Scenario Analysis

Case deals with agri e-commerce major big-basket and the barriers it is facing to unlock the agri-
business opportunity. Big basket wants to expand its business alongside with improving farmers
livelihood. Big Basket intends to double its customer base to 20 million by 2020 and in doing so, it is
searching ways to efficiently connect to farmer by training them on quality and packing aspects as
well as also enable farmers to sell their product directly to consumers.

Major barrier agri e-commerce firms are facing is of optimizing distribution channel. Big Basket
distribution channel consists of producers (farmers), middlemen (big basket or outsourced to some
other player) and the consumers. The Indian agricultural distribution channel is often viewed as
exploitative. The intermediaries in the marketing system, it is alleged, make abnormal profits at the
cost of producers and consumers. The farmers have to depend upon local traders and middlemen
for the disposal of their farm produce which is sold at throw-away price. In most cases, these
farmers are forced, under socio-economic conditions, to carry on distress sale of their produce. In
most of small villages, the farmers sell their produce to the money lender from whom they usually
borrow money. This takes us to first barriers Big Basket is facing “middlemen”. Middlemen act as a
bridge between producers and customers. One way to eliminate middlemen is to transit from
indirect distribution channel to direct distribution channel. But, it is very difficult for a firm operating
in India to eliminate middle-men, all we can do is restructure the middlemen to get efficient output.

Other important component of distribution system is producers i.e. farmers. The first major
challenge Indian farmers are facing is of small and fragmented land holdings. Sub-division and
fragmentation of the holdings is one of the main causes of our low agricultural productivity and
backward state of our agriculture. A lot of time and labour is wasted in moving seeds, manure,
implements and cattle from one piece of land to another. Irrigation becomes difficult on such small
and fragmented fields. Further, a lot of fertile agricultural land is wasted in providing boundaries.
Under such circumstances, the farmer cannot concentrate on improvement. Consolidation of land
can help increase productivity which in turn will be beneficial for both farmers and consumers.
Moreover farmers will have larger corpus, which will enable them to procure new technologies.
Most of the agricultural operations in larger parts are carried on by human hand using simple and
conventional tools and implements like wooden plough. Little or no use of machines is made in
ploughing, sowing, irrigating, thinning and pruning, weeding, harvesting threshing and transporting
the crops. This is specially the case with small and marginal farmers who are short of capital. It
results in huge wastage of human labour and in low yields per capita labour force. There is urgent
need to mechanise the agricultural operations so that wastage of labour force is avoided and
farming is made convenient and efficient. Agricultural implements and machinery are a crucial input
for efficient and timely agricultural operations, facilitating multiple cropping and thereby increasing
production. Also, seeds and fertilizers are a critical and basic input for attaining higher crop yields
and sustained growth in agricultural production. Unfortunately, good quality seeds and fertilizers are
out of reach of the majority of farmers, especially small and marginal farmers mainly because of
exorbitant prices of better seeds. Thus by consolidating farmers and lands big basket can help
farmers procure better quality seeds and fertilizers, sickle, etc.

The last stage of distribution channel is customer. It is of utmost importance to know what
customers are demanding. One of the major barriers is understanding demand as the trends are
changing, the demand for product is changing. Consumer demands towards healthier, convenient
and highly differentiated food. Consumer demands value addition in the food. But for fulfilling
consumer demand farmers needs to train in the parallel ways. Farmers are not aware about modern
ways of farming like organic farming, value addition in product etc.