Can the government promote agricultural produce with exclusive online portals?

It can’t be denied that initially E-commerce platform was largely used by private players. Primarily because online shopping not only picked up late in India as compared to the western counterparts, but also the consumer portfolio was restricted to urban cities. Thus private companies, creative entrepreneurs, and tech savvy folks were the only ones who explored the Internet retail world.

However, things have changed for better. The Socio-economical boundaries have been broken and people from all segments – be it rural or urban, from middle class to millionaires- are shopping online. That has resulted in a ripple effect, which is: stupendous growth of the Ecommerce sector, followed by sizable contribution of digital businesses to the country’s economy and Government finally realising the huge potential of the online retail tool.

Ecommerce Website as Potential Tool

The keen interest of several Indian State Ministries in taking agricultural goods online was reflected in the recent news article published on ETRetail.com, a venture of The Economic Times. The feature titled ‘World’s only website launched for sale of gorgon nut’ reported that an online shopping portal meant for selling gorgon nuts (makhana) exclusively was launched by the Union Agriculture Minister, Radha Mohan Singh.

Gorgonnut.com is an initiative of the Shakti Sudha Foundation with the support of Central Government funds. The basic objective of this venture is to attract buyers from across the world, improve the financial state of gorgon cultivators and boost the broken economy.

Exclusive Online Portals

The idea and intention of the Government behind such initiatives is laudable. Especially since Indian farmers are going through the worst phase in our country, in spite of playing a very crucial role in our economy. Using the digital medium to sell agricultural products from small towns and villages will not only help farmers, but also the economy on the whole.

However how feasible it is to launch dedicated websites for each crop? Will it be better if the same plan is implemented with the help of already popular online shopping sites?

Unfortunately there is no simple answer.

Launching an exclusive website like the above mentioned one doesn’t appear to be feasible. Unless entertaining B2B buyers is the major objective. By limiting to a single or bundle of farm produce, the market becomes niche. And niche market has few takers and requires great amount of promotion & smart logistics to reach the right consumer. This means the business will be slow and marketing cost will shoot up.

Even private players that concentrate on niche market agree that it takes years and lots of investment to break-even. Take for instance online start-ups that sell freshly roasted coffee powder. There are many privately and seed-funded ventures such as Blue Tokai, The Indian Bean, & The Coffee Coach that focuses on selling good quality fresh coffee beans, which are sourced from various parts of the country. In one of the reports published last year in Entrepreneur, Kunal Ross, CEO of The Indian Bean said, “Since the market is not as developed, you need to sell a lot of coffee to make significant profits.” This highlights the risk and financial strain involved in niche market business.

Ankesh, an Accounts Manager ponders, “I doubt how farmers who already are in a dire state will be able to start making profits from exclusive portals. Funds for such online sites are provided by the government but making money is also important. Many are not in a position to consider long term profits over immediate gains. ” Agreed.

Also, farmers are a little wary of selling directly and doing away with traders and middlemen.

For taking Indian agriculture in the online world successfully, business needs to be guaranteed from the onset or else farmers would prefer to sell it to traders than stocking it for future online business. Won’t you, if you were a modest manufacturer/farmer?

Tie-Ups with Existing Online Players

Many Indian state ministries have/had plans to launch online portals for farm produce but nothing concrete has materialized as yet. That’s why; tying up with existing online shopping sites is the next feasible option. HyperCity, Ekstop, Homeshop18, LocalBanya, Nature’s Basket, Big Basket, Amazon, eBay,  are some of  the thriving online shopping portals that caters Groceries & Farm Produce to National and/or International Consumers.

But in this scenario, Seller Margin needs attention. It’s common knowledge that online shopping portals reserve a specific margin on selling price. The cost is either passed on to the end consumers or the manufactures. In the case of government funded farmers selling their wares on shopping sites, margin will be an extra burden for bother end consumers and cultivators. And e-tailers can’t be expected to waive off the margin as at the end of the day its business. So for this business model to work smoothly, Government will have to ensure that the seller margin is paid from the administrative fund schemes only.

Alternatively, a common body for each state can also be formed that can act as a single seller or common denominator between online portals and farmers. Far more organised and simpler too.

Going Independent

Senior Event Production Manager, Krishna Pandey feels launching Government’s very own refined shopping website can do wonders. He said, “Exclusive portals are out of question on the grounds of feasibility. Someone accountable from the administration who knows how effective Internet as a medium is, should propose making a functional website which is at par with top online shopping sites in India like Flipkart, Amazon etc.”

Essentially it means, bringing all farm produce of India on one portal and selling it from a common platform. Each state can pool in resources allotted by the ministry and use it for building a high-tech website, maintenance, promotions, packaging, and logistics. A semi-government body with structure akin to a private firm should also be formed that can look after day-to-day operations of this website.

Nonetheless this would require a serious approach from the ruling party and should not remain just a headline-grabbing gimmick. If done correctly, E-commerce can bring a lot of respite to the ailing farmers of India. How great will be that!