stmh14-3 proj rep sec a groupno 6
TRANSCRIPT
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Submitted by
Atin Aggarwal H14019
Maulik Rajesh Gandhi H14030
Subramanya Sai Pratik Bontha H14052
Tejesvi Dhankhar H14055Vasudevan L H14058
Vinith Dwarakanath H15059
Vivekananda Reddy P H14060
Varun Kumar Yanamadala H14061
Strategy – Informally
Organized Sectors
FRUIT AND VEGETABLE VENDORS
GROUP 6-‘A’ Section
HRM 2014-16
STRATEGIC MANAGEMENT
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STRATEGY – INFORMALLY ORGANIZED SECTORS | March 2015 | XLRI Jamshedpur 1
Table of Contents
I. Executive Summary ......................................................................................3
II. Introduction ...................................................................................................4
About the Industry
Structure and Characteristics
III. Strategy Map ..................................................................................................7
Critical Success Factors
Business Model Canvas
IV. Business Operations – Ownership and
Purchase Decisions ..................................................................................... 10
Experiences
Insights
V. Business Operations – Pricing and Selling ................................................ 14
Insights:
Marketing
VI. Business Operations – Contingency and Stock
Management ................................................................................................ 18
Contingency
Stock Management
Additional Services
VII. Business Operations – Challenges Faced,
Competition, and Threat of Substitutes ..................................................... 19
Challenges Faced
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Competition
Threat of Substitutes
VIII. Customers Profile ........................................................................................ 24
IX.
FVRs vs. Kirana Stores ................................................................................ 27
Similarities
Differences
X. Comparison Informally Organized vs.
Organized Retail ......................................................................................... 29
Kirana and FVR vs. Super Markets
XI. References ................................................................................................... 30
XII. Appendix...................................................................................................... 31
Questions to Fruits / Vegetable Vendors
Questions to Customers
Few Glimpses from Our Visit
Experiences: Fruits / Vegetable Vendors
Experiences: Customer Interviews Offline
Experiences: Customer Interviews Online
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Executive Summary
This project was undertaken to study the strategy of the entities operating in the informally
organized sector, with the primary focus on small scale fruit and vegetable vendors. Themethodology undertaken to carry out this study included primary research of about 20 fruit and
vegetable vendors, predominantly in Jamshedpur, with a few interviews from Hyderabad and
Delhi. Some insights into customer mindset have been drawn from a separate set of customer
interviews. All of these are presented in the appendix.
The report highlights several dimensions of the current strategy of FVRs operating in the country.
Coupling the findings of primary research with the secondary data drawn from various sources, it
is clear that, as can be expected, the sector is highly fragmented, and primarily runs through
‘street-smart’ means of carrying out business – in most of the day-to-day workings. The
challenges faced by individual FVRs are primarily concerned with the lack of space and
technology, to make the business more efficient.
Though an effort has been made to spread the study across geography, one of the limitations of
the study is that it has been primarily confined to a single city. The limited number of studies and
sources for secondary research is another limitation.
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Introduction
About the Industry
Traditional Indian retailers account for 12 million retail outlets all over India and more than 40
percent of them sell vegetable and grocery (IBEF, 2008). Indian food retail consists of staple
commodities comprising grains, pulses, and vegetables. The Indian food retail business,
especially vegetable retailing is witnessing a rapid growth in India's organized retail sectors.
The traditional retailing of vegetables is not very much organized, amounts to 97% of the total
market (Ernst & Young, 2006), is extremely localized and highly fragmented with large number
of intermediaries. The intermediaries between the customers and farmers are traditional retailers
with different outlet formats-mom and pop shops, non-permanent shops in the market, pavement
vendors, roadside vendors and push cart vegetable sellers, wholesale traders, commission agents
and auctioneers.
Figure 1. Retail - Total vs. Organized Sectors
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Structure and Characteristics
Figure 2. Model Supply Chain observed in this sector
This is a general traditional model supply chain for fruit and vegetable vendors of the
unorganized sector in India. This model has persisted the test of time and competition from
supposedly better models such as the Value Chain model and the Hub and Spoke model, which
are being used in organized retail (like Food Bazaar and Spencers).
In our primary data collection, we have found evidence that the chain is not completely followed
and there have been attempts to reduce the levels by the retailers themselves. For example, for
particular vegetables and fruits, they prefer buying directly from the farmers or at the farmer’s
market primarily to reduce their costs and retain customers.
Figure 3. Variety of Intermediaries involved
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Indian households, across the rural and urban divide, were expected to spend approximately INR
18 trillion on food items (fruits, vegetables, nuts, grains, pulses, wheat, etc.) in 2013-14. With
almost 263 million households, in the country, this is tantamount to an expenditure of
approximately INR 68,745 per household in the given period.
Figure 4. Indian Household Expenditure
An analysis of the same across the two segments viz. urban and rural, reveals the following
figures:
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Critical Success Factors
1. Reduction in Wastage
Wastage contributes 20-30% of their losses. Hence efficient inventory management and
predictability of demand contributes to success of business.
2. Location
Locations like Hospitals, residential areas, etc. affects sales per day and as a result is oneof the critical success factor.
3. Availability of Substitutes
Variety of products including exotic/off season products can also drive sales as it offers
unique choice to customers. The choice to offer certain products over other is a key
decision and is a result of limited shelf space that a vendor can offer.
4. Quality
Quality is most critical success factor as customer shows preference to quality which
affects customer satisfaction. Customer satisfaction is key for our margins and volumes
of sales.
Business Model Canvas
Small Scale Fruits and Vegetable Vendor Business
Figure 6. Business Model Canvas
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Variations in Different Vendors
Handcarts / Push Carts
Price over quality
Handcarts preferred to sell to price sensitive customer compared to quality driven
customer.
Leveraging proximity
Handcarts position themselves near hospitals, parks or other crowded places to drive their
sales.
Standalone Stores
Quality focus
Standalone stores preferred to hold quality products even if they are costly over cheaper
products.
Customer relationship is important
They focus on repeat customers hence focus major part on relationship with customer.
Maintaining quality seems to be part of this strategy.
Market
Cooperation among vendors
In a market place, vendors often cooperate among themselves with respect to exchanging
goods if needed or sticking to pre-decided price.
Bargaining power with wholesalers (or suppliers)
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Business Operations – Ownership and Purchase
Decisions
Ownership:
Based on the data we collected, we found that the majority of the businesses were run by Father-
Son/Sons or by single owners. Many vendors were the third generation of vendors in the family
and their shops were 75-80 years old. However, some vendors also operate on commission basis
– ‘Mahajan owned shops’. These vendors get around 10% commission of total sales.
Purchase Decisions
Similar to customers, the fruit and vegetable vendors also face certain purchase situations. Theonly difference is that they buy in bulk/ place large offers and the supplier tries to lure the most
profitable buyers.
The three major decisions can be grouped as:
Figure 7. Purchase Decisions
The purchase decisions of most fruit and vegetable vendors (FVRs) are STRAIGHT
REPURCHASES.
New Task Purchase
The vendor has never made these purchases before or rarely has made them. Here
the vendor spends a lot of time in evaluating the new alternatives and chooses the best bargain.
Modified Re-Purchase
When the vendor decides to evaluate the re-ordered straight re-purchase the vendorhas moved to the status of a modified re-purchase. This can be because a certain
vendor at the wholesale market has stopped selling, or the hand-cart vendor faces anew demand.
Straight Re-Purchase
Its routine ordering and most vendors order the same items from the samesuppliers at the wholesale market. They simply reorder the same fruits and
vegetables that were bought previously.
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Experiences
Handcarts
Bistupur Sakchi C.H. Area New Delhi
Fruit
Shop
Based on themarket demand the
vendor procures
bananas from
Bhusaval, Andhra
Pradesh, Bengal,
Bihar.
Depends ondemand. Purchase
is done daily on 1
week’s credit from
the wholesale
market. As they are
not a big player in
the market, the
wholesale market
gives them lower
preference than
shop owners.
TheMahajan/Owner
takes decisions.
Seller (who works
on commission
basis) is consulted
about demand.
Fruits are
purchased from the
nearby wholesale
market.
Based on marketdemand the fruits
are procured from
two areas – Okhla
& Azadpur Mandi.
Stationary Stalls
Bistupur Sakchi Sonari
Vegetable
Shop
He purchases again based on demand.
E.g. When demand is low, stock iscleared and capacity is kept unutilized.
He purchases the following from the
mentioned regions. Potato – West
Bengal, Onion – Lalsalgaon, Garlic –
Uttar Pradesh & Green Chilli – Orissa,
Chattisgarh. Payment is done via net
banking on Credit purchases. Discount is
offered if payment is made in cash.
Purchase
depends ondemand from
retailers and
demand from
local customers.
Purchase is made
from Sakchiwholesale market
on credit.
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STRATEGY – INFORMALLY ORGANIZED SECTORS | March 2015 | XLRI Jamshedpur 12
Bistupur Sakchi Sonari Hyderabad
Fruit
Shop
The vendor
purchases stock
from Parsudi
wholesale market
and can buy on 1
week credit.
He purchases fruits
from wholesalers
on credit – 1 day/1
week/1 month. This
depends on the
businessrelationship with
the wholesaler. For
him the quality of
fruits is paramount.
The Vendor
purchases fruits
from different
wholesalers.
Example: thewholesale market
in Sakchi and
another near
Tatanagar station.
Depending on the
person he allows
credit purchases.
Some wholesalers
sell on a 8-10 day
credit to him.
Solely based on
customer demand.
Purchases fruits
from the wholesale
market – Parsudi
and Sakchi market.
Stock is filled on
the basis of
available capacity.
“The shop must
look full”. Purchaseis also based on
demand and on the
sales made on the
previous day.
Stock keeping
depends on the
season. Seasonal
fruits are purchased
in bulk while otherfruits are procured
only on need basis
because there is a
high chance of their
wastage. Purchase
decisions depend
on demand and also
try to minimize
demand.
Purchase is made
from Sakchi
wholesale market
on credit.
The vendor
purchases fruits
from wholesalers in
Sakchi market on
credit (1 week/15
days). Quantity
purchased depends
on consumerdemand.
The Bananas are
from Reliance
suppliers usually
paid in cash,
because if taken on
credit the quality
supplied is
different. Due to
customer demand
the Apples are
imported. All the
other items are
from wholesalemarkets.
Early morning his
supply comes from
one of the bigger
markets in
Hyderabad. Some
specialty vegetables
are sourced from
farmers from far offdistricts which
arrive daily by
lunch time.
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Insights
Almost all vendors forecast demand based on the season. They estimate future sales on the basis
of previous day/week’s data. This demand forecast mainly drives their purchase decisions.
Seasonal Fruits are bought in bulk, whereas exotic fruits or imported fruits are purchased on the
basis of specific customer demand.
The vendor usually chooses multiple suppliers. Some stick to a near-by wholesale market and
purchase from different vendors there. Others diversify their suppliers by purchasing from
different wholesale markets as well as near-by farms and states.
The vendors both buy and supply on credit based on their relationship with the supplier or
customer. But paying in cash has certain benefits like discounts and better quality. Your
importance as a buyer in the wholesale market depends on the frequency and the size of your
purchases.
Figure 8. The Process
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Business Operations – Pricing and Selling
How much to price their fruits and vegetables is determined by the following variables.
Figure 9. Factors affecting price
Handcarts
Bistupur Sakchi C.H. Area New Delhi
Fruit
Shop
When the market is
down, margins are cut
and bananas are sold at
a lower price. During
peak seasons like
summer, prices are
high and margins are
high. Pricing also
depends on the price atwhich wholesaler made
his sale. Elaichi
bananas were priced at
Rs. 40/dozen and
bananas were priced at
Rs. 60/dozen.
Price depends on
quality and daily
sales. If sales are
down, margins are
cut and prices are
pulled down.
Prices are decided
on the basis of
demand. High
quality drives up
the prices.
During peak
seasons like
summer, prices
are high and
margins are high.
Winters are slow
and lower
margins. Litchis
sold at premiumas availability was
low.
Price and
availabiliy ofSubstitutes
Characteristicsrelative to
competitors
Income
Price/Strengthof Demand for
RelatedProducts
MarketEnvironment
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Stationary Stalls
Bistupur Sakchi Sonari Hyderabad
Fruit
Shop
Depends on purchase. “If
I purchase at Rs.10, I sell
at Rs.12 – 15”. Dependson demand. e.g. Chickoo
– Rs.100, Strawberry –
Rs.120
Based on the price
charged by the wholesale
market.
Pricing depends on
quality. As better quality
fruits are purchased at a
higher price from
wholesalers, the vendor
charges a premium price
to his customers with the
guarantee that the quality
will not be compromised.
Price = Purchase Price +
Other expenses + Profit
Price depends on quality.
If the adjacent vendor is
selling lower qualityapples at Rs. 100/kg, the
other vendor with better
quality apples will sell at
Rs. 110/kg.
Prices are decided on the
basis of demand and also
on the basis of
competition. Purchase
decisions are taken by the
principal owner.
Price depends on quality
Price depends
on quality
and demand.
Fixed prices,
since quality
is very highand prices are
mostly not
bargained.
With 20-30%
margin. And
if sales are
low sold at
loss to push
the stock.
Bistupur Sakchi Sonari
Vegetable
Shop
Prices are decided by the
market. Prices vary daily.
Price depends on quality.
Better quality means
higher price.
Rates are decided daily in
the market at 5am. The
prices charged by all
vendors in the wholesale
market are uniform. Any
difference in price is
because of the difference
in quality.
Rates are decided on the
basis of price at which
goods were purchased
from the wholesalers.
Price depends on quality.
Rates are decided on the
basis of price at which
goods were purchased
from the wholesalers.
Price depends on quality.
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Insights:
Figure 10. Characteristics and the Pricing Model
Just like the purchasing decisions, majorly the pricing is determined based on the season or the
demand. Peak season or high demand means high price & high margin. Lean period or low sales
means low price & low margin or zero loss. As the products are perishable, the aim is to sell
them before they spoil. In case the sales for a particular day are low, the prices are slashed to
reduce inventory. The vendors want to avoid loss in all circumstances.
Scarcity and quality also majorly influence pricing. Fruits and vegetables that are scarce are sold
at a premium price. If the products are of higher quality their price is automatically higher.
Certain vendors engage in Cost-plus pricing. Their Price = Purchase Price + Other expenses +Profit. So based on the wholesaler’s price they mark -up their product and sell in the market.
Some vendors engage in Competitive pricing. If the adjacent vendor sells lower quality products
at a price, you charge higher for the same if your quality is better. The competition is not only
restricted to adjacent vendors but also to other retail stores. So the vendors sell Higher than the
wholesale market but lesser than departmental stores/super markets.
Other vendors choose to collude rather than compete. Rates are decided daily in the market at
5am. The prices charged by all vendors in the wholesale market are uniform. Any difference in
price is because of the difference in quality. Due to this collusion and based on various parameters like demand, quality and season the prices can vary daily.
Yet in some places the prices are fixed and do not vary. This is because the quality is very high
and prices are mostly not bargained.
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Figure 11. The Process
Marketing
Marketing Strategies followed by the vendors:
Offer and price should be precise
Offer shouldn’t be too complicated for the consumer to assess
Keep communication channel absolutely simple and easy
Customize their marketing pitch
Display of merchandize in a manner so as to attract consumers
Some observations:
Fruit/Vegetable vendors and street hawkers are the best marketers. They sell very low priced
products, but they have to put all the creativity in their salesmanship for success. Vegetable
sellers keep already created bundles or a bunch of the quantity of vegetable they are going to sell
for the set price. This saves the time of both the customer and the vendor during even rush hour.
There is not any need of scales. This easy method double or triple the sales. A crowded big
marketplace generally turns noisy with quarrels over bargaining, change, and cheating in
measuring quantities. Such quarrels result in decreased sales due to wastage of time leaving
negative impression on customers. No bargaining means more sales in lesser time. What vendors
have to think is to give satisfactory quantity of the product in the given price. Fruit/Vegetable
vendors shout with their own style. They also create their own communication style with
customers. In addition, they organize their fruits/vegetables attractively; some charge more for
high quality vegetables and do not compromise with the price. They can do so confidently
because they know their target customers are going to buy only from them.
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Business Operations – Contingency and Stock
Management
Contingency
Usually co-operation from nearby FVRs in case of shortage of stock or any such contingency.All the FVRs present a united front so that everyone benefits in case of contingencies. If in peak
periods, stock moves quickly, orders are placed with wholesalers who typically deliver within a
couple of hours. Also, sometimes to drive down demand in such peak periods, retailers in a
particular area collude and the prices are increased, while the wholesaler delivers.
Stock Management
Vegetable vendors: Typically, the stock procured is on that day or sometimes a day in advance
depending on the sales patterns. A few vendors keep track of the stock through the day (either
through assigning a specific person or through periodic inspections), so that order can be placedimmediately. A few vendors try to maintain as much variety as possible (so that any customer
visiting the store will not leave empty handed for lack of his choice), and hence to push the
product quickly, maintain low quantities.
Fruit vendors: They display the better looking stock, so that customers are interested in the
stock. FVs ensure proper protection from sunlight/rain to protect easily perishable fruits. The
stock management can be done better, if more space is available, averred a few vendors.
Wholesalers: They make pricing changes depending on stock demand, look of the stock and
customer reactions.
Additional Services
Among the vegetable vendors, selling cut vegetables is prevalent in pockets of affluent areas in
some cities. When asked about the same in Hyderabad, one particular vendor explained that his
typical customer did not require such a service. For such a service to justify the time and effort
put to offer it, the customer profiles are very specific and are found in very few affluent areas in
the city. The vendor saw little scope for these services to enter his vicinity, and very little reason
for immediate competitors to start offering them.
Among fruit vendors, selling cut fruits has two perspectives to it. (i) To reduce customer
hesitation of buying fruits, which they feel have to be further processed before consumption. To
make this easier for immediate consumption, vendors present cut fruits. (ii) Some customers
hesitate to buy fruits which look damaged on the outside. To counter this, the vendors present cut
fruits that do not present any such obvious defects.
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Business Operations – Challenges Faced,
Competition, and Threat of Substitutes
Challenges Faced
Many vendors seemed to be unaware of the challenges they face when enquired about it directly
but we were able to identify a few based on their responses to other questions. Some vendors did
have a clear idea about their shortcomings. All in all, they could be summarized as follows:
Lack of Cold Storage
Problem: Since fruits have a very low shelf life, expensive fruits like apples, papayas etc. get
spoilt easily. Their expensive nature leading to lower movement off the shelf and hence cold
storage turns out to be of prime importance which they cannot afford.
Remedy: To make the fruits look fresh, the shop keepers spray water on the fruits.
Wastage
Problem: Due to unforeseen conditions (like bad climate, bandh in the locality) sales is easily
affected. As a result the demand forecast becomes tricky. According to our survey around 20% -
30 % of stock goes waste. This also include damages caused during transit.
Remedy: Some big shops sell it to Restaurants or to Hand Cart vendors depending the condition
and price offered. Some items are also sold to feed cattle and rest of them are thrown off.
Space Constrain ts
Problem: The market layout plays a pivotal role in the selling pattern of the vendors. In our
observation made in the fruit market of Jamshedpur, some markets (like Sakchi) have Vendors
lined up one after the other in a large marketplace (bazaar) and certain other markets (like
Bistupur, Sonari etc.) have individual vendors for a particular locality with a considerable
amount of distance from one vendor to another. In both cases, vendors express that space is a
major challenge as they have no choice but to display all their stock in a very small area.
Remedy: They can’t help much. Some vendors arrange fruits a particular order for say apple, in
order of their prices and that would give the customer a better idea and also give the vendor a
better sense of the demand.
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Demand Uncertainty
Problem: Open markets have many new customers adding to the regular ones. Also, some new
customers scout for the goods and end up buying from a vendor where the vegetables appear
good. Vendors express that it is extremely difficult to predict the demand with decent accuracy in
such situations.
Remedy: Additional quantity is procured for those fruits & vegetables which have longer shelf
life. In case of shortfall based on a mutual internal agreement fruits & vegetable are borrowed
from neighboring shops.
Low Quality of Handcart Goods
Problem: As per our survey, certain wholesalers confessed that handcart vendors purchase goods
that are of lower quality from them at a lower price and sell them at a lower price (maintaining
the same margin). But the lower quality eventually translates to low sales.
Remedy: This is how they operate. So not much can be done about this fact. If there is monopoly
for the handcart operator, he might be interested in investing more for high quality fruits. But
there is heavy competition for that too.
Delivery fr om Suppli er
Problem: The supply of certain speciality goods which are obtained directly from farmers have a
non-uniform delivery pattern and hence forecasting becomes a challenge.
Remedy: Cannot do much about this. They try to procure the items from the nearest farmer for
items which have lesser shelf life. But still this fact remains a disadvantage.
Wholesaler Unable to Monopolize
Problem: The retailers collude to take decisions regarding purchase from a particular wholesaler
in a locality. In case of a sour relationship between a retailer and the wholesaler, a large chunk
of retails shy away from procuring the goods from there. As a result the wholesaler loses control
in his own area.
Remedy: Can’t help much either. Timely delivery and maintaining good quality can help him
build some good will and get some say in the market.
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Summary:
Challenge About Potential Remedy
Lack of Cold
Storage Low Shelf life of fruits
The shop keepers spray water on the
fruits to make them look fresh
Wastage(Spoilage)
Unpredictable nature of sales
Unforeseen circumstances - like
bad climate, bandh in the
locality
20 - 30% stock goes waste
Some big shops sell it to
Restaurants, Hand Cart vendors
Some items are sold to feed
cattle and rest thrown off
Space
Constraint
Limited space especially for small road
side shops
Maximize space by arranging products
vertically
Uncertainty in
Demand &Delivery form
Supplier
Majority of customers are notrepeat customers
Few items are directly procuredfrom farmers
Additional quantity of longershelf life vegetables procured.
In case of shortfall, borrowedfrom neighboring shop
Wholesalerfaces vendor
collusion
Retailers Collude on price doesn’t give
autonomy in price
Timely delivery & Maintaining good
quality get Control in the market
Competition
For a cart vendor: Shops and markets are competitors for reasons of quality and general
customer preference.
For an FVR from other FVRs: Almost all the FVRs that we interviewed opined that other
FVRs within their vicinity are not their competition. They usually collaborate when required and
carry out their business.
In a market setting, they compete not on price but on quality. For a non-market vendor,
competition occurs in the form of weekend market, where people can get lower prices.
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FVR v Organized Retail: Almost all the FVRs feel that the customer segments are different and
so organized retail is not going to be threat in the near future. Also organized retail stores can’t
offer the variety and personal service that some of the fruit vendors can offer.
But some vegetable vendors have expressed concern about the margins that OR can capture at
lower prices due to their scale, packaging savings.
From our customer survey, a significant portion favored OR over FVRs for fruits, since they
have more variety and quality. This might indicate disconnect between FVR’s estimation of
customer preferences. (Or Sampling bias)
Wholesaler: Changing times brought changes to market structure within Jamshedpur - new
markets at Sakchi and Kadma in addition to the traditional Bistupur market.
Summary
Who From Why
Cart Vendor Shops and
Markets Reasons of quality and customer preference
FVR Other FVRs
Usually collaborate when required and carryout their business
In a market setting, they compete not on
price but on quality
FVR Organized Retail Personal service and experience that is a hallmarkof the friendly neighborhood “sabziwala”
Wholesaler Wholesaler
In the Jamshedpur region, new wholesale markets
at Sakchi and Kadma have added to the competitionfor the Bistupur market
Vegetable
Vendors
Substitutes
Soya Chunks, Cottage Cheese, InstantMeals, Sprouts and other healthy options
such as organic foods
Increased Professionalization and dualincome – Families opting for instant meals
or dining-in options
Fruit Vendors Substitutes Artificial fruit beverages and other soft drinks/eatables
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Threat of Substitutes
Vegetable Vendors
Soya Chunks: In numerous places where food is prepared in large quantities (such as
hostel mess, charity organizations) they vegetables are replaced with soya chunks in
many of the preparations owing to the low cost, nutritional value and ease of preparation(no cutting / dicing required). But the vendors we interviewed did not express any
concern over this issue as it did not hit their revenues much currently, but might play a
part in the future.
Paneer (Cottage Cheese): Adding to the context in the above point, paneer or cottage
cheese is added in various preparations to enhance the taste. The vendors too admitted the
extensive usage of paneer in household and commercial preparations and have learnt to
live with this fact.
Sprouts and other healthy options: In recent years, the usage of sprouts and other
grams has increased. A few vendors have already started including such varieties in their
offering. In future the proportion might increase commensurate to the demand and
margins.
Instant meal (cup noodles, pasta etc.): Similar to artificial fruit drinks for fruit vendors,
this product is a substitute among the younger demographics. The vendors felt that the
nutrition value will not be sustainable in the long run, and so this product’s threat is not
something which affects them heavily.
Fruit Vendors
Fresh fruit Juices: All the Fruit retailers feel that juice parlours cannot compete with
fruits on quality. So a discerning customer will know the difference and prefer fruits over
juices. Hence the retailers feel that it isn’t really a credible threat
Artificial fruit beverages: The major consumers of these products lie in the younger
demographics. Owing to the ease of use and delicious taste, vendors feel that youth are
short-sighted in their choice. However, since the consumers are not the decision makers
(for the younger generation, as the purchase is made by the elders) the fruit retailers feelthat this threat can be mitigated
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Customers Profile
Initially, Customer profiles were obtained from random interviews with customers during and
after purchase from a fruit/vegetable vendor. After initial interviews, most of the responses were
redundant. So to get more diverse responses we floated a form. Our sampling depended on the
time we visited and the people who agreed to be part of the study. Some of the observationswere:
Profile
All kinds of customers buy fruits and vegetables. Customers who buy lower priced fruits and
vegetables belong to the lower middle class segment whereas health and quality conscious
customers belong to the upper middle class.
Customer profile also depends on the area: Upper middle class in Bistupur, Lower middle class
in Sonari, A combination of both in Sakchi.
In total we have taken inputs from 37 Customers. The sample size might look small but we have
focussed on a Qualitative data rather Quantitative. Each one of these members we have
interacted with through various means are regular fruit buyers.
Availability of F rui ts
Most common fruits preferred by the customers were Apple, Banana, Grapes and Orange.
Seasonal fruits like watermelon, pineapple, Litchi, strawberry and peaches were consumed
depending on availability. 50% of people prefer to buy in the evening, the reason being, they get
free time. Rest of them did not emphasize on any particular preference in time.
Choice of Vendor
Their choice of vendor is dependent on the distance to the vendor as per 69% of the surveyedcustomers, whereas price and quality did not seem to influence much of their decision. There
was mixed choice for Roadside stores and supermarkets to purchase fruits which covered more
than 80% of customers we surveyed. Loyalty to a particular vendor does exist, but primarily after
multiple transactions. Quality and Price secondary factors here. The size of loyal customers
varies and is dependent on the variety of fruits/vegetables, the service provided by the vendor,
prices charged, and quality.
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Pri ce vs. Qual ity
Price and quality might be hygiene factors which do not differentiate vendors. Among price and
quality, about 72% of the customers preferred quality over price. B2B sales were influenced by
both price and quality.
Amount of Pur chase
Over 75% of respondents preferred to buy for a particular day’s consumption which might be
reflection of distance factor.
In areas like Bistupur, average basket size (Rs. 100-120) is more than that in areas like Sonari
(Rs. 50-80)
Some fruits like Papaya which are priced at Rs.30-40/kg are sold at weights ranging from 2-3kgs
while Apples priced at Rs.100-120/kg are sold at weights ranging from 1-2kgs. For vegetables,
similar patterns are observed.
Knowledge of Business
45% of customers claimed to have ‘Good idea’ of the business but none were tested on their
understanding of their business.
Bargaining
40% of customers feel that the vendors always overcharge. So bargaining is to be done every
time. 35% of people decide on the spot whether to bargain or not based on their perception of the
fruit vendor. Only 25% of customers told they don’t indulge in bargaining.
Mode of Purchase
Cash and Carry is most preferred way of purchase among the respondents.
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Taste vs. Nutr iti on
66% of Customers showed preference for Taste over Nutritional value of the fruits.
Miscell aneous
Number of customers serviced is not fixed. Sometimes it is 50, sometimes 100 or 200. They
forecast demand based on present and previous day’s sales. Demand is at its peak in evenings for
fruits and in early mornings and evenings for vegetable vendors. For some fruit vendors, demand
is high in the morning as well as in the evening.
Demand is at its peak on weekends and is the lowest during mid-week. During low demand
cycles, vendors cut prices or put more efforts in marketing their products.
Some vendors clean and serve chopped fruits too, to customers who prefer to have it then and
there. Based on familiarity with the customer, additional pricing is decided on the spot.
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FVRs vs. Kirana Stores
Simple Illustration of our understanding of their Business Model
Figure 42. Business model of Kirana Stores
We find similarities and differences in the business models of a typical FVR and a relatively
more organized retail type i.e. Kirana stores.
Similarities
Customer Base: The customers are more or less the same for Kirana stores as well as fruit and
vegetable retailers i.e. middle and lower middle class.
Credit System: There is loyalty from the customers, which translates into credit being an
acceptable transaction, especially for people living in the vicinity as well as regular customers,
with a payback period of a week/month.
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Choice: A choice is available with the customers in most cases, when we talk of an urban
scenario. Usually proximity plays an important factor and depending on availability of the
product, the customer will go further to other stores.
Stock Replenishment: It happens on a regular basis. In an FVR it would range from daily to
weekly depending on the type of vegetable and demand. Similarly, Kirana stores which stock
vegetables .FMCG products done in sync with the distributor and replenishment takes 2-3 days.
Tax Evasion: It is a problem in Kirana stores, with most of them having handwritten billing or no
billing at all.
Differences
Credit Purchase: In Kirana stores, purchasing from distributors on credit is rare. Mostly cash
transactions take place. However, in FVRs we see that credit purchasing from wholesalers is a
common practice with detailed logs and a maximum repayment period of 1 month.
Stock(Vegetables and fruits in particular): The type of fruits and vegetables that are kept by a
Kirana store have a higher shelf life, typically wouldn’t need refrigeration and are likely to be
impulse buys from a customer who is already in the shop for a different purchase. Examples
would be coconuts, potatoes, onions, garlic, ginger, green chillies etc.
From our primary data and secondary sources we can draw a comparison between informally
organized retail (FVRs and Kirana stores) and organized retailers.
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References
In no particular order:
1. Rajkumar, P., & Jacob, F. (2010, January 1). Business Models of Vegetable Retailers In
India. Retrieved February 10, 2015, from
http://www.greatlakes.edu.in/uploads/pdf/Chapter3.pdf
2. Hegde, R., & Madhuri, N. (2013, January 1). A STUDY ON MARKETING
INFRASTRUCTURE FOR FRUITS AND VEGETABLES IN INDIA. Retrieved
February 19, 2015, from http://www.nird.org.in/NIRD_Docs/rs2013/RS 91.pdf
3. Singh, S., & Singla, N. (2010, September 24). Fresh Food Retail Chains in India:
Organisation and Impacts. Retrieved March 1, 2015, from
http://www.iimahd.ernet.in/users/webrequest/files/cmareports/9FreshFoodRetailChains.p
df
4. P, S. (2010, January 1). The future of unorganized retailing in Kanyakumari district.
Retrieved February 15, 2015, from
http://ipublishing.co.in/ajmrvol1no1//voltwo/EIJMRS2038.pdf
5. http://www.mohinipuranik.com/2015/01/marketing-strategies-vegetable-vendors.html
6. E.Y. (2006). The Great Indian Retail Story, Ernst &Young's report, April, 2006.
7. Tulani, V., & Hussain, H. (n.d.). Strategic Change in Model of Fruit and Vegetables
Supply Chain. Retrieved February 19, 2015.
a. http://www.ripublication.com/gjmbs_spl/gjmbsv3n9_06.pdf
8. Indicus Analytics, Market Skyline Report 2013-2014.
http://www.greatlakes.edu.in/uploads/pdf/Chapter3.pdfhttp://www.greatlakes.edu.in/uploads/pdf/Chapter3.pdfhttp://www.nird.org.in/NIRD_Docs/rs2013/RS%2091.pdfhttp://www.nird.org.in/NIRD_Docs/rs2013/RS%2091.pdfhttp://www.nird.org.in/NIRD_Docs/rs2013/RS%2091.pdfhttp://www.iimahd.ernet.in/users/webrequest/files/cmareports/9FreshFoodRetailChains.pdfhttp://www.iimahd.ernet.in/users/webrequest/files/cmareports/9FreshFoodRetailChains.pdfhttp://www.iimahd.ernet.in/users/webrequest/files/cmareports/9FreshFoodRetailChains.pdfhttp://ipublishing.co.in/ajmrvol1no1/voltwo/EIJMRS2038.pdfhttp://ipublishing.co.in/ajmrvol1no1/voltwo/EIJMRS2038.pdfhttp://www.mohinipuranik.com/2015/01/marketing-strategies-vegetable-vendors.htmlhttp://www.ripublication.com/gjmbs_spl/gjmbsv3n9_06.pdfhttp://www.ripublication.com/gjmbs_spl/gjmbsv3n9_06.pdfhttp://www.mohinipuranik.com/2015/01/marketing-strategies-vegetable-vendors.htmlhttp://ipublishing.co.in/ajmrvol1no1/voltwo/EIJMRS2038.pdfhttp://www.iimahd.ernet.in/users/webrequest/files/cmareports/9FreshFoodRetailChains.pdfhttp://www.iimahd.ernet.in/users/webrequest/files/cmareports/9FreshFoodRetailChains.pdfhttp://www.nird.org.in/NIRD_Docs/rs2013/RS%2091.pdfhttp://www.greatlakes.edu.in/uploads/pdf/Chapter3.pdf
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Questions to Customers
1. Which fruits/vegetables did you buy?
2. Why did you buy these fruits and no other fruits/vegetables?
3. Nutrition vs. taste. Which one would you choose?
4. Do you buy from the same vendor?
5.
What is the average quantity – price and weight - you buy per transaction?6. Does price matter?
7. Do higher prices mean better quality?
8. Who sells better quality fruits/vegetables? – supermarkets, stationary sellers, handcart
sellers
9. How much do you know about their business?
10. Do you bargain out of habit or do vendors overcharge?
11. How often do you buy fruits/vegetables?
12. Do you pay cash or purchase on credit?
13.
Have you ever faced the problem of lack of choice?
Few Glimpses from Our Visit
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Experiences: Fruits / Vegetable Vendors
Initially, they were apprehensive to share any information with us. They wanted to confirm
whether we really are students or are people from the media. We also had to explain the project
details to them and assure them that the recordings will only be used for project purposes. They
did not allow us to take a video. However, some of them allowed us to click pictures. Some fruit
and vegetable vendors gave detailed answers. Some wanted to finish the interview as soon as possible. The ones who gave detailed answers also shared details about their revenues and profits
and were honest enough to share the problems they faced in business.
Complete experiences are available in the tables.
Type of Vendor Fruit - Handcart
Location Bistupur Market
About him
Name – Joseph Kumar
Age – 49
Born and bought up in Jamshedpur.
Has been in this business since childhood.
Variety of fruits/vegetables Banana
Business
Ownership Sole owner
Purchase decisions
Bananas are procured from 3-4 areas – Bhusaval,
Andhra Pradesh, Bengal, Bihar.
Purchase decisions are based on market demand.
Pricing
When the market is down, margins are cut and
bananas are sold at a lower price. During peak seasons
like summer, prices are high and margins are high.Pricing also depends on the price at which wholesaler
made his sale.
Elaichi bananas were priced at Rs. 40/dozen and
bananas were priced at Rs. 60/dozen.
SalesCommission basis.
Did not provide any other details.
Contingency -
Management of StockBananas were arranged on the basis of size. Shop
space
Challenges faced
(He was answering questions openly initially. Then
suddenly, the responses reduced and it seemed as he
wanted us to finish the interview)
Did not answer about the challenges he faced in his
business.
Competition
Supermarkets – “Depends on people’s choices. Not a
competition. They use chemicals. I have all types of
bananas – artificially ripened and pure. I can provide
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them personal service, supermarkets cannot.”
Other vendors – “We are different vendors and do not
collaborate. Each has his own business and purchases
and sells independently”
Threat of substitutesArtificially ripened bananas – people would prefer to
buy bananas from roadside shops.
Changes that can be brought -
Customers
ProfileA middle aged man came and purchased bananas
worth Rs.50.
LoyaltyThere are a few loyal customers. Every shop has some
loyal customers.
Average Basket Size Rs.10 – Rs. 200
Bargaining
One customer did not bargain. Other one asked the
price and walked away.
Customers bargain when they want to buy in bulk
(>1.5 dozen)
Active periodsDepends on the market. During ‘Puja’ seasons, sales
are at their peak.
Preferences
Number of customers per day vary – 50 to 100.
In winters, sales are low because people do not prefer
to eat fruits.
Elaichi bananas are in high demand in ‘Puja’ seasons
while bananas are in high demand in summers.
Cash/Credit purchase Both
Type of Vendor Stationary stall
Location Main road in busy town close to residential area
About him
Variety of fruits/vegetables
All regular vegetables and some special ones from
Kerala (hometown) and have dedicated customers for
that.
Business
Ownership Self-Owned
Purchase decisions Self-made
Pricing Higher than wholesale market but lesser thandepartmental stores/super markets
SalesClose to 100 kgs on a daily basis ( cumulative sales of
all vegetables in that day)
ContingencySpeciality products from Kerala which aren’t available
with any other stores in the locality
Management of StockPurchases made on a daily basis / once in two days as
per the sales trend. Stock left is covered with wet cloth
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and left in the store . This would be good enough for
2-3 days and the left over stock (if any) are used as
cattle feed
Challenges faced
High class consumers , who previously were
customers turned to departmental stores for
convenience and store ambience. They are not price
sensitive but convenience factors like packaging, cold
storage, card payment etc matter to them
Competition
Weekend market – farmers sell the vegetables on a
weekend at a very low price ( almost wholesale price)
to reduce the closing stock
Threat of substitutes None
Changes that can be brought None
Customers
Profile Lower and Upper Middle Class
Loyalty
Fairly large pool of regular customers and also
frequent new customers due to location advantage( main road)
Average Basket Size 2-3 Kgs
BargainingYes, but not all do. Only regular customers get
marginal discounts
Active periods 5PM to 8 PM
Preferences
Cash/Credit purchase Mostly Cash purchases and rarely credit purchases
Type of Vendor Fruits
Location Pragathi Nagar, Hyderabad, A. P
About himOver 50, Family of 4, Son helps out in managing the
shop
Variety of fruits/vegetables Fruits, all varieties, some of them exotic
Business
Ownership Sole ownership, rented space near a Hospital
Purchase decisions
Bananas from Reliance suppliers, and if taken on
credit, the quality supplied is different. So mostly all
supply happens through cash basis.
Apples imported.Rest from markets
PricingFixed prices, since quality is very high and prices are
mostly not bargained
Sales Cash, daily revenue around 1500 INR
Contingency
Stock wasted due to low demand. Sold to cattle
holders, and juice stalls who then use such low quality
stuff in their
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Management of Stock
Not arranged by price differences/ sizes.
All fruits have a level of minimum demand throughout
the year, and during seasons
Challenges faced -
Competition
Not bothered about competition from other FVRs,
everyone dos their own business. Customer profile
that visit organised retail stores are different so not
really worried about it.
Threat of substitutes
Main substitute is juice shops, but a discerning
customer knows that the quality of fruits used in juices
and salads is less. Since the vendor is focussed on
quality, not really a factor
Changes that can be broughtWith more space, the fruits can be arranged by prices
and sizes. But that would cost more
Customers
Profile
Colony residents, housewives predominantly. During
medical camps, influx of patients to the hospitalincreases demand
Loyalty Since it is not a daily purchase, no real loyalty
Average Basket Size 2-3 kg
Bargaining Very less, since quality is shown
Active periodsThroughout the day, since housewives are main
purchasers after 11 am
PreferencesOutward appearance to people who are visiting,
regular buyers have their own preferences based on
Cash/Credit purchase Cash
Type of Vendor Vegetables
Location Nizampet Main Road, Hyderabad
About himSole owner, operates the store with his wife and two
helper boys
Variety of fruits/vegetables60 varieties of vegetables. No customer should leave
empty handed.
Business
Ownership Sole ownership.
Purchase decisions
Frome one of the bigger markets in Hyderabad, earlymorning. Some specialty vegetables are sourced from
farmers from far off districts which arrive daily by
lunch time
PricingWith 20-30% margin. And if sales are low sold at loss
to push the stock
Sales Credit based
Contingency During rainy season, sales are very low since
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customers cannot stop in the rain to buty goods
Management of Stock
Low quantities of each variety so as to push all
products by EOD. Any leftover stock is pushed first
the next day and if it is unusable is disposed of(~20-
30% stock wasted every day, because of damage and
defects)
Challenges faced -
Competition
Not bothered about other FVRs, co-operate with them
when needed. Threat is from organised grocers, since
they can get better margins at lower prices.
Threat of substitutes None
Changes that can be brought Optimising inventory, packaging
Customers
Profile Daily office goers
Loyalty Pretty high, since all varieties can be bought
Average Basket Size 2-3 kg
Bargaining Based on relationship and sales trends
Active periodsAfter 6pm when employees return home. Weekends
and Mondays
Preferences Low seasonality,
Cash/Credit purchaseCash mostly, with repeat customers some leeway
about payments is allowed
Type of Vendor Fruit- Handcart
Location Asian Games Village
About him
Name: Dilip Kumar
Age: 37
Born and brought up in Delhi
Been in business for 20 years
Variety of fruits/vegetables Citrus Fruits and seasonal
Business
Ownership Sole Owner
Purchase decisions
Fuits are procured from 2 areas – Okhla, Mandi in
Azadpur.
Purchase decisions are based on market demand.
Pricing
During peak seasons like summer, prices are high and
margins are high.
Winters are slow and lower margins
Litchis sold at premium as availability was low
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SalesRevenue around Rs.1200/ Profit about
Rs.250(January)
Contingency --
Management of StockBrighter/shinier fruits placed upfront
Washing done few times a day
Challenges faced
Wholesale point(Margins go lower)
Wastage(forecasting is a problem)
Competition
Keeps cart at wholesale point; shared gain/loss
strategy with competitors (collaborators).
Safal, Mother Dairy(on prices)
Threat of substitutesYounger population prefers cheaper snacks(chips,
biscuits)
Changes that can be broughtCan go to wholesaler/farmer’s market for lower and
competitive pricing.
Customers
Profile Middle-High Class( Locality )Loyalty Sometimes; Lose them to Safal(Mother Dairy)
Average Basket Size 1-2 Kilos on average; According to budget
Bargaining Yes
Active periods 7AM- 8PM
Preferences
Number of customers per day vary – 50 to 100.
In winters, sales are low because people do not prefer
to eat fruits.(profit is lower ~ 300/day)
Seasonal fruits preferred
Cash/Credit purchaseCash
Credit: Only for people living nearby
Type of Vendor Fruit- Stationary
Location XLRI Jamshedpur
About him
Name: Hashim
Age: 21
In XL since 3 years; earlier in Kadma
Variety of fruits/vegetables All Indian(seasonal);Imports(on demand eg.dates,strawberry)
Business
Ownership Owned by family: Father to sons run business
Purchase decisions
Demand estimation(mainly B2B driven);
B2C: eg. 50 kilos Papaya per week, 300 bananas a
day(estimate from previous weeks)
PricingDuring peak seasons like summer, prices are high and
margins are high.
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Winters are slow and lower margins
Sales
Revenue: 3000-4000( one batch)
5000-6000(both batches)
Daily Average profit: Rs.400
During SIPs: sitting at home.
Contingency Will put up shop elsewhere in summers
Management of Stock
Stock comes from Kolkata(Apples) , Wholesaler in
Barsodi(Near Tatanagar station)
On trucks, and places in Sakchi
(credit with weekly payments)
Challenges faced
Fridge (electricity unavailable) for Fuji/Washington
apples, papaya etc.
Space constraint(expansion not possible)
Wastage due to above reasons.
Competition Open Market(Bistupur); If rates perceived to behigher.
Threat of substitutes NA
Changes that can be brought Acquiring a fridge, some more space
Customers
ProfileStudents(all classes); Professors(well to do people);
B2B Customers(Mess, Sonnet and Alcor Hotels)
Loyalty Singular fruit vendor in campus;
Average Basket SizeStudents: Rs.80-100
Professors: Rs.150-250
Bargaining Yes; But doesn’t budge most of the time
Active periods 9AM-11PM
Preferences Cut fruits
Cash/Credit purchase Both
Type of Vendor Fruit – Shop
Location Bistupur Market
About him
Name – Sultan
Age – 40-43
Been selling since the past 20 odd years inJamshedpur.
Also sells some fruits to XLRI fruit vendor.
Opens his shop at 7.30am and operates till 11pm.
7 people in his family. Daughter is preparing for CA.
Variety of fruits/vegetables
Many (Indian and Imported)
Apple, Grapes, Banana, Orange, Mango, Muskmelon,
Watermelon, Dragon Fruit, Apricot, Guava,
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Strawberry, Papaya, Pears, etc.
Imported fruits are not better than Indian, they only
look better.
Chemically treated fruits have a longer shelf life.
Business
OwnershipSole owner
Has 3 people working under him (1 is a bodyguard)
Purchase decisions
Purchase fruits from different wholesalers. There is a
wholesale market in Sakchi. There is another near
Tatanagar station.
Monthly credit purchase. Depends on the person.
Some wholesalers sell on a 8-10 day credit.
Pricing
Depends on purchase. “If I purchase at Rs.10, I sell at
Rs.12 – 15”
Depends on demand
e.g. Chickoo – Rs.100
Strawberry – Rs.120
Sales
High Demand
Revenues - Rs.10000-12000/day
Profit – Rs.2000-3000/day
Low Demand
Revenues – Rs.6000-7000/day
Contingency
In case he is running out of fruits, he calls his
wholesaler who delivers a fresh stock within a few
hours.
Management of Stock
(Fruits were arranged very beautifully. Appearance of
the store was colourful. He sprayed water on the fruits
to make them look fresh)
Challenges faced
Wastage
Damaged fruits
Fruits have a very low shelf life
Competition
“Double-sided sword”
Competition has been there always and is bound to
stay.
Supermarkets are not a threat as they cannot keep sucha large variety of fruits and even if they keep, they will
be unable to maintain the same.
Threat of substitutes None
Changes that can be brought None.
Customers
Profile All kinds of people.
LoyaltyThere are a lot of loyal customers. His shop was one
of the best in the area.
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Average Basket Size Rs. 50-100
Bargaining
Customers bargain a lot. “But I am also very smart. By
looking at a customer, I can predict if he or she is
going to bargain. In such cases, instead of Rs.100, I
charge them Rs.120 so that after bargaining, they will
decide on a price of Rs.100”
Active periodsEvenings
Summer season contributed greatly to yearly revenue.
Preferences
According to him, people’s preferences are
independent of seasonal changes. “Kalyug zamaana
hai. Log thand mein bhi raat ko bhi icecream khaate
hai!”
Sales increase during the marriage season.
People do not buy much fruits for kids in winters.
Customers buy fruits on the basis of look, taste, and
nutrition.Cash/Credit purchase Both
Type of Vendor Fruit - Shop
Location Bistupur Market
About him
Name – Lakshman
Age – 51
Born and brought up in Jamshedpur.
Family has been into this business since the past 3
generations.
Elder brother operates another shop in the vicinity.
Studied in St. Mary’s high school till Std.VIII.
Had to drop out of school as family could not afford
fees.
Shop timings – 8.30am – 11pm
Variety of fruits/vegetables
Many (Indian and Imported)
Apple, Grapes, Banana, Orange, Mango, Muskmelon,
Watermelon, Dragon Fruit, Apricot, Guava,
Strawberry, Papaya, Pears, etc.
Business
Ownership
Sole owner. No staff.
Children are studying – B. Tech. Daughter was a
school teacher and is now married to an engineer from
HINDALCO.
He is the last generation of fruit sellers.
Purchase decisionsPurchases stock from Parsudi wholesale market.
1 week credit.
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Pricing Based on the price charged by the wholesale market.
SalesProfit – Rs.2000 to 3000
During mango season – Rs. 5000
Contingency
The vendor calls the wholesale market in case he is
running out of stock and delivery usually takes a
couple of hours.
Management of Stock
In summers, protecting mangoes from sunlight is very
important. Because of TATA Steel, temperatures
shoot up to 50 degree Celcius.
Need to take extra care of all fruits in summers.
Challenges faced
Wastage (7-10%)
Damaged fruits.
Low shelf life – e.g. Cold storage apples need to be
constantly sprayed with water else they will dry up.
Sell such fruits to ragpickers at throwaway prices or
for free.
Competition
Supermarkets do not provide personal service. Fruits
are of poor quality.
Exist as one player in a market of many players.
Threat of substitutes -
Changes that can be brought -
Customers
Profile All kinds of customers. Max. 100/day
LoyaltyThere are a lot of loyal customers. Around 20-30
regular customers come every Sunday.
Average Basket Size Rs.100
Bargaining
Customers always bargain. “Ultimately, I need to sell
my fruits. If a customer bargains a lot, I reduce prices
by Rs.8-10. On other fruits, I charge Rs.10 more”
Active periods11am-2pm
5pm-8pm
Preferences
Change as per seasons. In winters, they prefer to buy
from a shop which has a good collection of winter
fruits.
e.g. Grapes, Oranges, Papayas
Cash/Credit purchase Both
Type of Vendor Fruit – Shop
Location Bistupur Market
About him
Name – Sunil
Age - 45
Did not want to answer our questions. The other
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owner asked him to answer.
Variety of fruits/vegetables
Many (Indian and Imported)
Apple, Grapes, Banana, Orange, Mango, Muskmelon,
Watermelon, Dragon Fruit, Apricot, Guava,
Strawberry, Papaya, Pears, etc.
The largest shop in the area.
Business
Ownership Father and two Sons
Purchase decisions
Purchase fruits from wholesalers on credit – 1 day/1
week/1 month
Depends on the business relationship with the
wholesaler.
Purchases best quality fruits from the market.
Pricing
Pricing depends on quality. As better quality fruits are
purchased at a higher price from wholesalers, the
vendor charges a premium price to his customers with
the guarantee that the quality will not becompromised.
Price = Purchase Price + Other expenses + Profit
SalesProfit – Rs.3000 to 4000
Depends on customer demand.
Contingency During ‘Pujas’ and ‘Marriage Seasons’, stock need
Management of Stock
(Fruits were arranged very beautifully. Appearance of
the store was colourful. He sprayed water on the fruits
to make them look fresh)
Challenges faced
Loss because of wastage.
Sell such fruits to ragpickers at throwaway prices or
for free.
Competition
Competition is there. They not only face competition
from the local fruit sellers, but also from sellers in
Sonari, Sakchi, and Kadma.
Supermarkets operate at a different level and will
never be a competition to local vendors.
Threat of substitutes -
Changes that can be brought -
Customers
Profile All types of customers – Generally upper middle class
Loyalty
There are a lot of loyal customers. Local customers
generally prefer his shop.
The shop is around 90-100 years old.
Average Basket Size Rs.120-150
Bargaining Charge higher price to customers who bargain
Active periodsSummers contribute majorly to yearly sales.
Customers do not prefer to buy fruits in winters
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Preferences
Customer preferences are dependent on the season.
Winters – Apples and Grapes
Summers – Mangoes and Oranges
Cash/Credit purchase Both
Type of Vendor Vegetable – Wholesale Shop
Location Bistupur
About him
Name – Mohammed
Age – 40
Shop is 40 years old.
Operates as a retailer as well as a wholesaler.
Shop timings – 7am to 10pm
Shop – A bed, TV, and chair
Variety of fruits/vegetables Potato, Onion, Garlic, Ginger, and Green Chilly
Business
Ownership Sole owner.Staff of 4 people.
Purchase decisions
Based on demand. E.g. When demand is low, stock is
cleared and capacity is kept unutilized.
Potato – West Bengal
Onion – Lalsalgaon
Garlic – Uttar Pradesh
Green Chilli – Orissa, Chattisgarh
(payment done via net banking – Credit purchase)
Discount offered if payment is made in cash.
Pricing
Rates
Potato – Rs.6/kg Wholesale
Rs. 8/kg Retail
Onion – Rs. 22/kg Wholesale
Rs. 26/kg Retail
Price charged depends on quantity bought.
Rates are decided in the market daily.
Sales Sold in bulk quantities. Revenues are generally fixed.
Contingency
In cases when there is shortage of vegetables with one
vendor, the nearby vendors help him by lending theirvegetables to him or by increasing prices to bring
down demand.
Management of Stock
Some Potatoes are misshapen but their intrinsic
properties are same. However, retail customers will
not buy such potatoes and therefore, they are sold at
wholesale prices to contractors.
The vendor had a huge godown filled with vegetable
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sacks.
Challenges faced No monopoly in business. Delivery of onions takes 4
days while potatoes are delivered in 8 hours.
Competition
No competition in this wholesale market.
Each vendor has fixed customers.
Nearby markets are their competitors but they cannot
bring retail customers from Sakchi to Bistupur.
Threat of substitutes -
Changes that can be brought No changes. As per the vendor, this model will
sustain.
Customers
Profile
Initially, they used to sell to caterers. Now they
purchase directly.
Customers include hotels, mess contractors, and also
retail customers.
Most transactions are made over mobile phones.
Loyalty
Loyal customers are generally charged lower prices.Because this is a wholesale market, 90% sales are
done to regular customers.
Each wholesaler has his own set of customers.
Average Basket Sizee.g. 50-100kg
Up to 500kgs
BargainingFixed customers. Prices charged are reasonable. Little
bargaining
Active periods Early morning to noon.
Preferences
Customers prefer to buy from a particular vendor as
they have developed business relations with the
vendor.
Cash/Credit purchase Both
Type of Vendor Vegetable – Shop
Location Bistupur Market
About him
Refused to share his name.
One of the bigger shops in the area.
Father did not seem to be interested in answeringquestions.
Owners appeared frustrated may be because the
market has deteriorated in the last few years.
Store time – 8am – 10pm
Variety of fruits/vegetablesGreen leafy vegetables, and other vegetables except
potato, onion, and garlic.
Business Ownership Shop is run by father and his two sons.
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Has been running shop since 53 years.
Purchase decisions
Into the wholesale as well as retail business.
Purchase is directly made from farmers. In cases
where vegetables are not available with the farmers,
they purchase from other wholesalers.
For wholesale orders, stock is procured one day in
advance.
Pricing
Prices are decided by the market. Prices vary daily.
Price depends on quality. Better quality means higher
price.
SalesSales depend on the season.
Summers are poor for doing business.
Contingency All decisions depend on common sense.
Management of Stock Stock is procured one day in advance.
Challenges faced
Wastage
Disposed off /cattle feed/ sold to rag pickers atthrowaway prices
Competition
No competition. All vendors purchase their stock
together from same farmers. They all coordinate and
cooperate.
No comments on supermarkets. (They thought we are
from Big Bazaar)
There are bigger markets in Sakchi and Kadma.
Previously, there was only one market in Jamshedpur
in Bistupur, but now new markets have cropped up.
Threat of substitutes
No threat.
In winters, green vegetables are sold. In summers,
they are substituted by bitter gourd, lady finger,
radish, etc.
Changes that can be brought No comments
Customers
Profile All types of customers – 100 – 400/day
Loyalty 20-30% repeat customers
Average Basket Size Rs. 50-100
Bargaining
Customers bargain. Ultimately, they need to sell, so
they have to sell at lower prices to customers who bargain a lot.
Active periods Early morning
PreferencesWinters – Peas, Cauliflowers
Customer preferences change as per seasons.
Cash/Credit purchase Cash
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Bargaining
Yes. Customers bargain. Prices are raised by Rs. 5-10
and then customers bring down prices by the same
margin to make the Net Result = 0.
Active periodsEvenings
Sales pick up in March.
Preferences Customer preferences change as per season.
Cash/Credit purchase Both
Type of Vendor Fruit - Handcart
Location Airport Road, CH Area
About himRefused to share his name.
Was hesitant to answer our queries.
Variety of fruits/vegetablesGrapes, Apple, Orange, Pomegranate, Papaya, and
Guava
Business
Ownership “Mahajan” basis – The seller gets commission basedon daily sales. The shop is owned by somebody else.
Purchase decisions
The Mahajan takes decisions. Seller is consulted about
demand. Fruits are purchased from the nearby
wholesale market.
PricingPrices are decided on the basis of demand. High
quality drives up the prices.
SalesDaily sales are in the range of Rs. 4000 to Rs. 5000.
Sales increase in the summer season.
Contingency -
Management of Stock
Stock is filled as it starts running out. The handcart
should always appear full of fruits and fruits should be
arranged in such a way that they pull the customers
towards them.
Challenges faced None
CompetitionHe is the only fruit seller on a 2km stretch of road. His
customers are locals and travellers. No competition.
Threat of substitutes None
Changes that can be brought None
Customers
Profile Locals, travellers.Loyalty Hardly any
Average Basket Size Rs. 50
Bargaining Yes. Higher prices are charged to such customers.
Active periods Early mornings and Evenings
Preferences Fruits are stocked as per the season.
Cash/Credit purchase Cash
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Type of Vendor Fruit – Handcart
Location Sakchi Market
About him
Did not allow us to record. We could record only 1.5
minutes of the conversation. Remaining conversation
was then transcribed.
Variety of fruits/vegetables Grapes and Guavas
Business
Ownership Dual ownership
Purchase decisions
Depends on demand. Purchase is done daily on 1
week’s credit from the wholesale market. As they are
not a big player in the market, the wholesale market
gives them lower preference than shop owners.
PricingPrice depends on quality and daily sales. If sales are
down, margins are cut and prices are pulled down.
Sales
Not much. Sells around 50kg grapes per day @ Rs.
90/kg.
Profits are low.Contingency -
Management of StockDifficult to manage stock as there is a problem of lack
of space.
Challenges faced
Lack of space.
No fixed location.
Customers prefer shops.
CompetitionShops are the biggest competitors. Handcart pullers do
not have much bargaining power with the wholesaler.
Threat of substitutes -
Changes that can be brought -
Customers
Profile All kinds of customers.
Loyalty Very few.
Average Basket Size Rs. 50-80
BargainingCustomers bargain and are therefore charged higher
prices so that the fruit vendor does not suffer a loss.
Active periods Evenings
Preferences Preferences change as per season.
Cash/Credit purchase Cash
Type of Vendor Fruit - Shop
Location Sakchi Market
About himHe was very forthcoming.
Young.
Variety of fruits/vegetablesAll kinds of fruits – Indian and Imported.
One of the bigger shops in the area.
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Business
Ownership Dual ownership
Purchase decisions Based on customer demand.
Pricing
Prices are decided on the basis of demand and also on
the basis of competition. Purchase decisions are taken
by the principal owner.
Sales
Sales fluctuate as per season. No fixed income. Daily
sales depend on the number of customers and their
basket size.
ContingencySupplies were replenished daily and also when an item
was on the verge of going out of stock.
Management of Stock
The shop was filled with all kinds of fruits. Supplies
were replenished daily and also when an item was on
the verge of going out of stock.
Challenges facedWastage
Low revenues in winters
Competition
As they are all operating in the same market, there issome competition but the competition is healthy. If
they are not competing on price, they compete on
quality.
Supermarkets were never a competition and according
to the vendor, they will never be.
All sellers will operate and they will all operate
independently.
Threat of substitutes“Not much. Customers are smarter now and talk about
nutrition too!”
Changes that can be brought None
Customers
Profile
All kinds of customer.
If you are an upper class customer, you will be sold a
higher priced, better quality product.
Loyalty There are a few loyal customers.
Average Basket Size Rs. 80-100
Bargaining
“Customers bargain. To operate in this market and sell
your fruits, it is important to manage such customers
tactfully”
Active periods Evenings
Preferences
Customer preferences depend on the season and also
on the willingness to pay.
In winters, grapes occupy a larger share of wallet
while in summers, mangoes occupy a larger share of
wallet.
Cash/Credit purchase Both
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Type of Vendor Fruit – Retail + Wholesale
Location Sakchi Market
About him
There is a retail store in front of their godown and
three brothers operate the store as well as manage the
wholesale business.
Operating in this area since last 6 years.
Variety of fruits/vegetables
Many (Indian and Imported)
Apple, Grapes, Banana, Orange, Mango, Muskmelon,
Watermelon, Dragon Fruit, Apricot, Guava,
Strawberry, Papaya, Pears, etc.
Business
Ownership Three brothers.
Purchase decisions
Stock keeping depends on the season. Seasonal fruits
are purchased in bulk while other fruits are procured
only on need basis because there is a high chance of
their wastage.
Purchase decisions depend on demand and also try tominimize demand.
Pricing Price depends on quality
Sales
As three people are running the shop, revenue would
be high and so would be the profit. Because they are
one of the few sellers in the wholesale market, and do
not have to bear extra costs for retail sales, their
margins are high.
Contingency
If the fruit does not sell in two days, they try to
salvage their loss by selling it below its cost price.
In case of low stock, they call the farmers who deliver
fresh stock in one day.
Management of Stock
(Fruits were arranged very beautifully. Appearance of
the store was colourful. He sprayed water on the fruits
to make them look fresh)
Challenges faced
As this is a business, if there is a profit of Rs. 200
today, there may also be a loss of Rs. 500 tomorrow.
Uncertainty is perpetual in this sort of business.
Perishability of fruits.
CompetitionCompetition always exists in the market but there areonly a few people who do both retail and wholesale
business simultaneously.
Threat of substitutes None.
Changes that can be brought None.
Customers Profile
“Today, customers are smarter than the seller”
All kinds of retail customers. Wholesale customers
include mess contractors, caterers, and institutions.
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Loyalty“Customer is never permanent. Customer wants low
prices and better quality.”
Average Basket SizeRs. 80-100 for retail.
No fixed size for wholesale.
Bargaining
Customers bargain.
E.g. Orange sells at Rs. 40/kg.
Customer asks for Rs. 35/kg.
Not only that, they choose the best looking oranges
from the lot.
Therefore, the retailer marks up the price to Rs. 45/kg
so that the customer settles at Rs. 40/kg
Active periodsEvening.
Summer season is best for business.
PreferencesCustomer preferences for vendors and fruits change on
the basis of season, price, and quality.
Cash/Credit purchase Both
Type of Vendor Vegetable – Retailer + Wholesaler
Location Sakchi Market
About himAppeared to be in early 60s. He also owns a paper
shop adjacent to his vegetable shop.
Variety of fruits/vegetables All kinds of vegetables. Full stock.
Business
Ownership Father and sons.
Purchase decisions
Purchase depends on demand – demand from retailers
and demand from local customers.
Pricing
Rates are decided daily in the market at 5am. The
prices charged by all vendors in the wholesale market
are uniform. Any difference in price is because of the
difference in quality.
SalesMarket is growing and will continue growing. Family
members are also diversifying their business.
ContingencyIn case a part