India’s forgotten entrepreneurs
And an opportunity to impact millions of lives
Being Jet-lagged has its own benefits, one of them being you wake up really really early. For the first two weeks in India, I was up by 3AM every morning and so I just decided to go for my runs at 5:30 AM. On my way back , I would often stop at a roadside coconut vendor for some refreshing coconut water. Lets call him Sunil.
I struck up a conversation with Sunil and learnt that there were many street coconut sellers like him in the city
“but of course, none of them can match my quality” he said.
Sunil had roughly 100–150 coconuts piled up on the pavement and he bought these from some middleman. He had a cellphone (not a smartphone) but no online footprint.
He had no idea exactly how many other coconut vendors he was competing against, but he knew that there were a few. He did not know exactly what his competitors were pricing their coconuts at “but roughly the same price”, he guessed. He priced his coconuts at Rs. 40, (~ 60 cents) per unit.
Sunil is not alone. According to this article in Wikipedia, India has about 10 million street vendors like him. Most of them sell inexpensive items, handicrafts or food items. Some street vendors (a.k.a Hawkers) have a mobile set up with a wheeled hand carriage and there are others that just set up shop on the street/pavement. There are still others that carry all their inventory on their bodies. They are open for business all 7 days a week, rain or shine.
10 Million Street Vendors? If you’ve ever lived in India , you will probably realize that estimate is highly inaccurate, perhaps stemming from the government’s “official estimates” based on the number of vending licenses allotted. Oh and if you thought India got rid of the ‘License/Permit raj’ long ago, you are slightly wrong. Street vending licenses are still a reality here. Today, If you want to start vending on the streets (legally), you have to obtain a Certificate of Vending from the City Municipal office, and then find a Vending Zone to set up your vending business. (Good luck with that)
The Street Vendor’s Act 2014 mandates the above requirements, and there are several other clauses around transferability of these licenses across generations, non-compliance measures, etc.
To be fair, these are all well intentioned steps, aimed at regulating this informal sector that is subject to massive extortion and hefty bribery from local policemen and goons. The problem however is two fold:
1. Despite laws from the central government to regulate this informal sector, there is very little execution on the ground since implementation has largely been left to states and however they deem fit
2. Most street vendors are illiterate and live in abject poverty and simply regularizing them via parliamentary laws serves them no good. There are very few support structures for these vendors and their businesses. For example, where are the demand generation programs ? Also, strangely enough there no representation from the vendors in the civic bodies that will decide their destiny and make decisions such as where the vending zones should be established?
Things are changing, but are they?
National Association of Street Vendors of India (NASVI) founded by Mr. Arbind Singh is a national federation of street vendor organizations that has done amazing work to organize this highly informal sector. It is a coalition of Trade Unions, Community Based Organizations, Non-Government Organizations and professionals that work for the upliftment of this sector as well as protect its interests.
While NASVI has done great work at the policy level and has spearheaded many initiatives to enhance access to legal aid, micro-finance, insurance, basic education and healthcare for street vendors and their children, a LOT more needs to be done AND it needs to come from the market forces.
Street vendors are entrepreneurs
And like any entrepreneur, they need basic infrastructure to thrive and grow. Regulatory and policy changes are a welcome step in the right direction, but this sector desperately needs market forces to work for them. In other words, there is a need for allied services and infrastructure to develop that will help this sector improve goods and services, grow business and ultimately positively impact their quality of life.
It is a huge opportunity for an ecosystem of meaningful startups
India needs startups that will bridge this gap — between street vendors & customers. For example, Indians love street food, but there is also a sense that low quality ingredients and unhygienic methods are often used to prepare street food, something that keeps a lot of health conscious customers away from them.
If thats the case, then there is a clear opportunity for an independent 3rd party certification agency/startup that will periodically review or audit the food vendor and provide a “Stamp of Quality” which in turn will mean more customers for the food vendor.
Another demand generation opportunity is a database of street businesses are listed alongside their location and contact details, as well as whatever it is that they are selling (e.g. food, small electronics etc). This will not only provide an online footprint to these vendors, but it has the potential to eventually grow into a platform where buyers and street sellers create and exchange value. (Just look at Yelp or Zomato which started as simple online databases, and are now multi million dollar businesses. For the average restaurant listed on these websites, revenue shoots up 3X. ). Once a vendor gets their own online footprint, that opens up a whole range of new opportunities.
Supply Chain Aggregation
There is a huge opportunity for startups in the supply chain aggregation for these street vendors. This sector is ultra fragmented and has ZERO buying power by itself. Sure there are small trade associations , but supply chain aggregation is a game of scale, and there are simply too many associations that are not very powerful in negotiating prices from suppliers.This lack of buying power results in middlemen exploiting street vendors, rendering the latter incompetent in the marketplace. (After talking to Sunil , I spoke to some other coconut vendors on the streets and they were all buying inventory from several different middlemen) . This fragmentation and information asymmetry is a space where new startups can do meaningful work, impact livelihood and be profitable as well.
India’s Street vendors are her forgotten entrepreneurs that have assumed great risks to just somehow manage 3 humble meals a day. The problem is they cant quit and are stuck in this vicious loop of poverty. They need help — not charity, but a level playing field in the marketplace. India’s street vendors need other entrepreneurs to realize the hidden potential they offer. This sector is an opportunity to build meaningful for-profit companies that is not another food delivery startup. (nothing against food delivery startups)
Lets make the market forces work for these people. It’s a once in a lifetime opportunity to impact millions of livelihoods.
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