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With a technology based infrastructure, 72 Networks aims to deliver consumer durables, including mobile phones, consumer electronics and home appliances, within 72 hours in the rural areas across India. In an interview, Srinivas L, Chief Executive Officer, 72 Networks speaks to Mohd Mustaquim on the company’s journey, future roadmap, operational challenges, technological innovations in last mile delivery in rural areas and many more related issues...
What is the basic objective of 72 Networks? Kindly elaborate about your logistic services to the marketers.
72 Networks is a new age Pan India last mile logistics enterprise with a special focus on rural areas across India. We have been in effective operation since 2017 with a vision to create a thriving ecosystem to fortify the lifestyle aspirations of the rural populace of India. We are currently operating in 14 states with 53 dedicated and fully functional warehouses.
We aim to deliver consumer durables, including mobile phones, consumer electronics and home appliances, in the remotest parts of the country. We have a technology-based infrastructure capacity that strives for last mile delivery within 72 hours.
72 Networks is opening an alternate channel of almost 15 crore consumers for OEMs (original equipment manufacturers) , which is why we have alliances with the country’s top OEMs like Samsung, Nokia, Xiaomi, Maharaja, Singer and many more. At the other end of the spectrum, we are taking the cross-selling business as an additional channel of financing for MFIs (microfinance institutions). Currently, we are actively servicing clients of BFIL (Bharat Financial Inclusion), Fullerton, Fusion, Spandana and much more. These MFIs offer a member base of over 15 crore as an untapped market for these OEMs.
What was the inspiration behind 72 Networks to provide logistic and supply chain services in the roughest terrain in the country where marketers are reluctant due to high operational cost?
Microfinance, as an industry has rapidly expanded over the last few years providing financial access to a very large rural population that was hitherto excluded from the country’s financial system. This segment of the population, with the help of micro credit have been able to generate a steady residual income that has seen an improvement in their lifestyle and fulfilling aspirational needs.
This has led to the rural populace coming up as a new market with a huge potential for manufacturers of consumer durables and electronics. Rural consumption is in fact gradually overtaking the urban consumption. But the logistics and the cost have always been a challenge when it comes to on time last mile delivery. These consumers live in the hinterlands of the country and deserve the same delivery service as their urban counterparts.
The holy grail for us is to provide rural India with ample opportunities to achieve the lifestyle they have been longing for. The ultimate reward for us is the smiles on the faces of the rural women in India when they unpack their first smartphone or the refrigerator they have been meaning to buy for years. 72 Networks not only plays aggregator between the MFIs and the OEMs but also facilitates the lifestyle aspirations of the people living in the rural India.
How has been your journey in the rural markets since inception?
We began our operation in November 2017. We rely on our cutting-edge technology-driven delivery system and routes planning to trace product deliveries within 72 hours. We have a “No ODA (outside delivery area) Concept” to deliver to every pin code in the 14 states across 53 warehouses. To date, the company has made about 2.5 lakh individual rural deliveries since inception across the country and has delivered in almost 12,000 pin codes and counting.
72 Networks closed FY 2018-19 with a positive top line of Rs 70 crore. And already reached a top line of Rs 100 crore in the third quarter of FY 2019-20.
How does 72 Networks improve supply chain and logistic services in the rural areas and help organisations catering to rural markets?
72 is a new age venture which thrives on technology. Using technology as the backbone and a vast network of mother and micro warehouses, we have created a robust distribution system that flourishes on last mile delivery in rural pockets. The vision is to provide the rural customers the same services akin to their urban counterparts.
72 Networks is known to take full responsibility for delivering consumer durables up to the last mile. Our tech-enabled delivery systems ensure a strong operational infrastructure and fully traceable product deliveries.
Our full fledged last mile delivery platform has been honed with AI (Artificial Intelligence) and ML (Machine Learning) as the backbone of our infrastructure. Plus, we have a Pan India reach and ensure full rural coverage where there is no proper functional connectivity through roads. We connect well with organisations catering to the rural markets of the country.
Also, our diligent and industrious team handles all the operations across India to give a flawless experience to the end customer as well as our clients and partners. This company started off with three people and now have onboarded more than 200 employees to date.
Also, we have our own indigenous route optimisation tool, automatic task allocation system, deep learning software easing last mile contact in remote areas with questionable network connectivity of the end customers and much more.
What challenges do you face in operating in rural India and how do you tackle them?
If it was not for the tech-enabled infrastructure of 72 Networks, we would have faced all the challenges that pertain to last mile rural delivery in India. A seamless last mile delivery experience is still easier said than done and there are some serious challenges that brands encounter time and again. Cost is one such challenge. Also, when it comes to last mile rural deliveries, locating the address and the end consumer is a big hurdle. The communities in the tier-4 and above locations are so remote and the names of the end consumers are so similar that pinpointing the correct delivery address is a stumbling block.
To tackle this problem, we have gone a step ahead with our inhouse Android based SCM (supply chain management) application, Pragati POD. The App lets the field agents scan the invoices and gets complete order details in a systematic fashion. The delivery agents can easily acquire the directions to the last mile and deliver to the end customer without any hassles. This App uses latitudes-longitudes to determine the exact location of the end consumer.
In what geographical areas you are operating in and what criteria do you apply while selecting a market for entering into?
We are currently servicing the members of various MFIs in 14 states, including Bengal, Odisha, Chhattisgarh, Karnataka and Rajasthan being our biggest markets. The areas we cater to are the ones which have a potential to grow. The basic criteria we consider while selecting a market for entering into is the demand in the area. We collaborate with various MFIs to identify high demand areas and cater to the lifestyle aspirations of the rural populace.
How is distribution and retail strategy in rural India different from cities and metros?
The main challenges for the logistics business to fortify in rural India are infrastructure problems in remote locations, no real time visibility of orders, low volume density and consumer/area nuances. Technology should be used as the backbone to create a robust distribution system that a last mile delivery system can leverage in rural markets. Also, including people from the rural landscapes as employees can incorporate a sense of familiarity for the end consumers and provides employment opportunities.
What are your plans for the year 2020 and onward?
72 Networks is excited to get into next business growth phase which is to use technology - primarily AI as a tool to drive the businesses thereby achieving higher profitability and reach 150 crore of business in FY 2019-20. Our vision is to reach every rural household by 2022, with a foot print of almost 2.5 lakh RDTPs (rural distribution touch points) across the country and achieve a topline of 1000 crore.