As rural e-comm picks up, a startup is boosting supply chain

The contribution of e-commerce in India’s FMCG sector has been increasing consistently. The sector is expected to expand at a compounded annual growth rate of 14.9% to reach $220 billion by 2025, from $110 billion in 2020, as per a report on the FMCG sector by India Brand Equity Foundation (IBEF).

Although the rural sector accounts a 45% share, which is less than the share of the urban sector, its consumption has been on the rise. The FMCG industry grew by 36.9% in the second quarter of 2021, despite nationwide lockdowns.

The low penetration level in the rural market makes it a difficult choice for established brands to reach to the remotest pockets of the country.

“Although a lot of these big brands wish to have a wider presence across the country, they find it unviable to reach small rural pockets due to the cost ineffectiveness,” said Sanjay Kaul, Founder & CEO, Xpand, a last-mile connectivity company.

Xpand, conceived in March 2021 under its parent company Last-Mile Channel Enhancement (LMCE), is a tech-based B2B organisation that appoints local distributors in the affluent pockets of rural India. It aggregates orders from these distributors and assists them to source their requirements from its network of established brands.

While building a network of retailers from scratch is a major problem for a new distributor in a rural area, other challenges also exist.

Lack of expertise in terms of order management and access to established brands also remain as bottlenecks for the distributors in the rural pockets.

Ever since the outbreak of the pandemic, there has been a pent up demand for fast-moving consumables from rural households due to the reverse migration scenario the nation had witnessed during the lockdowns.

“Since we train and appoint our own distributors and set up our own logistics, it becomes viable for us to reach to these remote pockets. Aggregating orders from a number of places and reaching out to big brands makes it a win-win situation for the companies and the distributors alike. The distributors benefit by way of having access to a number of companies from a pool of 20-25 odd companies we work with at Xpand,” said Kaul.

Technology is at the centre of enabling the last mile connectivity, he added.

The company’s artificial intelligence- and machine learning-enabled app helps distributors to understand the consumption pattern in the neighbourhood and keeps them updated about the ongoing schemes and product releases, helping them manage their orders.

“We have partnered with well-known names like Philips, Godrej, Emami, and Shell lubricants. With a current network of about 500 distributors in the state of Uttar Pradesh and Bihar, we are looking to expand our network to 4,000 distributors across 20,000 villages connecting around 3,00,000 villages,” he said.