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For those who are interested in the Bottom of the Pyramid phenomenon in India, one cannot avoid two experimentations that have been systematically cited as examples throughout the world: Shakti and e-choupal! I will only concentrate on relating the Shakti project, a classic “case study” conducted by the Hindustan giant UNILEVER in order to adapt its packaging and its distribution network to the constraints of rural areas.

For those of you who are beginners, a few definitions – the “bottom of the pyramid” is just the simple idea that the least poor of the poorest represent a considerable portion of the population that is growing and that they have a sufficient overall purchasing power that it is worthwhile to rethink the distribution channels or network and to consider adapting products and services in order to reach this market segment. (For more details please visit http://en.wikipedia.org/wiki/Bottom_of_Pyramid.  This can be translated on a day to day basis as follows: the corner street seller of Pondichery who sells single cigarettes or a pre-paid telephone recharge card for less than 1€ and the more exceptional (as we will see in a bit); with other derivatives…It is in any case, the new leitmotiv pour those who are “in the know” in the realm of the war on poverty. Micro credit or micro finance is not bad but its seen to be a bit “outdated”, products need buyers, organisations are becoming industrial (thus efficient but nasty, of course). Okay so now there is something to content most, the major enterprises that become “nice and kind”, the poor who become consumers.  Yes, I’m a bit cynical but in the end even I’m taken with the idea.In the depths of the Andra Prades, 150 kilometres from Hyderabad (you know, the Mecca of micro finance and new technologies), lives Rojamma, a single mother. The special issue of the June 2008 World Bank Institute’s magazine, Development Outreach, tells the story in its article “Business and Poverty, opening markets to the poor”.Rojamma’s life changed the day she met a Unilever Hindustan sales representative. She earns around 10 euros per month, is now recognized and respected by her peers and has become a model for those who wish to escape poverty. At the end of the 1970’s, the economist Raymond Barre kept shouting that the “unemployed” should create their own enterprises. Today’s slogan in India is “become a Project Shakti Entrepreneur” – meaning open a shop in your village and sell the numerous Hindustan Unilever products (you know, that also means Lipton, Lifebuoy, Surf products too). From soap, food products to cosmetics… it all amounts to an annual turnover of over 2 billion dollars. But sell to your peers, repackaged as necessary adapted to your tastes and to your budget.For Unilever, it is of course the opportunity to diversify its markets and to craftily rethink their distribution network and a supply chain that should touch even the most remote villages, much less concentrated that urban areas.For the poorest, we do hope so in any case, it’s a manner to increase their “lifestyle level” and have access to everyday consumer products. It’s particularly a way to create new market outlets and to upscale micro finance (micro credit) projects.The Shakti model (in Hindi – shakti means force) is as follows:l  Distribution is based on the direct sales model. Shakti uses Indian women “self-help groups” which are quite developed and supported by the microfinance organisations. (see my September postings!) During the group meetings the women with entrepreneurial potential are identified and then offered training and coaching to become a “shakti entrepreneur”. They are then allotted $200 for the initial investment in stock (products), often financed by a micro credit loan, with a potential village clientele of 500.l  The products are specifically packaged for the low income consumers.  Example: the option a single dose of shampoo for half a euro. On the average, a woman “shakti entrepreneur” has sales of $225 dollars per month with a profit of $16 from which she subtracts several dollars to reimburse her initial loan. $150 per year is significant when one considers that annual household income in rural areas averages $250 per year.On this basis, other projects have been attempted: Shakti Vani (the voice) to transmit cultural, hygiene or family oriented information to Indian women via the local shops. 50000 villages are now covered today. I-shakti, another project, aims to furnish free Internet access accessible via the village sales shops. More than the Internet connection itself, the access to information services and to training are offered both in text and voice modes, to fulfil the needs of more often than not illiterate population.Since its creation in 2000, Shakti has covered 100000 villages in 15 Indian states with 46000 women “shakti entrepreneurs” reaching over 3 million consumers. The largest “home to home” sales network in the world! In 2010, it could reach a global turnover of more than $ 25 million per year, with a clientele of 600 million people in 500000 villages via 100000 “shakti entrepreneur” women.An evident extension, not easy to turn into reality (and that I’d personally like to see happen) would be the creation of vast ecosystem of NGO (non governmental organisations) around the selling points. In this type of business, an important lesson to retain is that it is difficult to dissociate social work, health & hygiene, improvement of competencies and the turnover in sales.  

This post has been translated by Elizabeth Devlin, one of my former colleague in Scientipole Initiative, the only american-french woman to take care of international development of young and innovative enterprises !