Case Studies

Digital Push: Breaking Through Market Separation Inertia

Digital push in the Chanderiyaan project provides a strong hope to thousands of collective businesses where both producers and customers can win in a competitive market. Pratik Modi and Satyendra Pandey write
Digital Push: Breaking Through Market Separation Inertia
Digital Push: Breaking Through Market Separation Inertia (Representative Image)

When the lush Chanderi fabric slips regally through our fingers, do we stop to think of the number of hands that went into its creation? More critical: did we ever pause to realise that those hands received far less than what we paid for it?

A growing chorus of experts points that market separation has long kept consumers isolated from markets. This separation is attributed to four factors, the physical distance between markers and consumers, the time difference between production and consumption, information asymmetry relating to products and market conditions, and financial separation, underscoring the lack of consumers’ purchasing power despite a willingness to fulfill needs. More recently, Modi (IRMA) and Singh (IIM Calcutta) proposed a fifth factor, capability separation, that bars poor producers or consumers at the Bottom of the Pyramid (BoP) from participating profitably in the market. One of the mechanisms to overcome market separation is going digital. This option, which has particularly eluded the small businesses, has started finding prominence off late. With COVID-19 pandemic leapfrogging businesses into digital transformation and budget 2021-22 giving an additional push by earmarking Rs 1,500 crore for incentivising digital payments, it is important to revisit how digital push can breakthrough market separation inertia.

Circling back to the Chanderi fabric, coming from a town of the historical importance of the same name, remained a craft and a sole surviving tool for the residents, especially the minority Muslim community. Not too long ago, the craft was faced with extinction, no thanks to exploitative intermediaries, poor sales, low wages, inadequate infrastructure, and relative isolation from the market. A local handloom weaver recalls, “Due to low wages… the weavers needed to take loans from middlemen and, consequently, get exploited by them as free labour burdened with huge loans.” It is a story that, sadly, finds echoes throughout the BoP spectrum, especially in India.

It wasn’t till the weavers’ plight was brought to the notice of the (erstwhile) royal Scindia family that things began to change for the better. Media Lab Asia (MLA), a Section 25 company of the Ministry of Electronics and Technology, was approached to revive the fading art form. MLA, in turn, reached out to the DEF, who, under a project entitled ‘Chanderiyaan,’ attempted to pan the temporal, financial, spatial, and knowledge separations from the formal market.

Collaborating with MLA, the DEF installed an internet-enabled Chanderi Weavers ICT Resource Centre (CWICTRC). The primary tasks of the centre involved skill enhancement, floating self-help groups (SHGs), and providing handlooms to the poor besides managing the Chanderi e-commerce portals. One arm of the Chanderiyaan project, known as the Chanderi Integrated ICT for Development Program (CIDP), has promoted entrepreneurship, healthcare, and tourism enthusiastically.

The results have been palpable. The digital push removed spatial separation by enabling online presence through the creation of an e-commerce website. This enabled reach to premium markets and hence better prices. Such a far cry from the past when poor weavers not only earned wages that were abysmally lower than the amount mandated by the government but were exploited by master weavers while being kept away from the market. The main crux of spatial reduction is the interactive galactic shared by both weavers and customers.

The DEF initiative removed temporal separation by enabling the weavers to produce their fabric with unprecedented promptness. Weavers covered by the Chanderiyaan project are involved with designing, weaving, apparel production, e-commerce, and retail. They are now able to craft new designs over internet-enabled computers. Executing their designs onto the fabric, they are able to devise the final product for sales with great speed. The introduction of new technologies to non-penetrated areas, too, serves to reduce temporal separation.

Removing spatial and temporal separation has the power to bring more producers together and foster cooperative action. As a result, more weavers started coming together, this unity has stimulated the reduction of informational separation thanks to the information that is shared through the website. Even more heartening: weavers have been able to re-invest their profits into their business. What this means is that financial separation has lessened if not evanesced altogether.

Digital not only rides on the power of connecting to the market and maintaining information symmetry. It also provides relevant self-paced training for the producers on aspects such as apparel design and finished product design, which goes a long way in reducing, if not eliminating, the capability separation. The Chanderiyaan project is just a template where digital has helped in overcoming market separation. It provides a strong hope to thousands of collective businesses where both producer and customer can win in a competitive market. Armed with the ruling government’s commitment to digital and, more importantly, incentivising digital transactions, small businesses may soon overcome the separation challenge.

(Pratik Modi and Satyendra Pandey are faculty members at the Institute of Rural Management Anand (IRMA). All views are personal.)

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