Financial Express: You were born and raised in New York, but found your calling in unravelling the rural markets in India. What drew you to microfinance and clean energy?
Ajaita Shah: While pursuing my higher studies in the United States of America, I got the opportunity to work in the sectors of microfinance and clean energy. Furthermore, being an Indian I was always drawn towards returning back to my roots.
I got the opportunity to deeply understand and work on addressing the social business, gender empowerment and design solutions to treat every rural family as a dignified customer who had the right to access quality solutions to address life challenges. Additionally, this is what I learnt – over 800 million rural consumers in India are not being serviced by most product and service providers including e-commerce platforms for their daily needs. Even though this customer has a need to access quality solutions ranging from appliances to financial services, to healthcare and even day to day FMCG goods, and is willing and able to pay, their demands are not being met. This is a missed opportunity of over $100BN annually, as well as missed opportunities to build resilience and to increase productivity in rural villages. Without access to quality solutions to address daily challenges, we are inevitably denying rural families an opportunity to change, to evolve, to grow.
Frontier Markets was built on the premise that rural customers need to be heard and serviced where they live. We have built an end-to-end distribution platform which manages the entire value chain – from demand generation to doorstep fulfilment and onwards to after sales service, helping rural customers access everything they need. We use a unique ‘phygital approach’ bringing together a network of local rural women entrepreneurs, called Saral Jeevan Sahelis, on the ground to build trust and digital technology to manage the value chain at scale.
Today Frontier Markets is India’s largest rural distribution platform for rural customers to access the products and services they want at their doorstep.
FE: What motivated you to move into social entrepreneurship?
AS: While working in the microfinance sector, I was exposed to the challenges faced by rural communities, especially women, when it came to accessing basic infrastructure, quality solutions and means to address poverty – from electrification, telecom, clean water, to basic deliveries.
I set up Frontier Markets in 2011 with an aim to broaden rural communities’ access to high impact products and services through a consumer-centric platform by integrating ecommerce, and a local distribution supply chain. As clean energy was a real need in rural areas at that time, Frontier Markets began by bringing products such as solar torches and lanterns of various brands from last-mile distribution points.
FE: How many people have you reached out to?
AS: Our goal is to become the largest rural platform to become the voice for rural women driven by women. In taking this approach we are the only platform that is reaching the deep rural last mile, connecting directly with customers.
We invest in 500 Sahelis through women’s networks to cover 100 villages setting up our distribution hubs within 1 month, enabling break-even within 10 months of operations ensuring Sahelis earn a minimum of $400 in the first year.
Currently, we have over 20,000 sahelis and have successfully partnered with State-level government leadership in Rajasthan and UP – signing MOUs with State Level Rural Livelihood Departments to open up over 10,000+ villages and create jobs for 100,000 Sahelis in this coming year.
FE: Tell us more about your partnerships.
AS: We have a total of 60+ partnerships with national and global brands. Each partnership has helped us in different ways.
As an immediate emergency response to Covid-19, we took the initiative of a multi-level collaboration- “Rural Access Coalition” with two other rural tech start-ups Hesa and 1Bridge, and other enablers, including Sattva, United Way Delhi, Noora Health, Armaan, and others.
Rural Access Coalition is helping customers and families with resources through our gender lens. Our 12,500 Saheli network connected deeply to amplify the gender-based health needs of the community alongside accessibility, connectivity, economic development and opportunities. Recently, we also partnered with the Government of Uttar Pradesh [Uttar Pradesh State Rural Livelihood Mission (UPSRLM)] and Rajasthan to promote rural women entrepreneurship in the states. This partnership helps rural women entrepreneurs earn enhanced income as Sahelis and diminish poverty.
The partnership is helping us onboard 2000 rural women as Frontier Markets Sahelis with Self Help Groups (SHGs) and train them to leverage technology through the Frontier Markets e-commerce platform “Meri Saheli” and generate an income of 50K – 60K per annum. Leveraging Banking Correspondent Sakhi (BCs), the organic part of the SHGs trained in conducting financial transactions will be trained to generate sales leads and data collection.
FE: If any, what were the challenges you faced in your journey as a social entrepreneur?
AS: It definitely hasn’t been an easy ride to set up Frontier Markets. When we first started in Rajasthan, in Chomu,we learned it was very difficult for rural customers to believe that a private company would in fact actually introduce high quality products at a low price and would deliver to their doorstep.
When we started selling our solar products, we had to reach out to the customers proactively and check in with them to see how the product was functioning.They didn’t believe that after sale service was areal thing because, let’s be honest, rural customers have never had after sale service as a component.They’ve been used to cheap low quality Chinese products. So it took a long time for us to really educate that rural customer about the difference between low quality versus high quality. We had to show them that we were giving them the right solutions and once they adopted the solutions, we had to proactively reach out to them to convince them that we were here to stay.
Scaling our model also was equally challenging because without technology, we were physically going to new villages, physically building relationships with nonprofits, and trying to reach out to rural customers directly, getting capital to be able to invest in field staff, building out delivery models. All of this took a lot of time, and I think that it was a struggle for a very long time because we were also then dealing with other outside external challenges. Demonetization created disasters when we realized that people didn’t know they had cash anymore. Digital payments were not a real thing. People weren’t ready to have smartphones and start paying online. So Frontier Markets essentially had to keep pivoting its model to be able to adapt to these realities when digitization.
One of the reasons we’re able to grow more effectively is because we are a tech first approach. We also have cracked the model of working with existing infrastructure. Today, by partnering with governments in rural India, we’re able to really leverage access to rural villages much faster, access to women entrepreneurs a lot faster because we are working off of an existing infrastructure. Earlier, we didn’t have any of those things. We were doing it all by ourselves. So it took us a much longer.
Today people ask us that you’ve been around for ten years and how come you’re only in 5000 villages or in two states? But the fact of the matter is that it took us eight years to really crack the model. And now we’re ready in a steady state to grow bigger and faster.
FE: What is next for Frontier Markets?
AS: Our goal is to become the largest rural commerce platform in the country, onboarding 500K Sahelis with 50 million rural customers, becoming $10BN+ company in transactions – scaling innovative solutions in climate, financial services, agriculture, healthcare, and education.
The combination of data and insights has enabled strong growth in sales, net revenues, while retaining profitability and growing operations. And now we are ready to scale what works. Additionally, there is a massive opportunity as we talk about investments in climate. Let’s invest in women, let’s build the future climate solvers.