Truck Sharing for Small-scale Producers in Rural India - An Analysis

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This presentation shows the results of conceptual, analytical and empirical study on the idea of transfering "car sharing in cities in developed markets to commercial transportation in rural areas of developing countries". The final objective is to improve logistics connectivity in rural India following the grassroots-to-global thoughts of Prof. Anil K. Gupta at IIM Ahmedabad.

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Truck Sharing for Small-scale Producers in Rural India - An Analysis

  1. 1. Non-Ownership Commercial Mobility Services forthe Base of the Pyramid: A User Preference Studyor„Truck-Sharing in Rural India“Dr. Roger MoserDirector, India Competence Center & ASIA CONNECT CenterResearch Institute for International Management, University of St.GallenDr. Tobias SchaefersAutomotive Institute for ManagementMarketing & Consumer Insights, EBS Business School
  2. 2. A crucial challenge for the economic development of theBase of the Pyramid (BoP): Commercial Mobility„Because Tier 4 communities are often physically and economically isolated, betterdistribution systems and communication links are essential to development of thebottom of the pyramid.”(Prahalad and Hart 2002, p. 9)• Access to commercial transportation vehicles poses difficulties for BOP, impedingbusiness opportunities and growth (Gupta 2008; Haugh et al. 2010)• Products created by low-income population in rural areas hardly ever reach the nextmajor city (Gupta 2008)Challenge: Vehicle Purchase• High initial investments or long-term financing• Several risks, e.g., maintenance, alterationChallenge: Logistics Services• Limited availability in rural areas• Pricing aimed at large businesses or corporationsin major citiesObjective: Solution offering access to commerical mobility for small-scale producers withoutthe requirement of individual ownership
  3. 3. Providing opportunities for the Base of the Pyramid:Non-Ownership Services (NOS) as an alternativebusiness model approach• The academic literature is still working on the exact definition and differentiations ofnon-ownership services (Möller, 2010, Schaefers & Moser, 2011, Haase & Kleinaltenkalb, 2011 among others)• For the base of the pyramid it only matters that Non-Ownership Services can help toovercome (financial and natural) resources restrictions.
  4. 4. NOS business models of Commercial Mobility for the BoPcan take numerous forms: Empirical research isrequired to identify what might really work• Non-ownership services can be defined as an alternative form of consumption inwhich the acquisition and possession of an object is replaced by temporary accessto that object (Schaefers & Moser, 2011)
  5. 5. Empirical research with small-scale producers in ruralIndia: Testing a non-ownership commercial mobilitybusiness model or “Does truck-sharing in rural Indiawork?”. .“The BOP proposition correctly celebrates the “shared access” modelas a way to make products more affordable to the poor.”(Karnani 2007, p. 102)• Shared use of resources can address challenges at the base of the pyramid• Improvement of business opportunities and livelihood• Specifics of non-ownership commercial mobilityservice in rural India:• Light Commercial Vehicles• Payment per amount of time used• Advanced booking or ad-hoc use Prices well below logistics service providers No initial investments & ownership risks Make commercial transport easier and moreaffordable for BoP small entrepreneurs
  6. 6. Applied research in rural India: Combining academicrigor and practicability in application and datacollection.• Step 1: Identification of existing similar, existing business models Similar services offered in proximity to centres of metros (e.g. 30 km away from Bangalore)• Step 2: Case study interviews with 15 commercial service providers and users Application in rural areas requires more coordination than what single small logisticsservice providers (max. 1-2 vehicles) can offer• Step 3: Conjoint measurement study with 300 small-scale producers as potential users of non-ownershipcommercial mobility services in rural India• Collaboration with Dharma (NGO) for data collection• New data collection approach to use Dharma employees forparticipant identification and datacollection• Data analysis by India CompetenceCenter at University of St.Gallen Results show potential business modelaccording to expectations
  7. 7. First results of the conjoint measurement study (step 3):Small-scale producers prefer the following businessmodel for non-ownership commercial mobility• A clear preference for ad-hoc booking over advancedor fixed offerings-0.056 -0.040.096-1.5-1-0.500.511.5book_fix book_adv book_adhBOOKING(12,31%)-0.8180.973-0.154-1.5-1-0.500.511.5adv_cash cash_dep asset_depPAYMENT(20,57%)0.38-0.38-1.5-1-0.500.511.51-way 2-wayMODE(20,14%)0.710.297-1.007-1.5-1-0.500.511.540 80 120MIN KM(14,06%)2.6710.575-0.303-2.943-3-2-101238 10 12 14PRICE (Rs./km)(32,92%)• A clear preference for acash-deposit over cash inadvance or asset-baseddeposit• A clear preference for one-way transport over two-waytransport offerings• The minimum amount ofwith the highest utilityvalue is 40 but also 80shows positive values• The price level with a utilityvalue of almost zero isclose to today’s marketprices
  8. 8. Next steps: Detailed analysis of study results andpreparation of pilot implementation0.1610.432-0.593-0.161-0.4320.593-1.5-1-0.500.511.51-wayx 401-wayx 801-wayx 1202-wayx 402-wayx 802-wayx 120MODE by MIN KM0.591-0.224 -0.361-0.006-0.5910.2240.3610.006-1.5-1-0.500.511.51-wayx 81-wayx 101-wayx 121-wayx 142-wayx 82-wayx 102-wayx 122-wayx 14MODE by PRICE0.281.208-1.446-0.043 -0.107-0.4081.012-0.496-0.173-0.80.4330.539-1.5-1-0.500.511.540x 840x 1040x 1240x 1480x 880x 1080x 1280x 14120x 8120x 10120x 12120x 14MODE by PRICEBusiness model development• The study results need to be further understood and discussedwith the potential actual users in India• Service packages need to be further clarified and adapted tospecific local contextsPilot implementation• Development aid agencies, trusts and commercial companiesfrom logistics as well as car manufacturing have to beintegrated into the set-up of a pilot application.
  9. 9. Dr. Roger MoserResearch Institute for International Management,University of St.Gallen, SwitzerlandAdjunct Faculty, IIM Udaipur, IndiaVisiting Faculty, IIM Bangalore, Indiaroger.moser@unisg.chIndia Competence CenterResearch Institute for International ManagementDufourstrasse 40aCH-9000 St.Gallenwww.fim.unisg.chIndia Competence Center: Contact

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