Indian Tobacco Company

Taking the Internet to the villages and empowering rural India with information at the click of a button is what best describes ITC's much acclaimed initiative - E-Choupal. ITC has combined digital technology with the Indian concept of a gathering place, choupal, to redefine the dynamics of distribution. ITC's unique Rs. 60 crore web based initiative offers wheat farmers of India all the information, products and services they need to enhance farm productivity, improve farm -gate price realization and cut transaction costs. With the e-Choupal farmers can learn online the best scientific farming practices for their crop, the prevailing prices and price trends for the crop in the Indian and world markets, the intricacies of risk management, and the local and global weather information - all in Hindi. Individual farmers thus get the benefit of expert knowledge for the cultivation of their crops. e-Choupal also facilitates the supply of high quality farm inputs as well as purchase of commodities at their doorstep. Today, ITC has 4,500 e-Choupals connecting 18,000 villages across Madhya Pradesh, Uttar Pradesh, Andhra Pradesh, Karnataka and Maharashtra. The main portals of the e-Choupal initiative are soyachoupal.com connecting soya farmers in Madhya Pradesh, Rajasthan and Maharashtra, plantersnet.com for coffee traders in Karnataka, and aquachoupal.com linking shrimp farmers in Andhra Pradesh all available in the local language. The e-Choupal idea cuts through the basic and historic problems crippling Indian agriculture fragmented land holdings, high levels of illiteracy - which make agricultural extension work unviable, and the application of laboratory research findings to agricultural cultivation daunting. The e-Choupal makes use of the physical transmission strengths of the current intermediaries the only efficient option in the context of Indias weak infrastructure, making them an integral part of the value chain. Yet, by using the real-time multicasting ability of the Internet, these intermediaries are bypassed to deliver information and market signals directly to the farmer to enhance the long-term competitiveness of their businesses. As a part of the e-Choupal, ITC has set up Internet kiosks in villages. Local farmers called sanchalaks manage these kiosks. At the kiosks, the sanchalaks serving as an interface between the computer and the farmers help them readily access the different agricultural crop-specific websites. e-Choupal leverages the seamless workflow capabilities of IT to virtually integrate best players along the chain and offer the services on a single platform to every farmer. The virtual aggregation of such demand effectively reduces the cost of these inputs, again bringing the power of scale to even the smallest of farmers.

Then, theres what it has done for the farmer. e-Choupal links the Indian farmer to the consumers in local and global markets, by leveraging ITCs competencies in branding, marketing and distribution. Unlike in the alternative mandi channel (where a farmer discovers the price for his produce after he has incurred costs of transportation, and therefore ends up selling even if he is not happy with the price), e-Choupal helps the farmer to take an informed and empowered decision (because the price is known in the village itself). In the process many unproductive activities like multiple transportation, handling and bagging, which ar e otherwise inevitable in the traditional supply chain, are eliminated, ploughing back a larger share of the consumers pie to the farmer. None of this, however, is as relevant as the e-Choupals transition into an alternative distribution system in a cou ntry where the potential of the rural market has never been fully tapped. Today, 60 companies, including the likes of Nagarjuna Fertilizers, Monsanto, Eicher, BPCL, TVS Motor, Hero Cycles, LIC and ICICI Prudential sell their products through the e-Choupal network: ITC earns a commission of anything between 3 percent and 40 percent on these. Not surprisingly, ITC expects the e-Choupal network to cover 1 lakh villages by 2010. On the ground, e-Choupal is proving to be a unique 3-D marketing channel for many products and services consumed by rural India. The changes sweeping the marketing discipline in the backdrop of the increasing consumer centricity of todays world are well known. For instance, while superior products and distinctive functional benefits are the necessary starting point for success in the marketplace, the experiential dimension is becoming a critical differentiator. Process benefits, which make transactions between the buyer and seller easier, quicker, less expensive and more pleasant, support this dimension. A third dimension, personalization, now successfully employed by a few marketing companies, will be the only sustainable differentiator in tomorrows world. The relationship benefits which reward the willingness of consumers to identify themselves and reveal their purchasing behavior laid the foundation for this dimension for ITC Being in a village should not restrict a farmer from having access to the latest retail products, especially essential supplies. e-Choupals new services include its use for the distribution of essential goods, implements and services. At present, FMCG products such as salt and biscuits are available through e-Choupals. ITC also has plans for setting up common retail hubs so that villagers have easy access to the products. The first such hub has already been commissioned in Madhya Pradesh. Earlier, procurement of farm inputs and agricultural implements meant a trip to the nearest big town for the farmer. e-Choupal has brought these closer to him by making them available through the portal. It is now possible for farmers to buy tractors and motorcycles using the network. The system also sells LICs life insurance products

Q1. Can it be stated that E-Choupal has accomplished virtual vertical integration and has brought immense benefits to farmers? Elucidate. Q2. How has E-Choupal revolutionized channel dynamics in rural India?