicles. Matt Flannery updates it from time to time with inside looks at Kiva's awesome microlending-to-entrepreneurs-around-the-world site. He is the CEO & co-founder of Kiva (a startup I tried to work for straight out of college).

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