1. REPORT
BY
Group 7 of MMM Batch II – Year I
JAMNALAL BAJAJ INSTITUTE OF MANAGEMENT STUDIES
ON
The Study of Street Transactions for Cosmetics Business
(Understandingthe Relation in Investments, Inventory and Profits in the
Business)
Group Members
503 - Mr. Karl Paghdiwalla
506 - Mr. Akshay Parab
508 - Mr. Sagar Patel
510 - Mr. Rohit Patil
512 - Ms. Nitasha Rana
515 – Ms. Sharon Raphael
526- Mr. Surendra Shirsekar
516 - Mr. Sumeet Saigal
537 – Mr. Gyanprakash Tiwari
541 – Ms. Suvarna Wandile
542 – Ms. Mamta Wathare
2. Acknowledgement
We, the members of Group … (for the Economic Project), acknowledge Prof. Agnelo
Menezes for his continuous support and guidance for executing the study on Street
Transactions.
Thank You, Sir.
4. INTRODUCTION
If cosmeticsmeanshoppingmallsorhigh-endboutiques,itisaratherdelightful scenariotowatcha
“vegaslike glitter”inthe colabamarketandbandra’slinkingroad.Rivetingdisplaysalluring
customersbothdomesticandforeign,little bargains,andsome winningsmilessumsupthis
experience.Streetshoppingisturningoutto “new-normal”formostof those who preferboutiques
and high-endstores.Especiallyforcosmetics,notonlydostreetvendorsprovideaplethoraof
optionstochoose fromat reallylowprices,the qualityof these productsisshockinglygood.
These streettransactionsare constitutedasthe Informal sector;whilethe informalsector
constitutesthe tertiarypartof IndianEconomy;data suggeststhatmore than 90 per centof
workforce andabout50 percentof the national productare accountedforby the informal
economy.A newdynamismof the informal economyintermsof output,employmentandearnings
has beenobserved.
The questionis,if streettransactionsare fastgrowing,doesthatmeaninformal economyneeds
fasterand a rather inclusivegrowth?
In thispaperwe make an attemptto understandthe economicworkingmodel in the informalsector
of StreetCosmetics.
The study consistsof foursections.
Section-1
Section- 2
Section-3
Section-4
5. Objective of the study
Testingthe hypothesisthat variable costhasa positive correlationwithprofit.
Methodology
1. Survey
2. Regression
6. SECTION 1
An informal economyexistsinbothdevelopinganddevelopednations,thoughitismostoften
associatedasan engine of economicdynamismindevelopingcountries.The commonexamples
fromthe informal economyinclude workersoperating„off the books ‟forcash,suchas street
vendors,constructionworkers,andtaxi drivers.Often,informal businessesare small andfamily-run
or run by a single entrepreneur.
With the IndianPrime MinisterNarendra Modi declaring“Make inIndia”,the real trial isdriving
forththe informal sectorinadevelopingeconomy.
While creatinganddevelopinganinformal sectorisatask. The perpetuationof thissectorisa
hurdle.Challengesbeing:Sorelydeficientinfrastructure,inhospitable businessenvironment,
corruption,poorqualityof humanresources,problemswithaccesstotimelyandadequate credit,
difficultyof gettingland,highburdenof taxationandrestrictive labourregulationswouldfigure
prominentlyonanylist.
Such hostilityencouragesbusinessestostart andremaininformal,therebyperpetuatingIndia’s
overwhelminglydominantinformal sector.Allthe aforementionedconstraintsbindwithmuch
greaterforce on informal firms.Italsodiscouragesexpansionof small business,amajorsource of
jobcreation,reflectedinthe “missingmiddle”of India’sfirm-sizedistribution.While manyof these
transactionscan be easedbysimplifyingthe regulationsconcerned,theirimplementationwouldrun
intostate capabilityandrelatedgovernance problems.
The informal sectorif broadlycharacterizedasconsistingof unitsengagedinthe productionof
goodsor serviceswiththe primaryobjective of generatingemploymentandincomestothe persons
concerned.These unitstypicallyoperateata low level of organization,withlittleornodivision
betweenlabourandcapital asfactorsof productionandon a small scale.Labourrelations - where
theyexist- are basedmostlyoncasual employment,kinshiporpersonal andsocial relationsrather
than contractual arrangementswithformal guarantees.
“Informal sector”as consistingof unitsengagedinthe productionof goodsorserviceswiththe
primaryobjective of generatingemploymentandincomestothe personsconcerned.The units
operate at lowlevel of organisation,withlittle ornodivisionbetweenlabourandcapital asfactors
of productionandona small scale.Labourrelations–are basedmostlyoncasual employment,
kinshiporpersonal andsocial relationsrather thancontractual arrangementswithformal
guarantees.
7. SECTION 2
STREET VENDING OF COSMETICS IN INDIA
Street vending of cosmetics in India has emerged in the past two decades. Prominent in
larger metros such as Delhi and Mumbai, they have grown in smaller regions as well. In
India, where most of the population struggles to make ends meet; street vending becomes a
means to earn a living. Typically an urban population of women depend on daily make-up
wear; these street vendors make the whole dilemma very simple by introducing cheaper
and a wider range of cosmetics for them to choose from.
The process in which is happens; is as follows:
The seller undertakes a series of pre-business activities before selling the product to the
consumer ranging from procuring a place, buying products, managing inventory, to
analysing and making business decisions.
1. The seller first procures a shop in order to sell his products. Shops are usually bought
or on cash / credit
2. The seller then undertakes a series of transactions this includes
a. Purchasing products from suppliers and salesman
b. Selling the products to the consumer using various techniques and
c. Taking care of daily routine expenses such as food, travel and payment to
staff and municipal officers, police men
d. The seller then takes a note of his inventory, this helps him to analyse his sale
and keep a count of stock unsold.
3. Procuring - The street vendor transacting on street source their material from local
vendors. The process is then divided into three stages as mentioned below:
a. Stocking
b. Distribution
c. Sales
8. Street vendors are popular because they provide much needed services to
the large section of society that retailing outlets can provide. The middle and
lower income groups buy a large proportion of Cosmetics from these vendors
at reasonable rates often lower than the formal stores.
….
Drugs and Cosmetics (Amendment) Act, 2008
The Drugs and Cosmetics Act, 1940, has been recently amended under the Drugs and
Cosmetics(Amendment) Act, 2008 providing very strict penalties for manufacture of
spurious and adulterated drugs.It is provided that any drug deemed to be adulterated or
spurious when used by any person for or in the diagnosis, treatment, mitigation, or
prevention of any disease or disorder is likely to cause his death or is likely to cause such
harm on his body as would amount to grievous shall be punishable with imprisonment for a
term which shall not be less than ten years but which may extend to imprisonment for life
and shall also be liable to fine which shall not be less than ten lakh rupees or three times
value of the drugs confiscated, whichever is more. The fines realized in such cases will be
paid to the relative of the deceased or the aggrieved person.
Any drug deemed to be spurious but not being a drug referred to above shall be punishable
with imprisonment of a term which shall not be less than 7 years but which may extend to
imprisonment for life and with fine which shall not be less than 3 lakh rupees or three times
the value of the drugs confiscated, which ever is more. Offences relating to sale and
manufacture of spurious and adulterated drugs have now been made cognizable and non
bailable. It has been provided that besides an Inspector appointed under the Act, the person
aggrieved or consumer associations, a gazetted officer authorised by the Government have
also been authorised to launched prosecution under the Act. A provision has been made for
especially designated courts for trial of offences under the act. A provision for compounding
of minor offences has also been introduced. Regulatory control over the manufacture and
sale of drugs Regulatory control over the manufacture and sale of drugs is exercised by the
State Licensing Authorities appointed by the State Governments which are responsible for
monitoring the qualityof drugs moving in the market. As a part of their function, the
Inspectors appointed by the State carry out market surveillance by drawing samples from
the sales establishments, hospitals and manufacturers and get them tested at governments'
laboratories. Wherever a drug is declared as spurious or adulterated or not of standard
quality, prosecutions are launched against offenders in the court of law by the concerned
regulatory authorities depending upon the merits of the case. Being an undercover activity,
it is difficult to detect the manufacture or movement of spurious drugs except by
continuous surveillance by the State Drug Control Organization and active cooperation from
the law and order Enforcement machinery in the State and other stakeholders like drug
manufacturers associations and voluntary associations. A Drug Inspector appointed by the
respective Governments is required to inspect not less than once a year all establishment
licensed for manufacture or sale within the area assigned to him and to satisfy himself that
the conditions of license are being observed. He may draw samples of a drugs or cosmetics
9. from the manufacturing or sale premises, where he has reason to doubt the quality of drug,
in a prescribed manner and send them for test and analysis to the Government analyst to
check the quality. The manufacturer is also required to allow an inspector to inspect all
registers and records maintained by him and to take samples of manufactured products, if
required, and provides such information as required for the purpose of ascertaining
whether the provisions of the Act and Rules thereunder have been observed. The inspection
may be conducted by one or more inspectors to examine the premises, plant, appliances
and process of manufacture, professional qualifications of technical staff and capability of
the manufacturer to comply with the requirements of Good Manufacturing Practices and
requirements of plant and equipment before a license is granted.
10. SECTION 3
After conversing with various cosmetic vendors, our observations were –
1. High margin
2. Local manufacturer
3. Mix products - original + fake
4. The product is a good mix of original and fake
5. Security high
6. BMC place
7. 300/-400
8. The business selling in this is high selling product
11. SECTION 4
Recommendations for bettering the informal activity as a livelihood
activity
Settingupof an autonomousbody,namely, National Skill DevelopmentAgency(NSDA),inJune
2013, withthe single pointfocusoncoordinating andharmonizingskill developmentactivitiesinthe
countryso as to meetskillingtargetsandto ensure thatthe skillingneedsof the disadvantagedand
the marginalizedgroupslikeSCs,STs,OBCs,Minorities, Womenanddifferently-abledpersonsare
takencare
of.
Notifyingthe National Skill QualificationFramework (NSQF) toprovide learningpathwayswith
horizontal andvertical mobilitybetweengeneral education andvocational education/training,
recognition of priorlearning,creditaccumulationandtransfer etc.NSDA ismandatedto
operationalize bybringing togetherthe keystakeholderssector-wisethrough the National Skills
QualificationsCommittee(NSQC).
• Settingupof SectorSkillsCouncil bythe National Skill DevelopmentCorporation(NSDC),which are
strivingtocomplementthe existingvocational
• Attractive display
• Good salesmanship.
• Callingthe customerspolitely.
• Price discount
• Availabilityof freshstockof all brandsat anygivenpointof time
• Buildingandmaintainingrelationshipwithcustomers.
• Offeringcomplementaryproducts likehairbrushwithHairdye
12. PERSONAL LEARNING’S
Sharon Raphael
"OutwardAppearancesare Deceptive"I wouldrelate thissayingwith mylearningof the projectasI
feltlife of astreetsellerwouldnotbe sodynamicorcompetitive.Mylearninginthisprojectdefines
that cosmeticssoldon streetshave highmarginsandrequire diversemarketingskillsdue to
competitionrisinginourMarkets.
It was verysurprisingtodenote the offersplacedbysellerswhichincludedbuy2 get1 free.Most
surprisingwastoknowthe higheducationlevel whichwasneverexpectedbyme ( MA pass).Every
sellerhadquite commonbrandswhichdenotesthattheypurchase themfromfew giantswhorule
the Market.
Evenafterthe newnormsandpoliciesfavoringstreetsellers,eye openerwasthe factthat hafta is a
regularpractice and denial canleadto harshrepercussions.The nature of the beastissuchthe
eithersurvive andrule orpack yourbags.
Amazinglythe sellersare quite contentastheyare makingtheirbreadandbutterafterall defined
forces.No educationcanmake a smart sellerasthe illiterate classof sellersmade higherprofitsthan
the literate.Thisprojecthastaughtme that "Grass may lookgreeneronthe otherside"however
streetsellershave theirownsetof drawbackor negativestodeal.
I salute the Positivityandlevelof patience portrayedbystreetcosmeticsellers.
Surendra A. Shirsekar
An increase inurbanpopulationconstitutesthe large sectionof consumersforthese streetvendors
whosale cosmetics.Streetvendorsare popularbecause theyprovidemuchneededservicestothe
large sectionof societythatretailingoutletscanprovide.The middleandlowerincome groupsbuya
large proportionof Cosmeticsfromthese vendorsatreasonable ratesoftenlowerthanthe formal
stores.
Commercial Information:Some vendorsengagedinthisoccupationbecause it’stheirfamily
occupation.Fewvendorsare involvedinstreetvendingdue tolessinvestment,needof moneyand
past experience of thiskindof business.Ithasbeenseenthatmostlyvendorsraisedfinancefrom
theirownsavingsor supportedbytheirfamily/relatives/friends.Some vendorshave beentaking
goodsfrom wholesalersoragentsoncredit.
Location: More than half of the vendorshave selectedthe place of vendingdue toreasonslike close
to an establishedmarketorwhere theyfoundgoodopportunityof sellingof theirgoods.Mostof the
natural marketshave grownalongthe mainroads,openspacesinpopulatedareasandaroundthe
entrypointof the formal marketssuch as whole sale marketsetc.The naturallygrownmarketalong
the road has itsown charm inall citiesinthe country.
Role in distribution:In all Indiancities,streetvendorsprovide alow cost,decentralizedandhighly
efficientsystemof distributionof awide varietyof products.Theyreachthe consumersat
13. convenientlocations,withoutwhompeoplewouldhave totravel large distancestoprocure these
goods.
Advertisement:These streetvendorswhosale cosmeticsare veryuseful toacompanyto reach
target customers.A companycan make advertisementof theirproductandnew launchbyproviding
bannersandpromotional material.
ProcurementInformation: Large numberof vendorsbuysgoodsfromwhole sale marketorfrom
supermarketsor salesmenof companywhovisitthemregularly.
Economic Information:It is statedthat a verylow skill andcapital investmentisrequiredtoenter
thistrade.Perday profitof these vendorsare Rs.300 – 600 excludingall expenses.
The study revealsthat “Strategy of inclusionofstreet vendorsin formal planningprocessand in
the processSales & Marketing channel of our company Company can make a good return”.
Nitasha Rana
My learningcanbe titledas – Myth Busters.
I was undera fewassumptionsregardingthe local cosmeticvendorontheirearningandtheir
process.Thisgot falsifiedafterspeakingtothem-
1. Wages - Onan average the sellerearns30,000 per month
2. Margin – I assumedthe profitmarginsare verylow butin-factsome vendorearn200% on certain
product
3. Manufacturer – I assumedthe sellerisachannel distributorof aparticularcompany
I was tryingto make out if the marketelasticorinelastic,butmyfindingsfromeachlocation
showedadifference indifferentmarket.Like the vendorfromBhuleshwarhasentirelydifferent
experience toshare thanthat of Elco Bandra. Each locationisdynamicandbuyingpatternsisso
diverse thatitisdifficulttoconclude.
The cosmeticbusinessisanevergreenmarketwhichisconstantlyincreasingmakesiteasierforthe
vendortosell (eg.ascomparedto beltand valetseller).The sellerhasnotsupportas there isno
propersystem.Thatbeingsaidthe cosmeticbusinessisaprofitable source of income forthe seller
(a lowwage earner).
While conversingwiththe vendorsIfeltthatthere isnoawarenessof MoneyManagement.
Simple thingslikesavings,bankaccountsare unknowntothem.If properinductionisgiventothe
people (low wage earners)Ifeelthere livingwill be alittle betterin-termsof personal finance.
Gyanprakash Tiwari
We have visitedmanystreetvendorsforcosmeticsproducts.Asperthe experience mainlythere
have beenpeople whoare earningtheirbread&butterandare strugglingtomanage the business
while there have beenfewvendorswhoare doingbetterandgrowingtoo.
Theyare facingsome difficultiesinsellingtheirproductsuninterrupted.
Fewof the problemsare:
14. Afraidof aboutthe governmentbodieslike police BMC.
Bribery& haftavasoolyisone of the majorconcerns
Duringthe surveyinitiallyPeople were hesitanttoshare detailsasitwas pertainingtotheir income.
Vendorshave theirfixedplace of operationwhere peoplefromthatlocationuse tovisitstall and
purchase the products.
Regularvisitingcustomersare alsothere withthese small vendors.
Profitmarginisgood incosmetics,nearabout 30% average marginisseen as products
are procured fromlocal manufactures.
Accordingto vendors,sale increasesduringthe festivalsaswomancome outto buythese productsin
bulk.
Fewvendorsare inbusinessasthere relativesare alsoinvolved,forfew peopletheyhad tostart
frombeginning.Few people are workingsince 2-3decades.
To start a business of cosmeticsasa vendoras perthere communicationthe capital investmentis
15-20 thousands.
Colorcosmeticslike eye liner,lipstick,nail paintsare maximumsalespotentialproducts,perfumes&
deodorantsalsorule onstreet.
Almost50 people visiting only10-15 endup buying.
Sale increasesduringweekends.
Suvarna Wandile
1. While interactingwithStreetvendorsof cosmeticproductsitwasfoundout:
2. There wascertainfear aboutthe governmentbodieslike police,BMC.
3. People were hesitanttoshare detailsmainlythere income asitseemsissueslike haftaisstill
verymuch prevalentinthe society.
4. Evenfor thisinformal wayof transactionsplace of sellingisfixed,reasonbeinglargely
populatedmarketareaandregularcustomersvisiting.
5. A marginincosmeticsproductsishuge,about30% average marginas productsare
procurrredfrom local manufacturesorgreymarketor customs.
6. MainlyMuslimswere the ownersof the businessalsoEidbeingthe bestfestival for
maximumsales.
7. Material mainlyprocuredfromJamaMasjid,CrawfordMarket.
8. Alsothese vendorsare linkedwithotherfamilymembersowingcertainotherproduct
businesslikeshoes,clothsetc.
9. Few people were inthe businessformore than30- 40years.
10. Capital Investmentislessaround 10 to 15K lateron insale cyclesproductsare procured.
11. Productsmainlysoldonstreetswere low pricedof local manufactures,duplicatesof
brandedproductslike lakme,Mac,Revlonetc.,expiredversionwithonly20% product costis
beingsold,hence increasingmargin.
12. Competitionislowinparticularmarketarealike inandheri eastonly5vendorswere citedin
the vicinity,maladwestaround3vendorsinvicinity
13. Securityismajorissue assome vendorshasto pay rentto adjacentsmall shopownerto
secure there products.
14. Colorcosmeticslike eye liner,lipstick,nail paintsare maximumsalespotentialproducts,
perfumes&deodorantsalsorule onstreet.
15. 50 people visitingonly10-15 endupbuying.
15. 16. Weekendsare generallycrowdedwithmore numberof people buying.
Rohit Patil
1. StreettransactionsinCosmeticsisaverylucrative.
2. Highmargin business.
3. where peddlersmake agoodlivingoutof it
4. marginsafterdeductingall variable &fixedcostsare ashighas 200-300%.
5. Costsin the businessare shortrunas inventoriesare notmaintainedforaverylongtime ,
6. if any inventoryisleftbackproductsare soldwithoffers/discountsthusmakingthe cycle
veryshort (2-3 monthsmaximum) whichmakesbudgetingverysimple with ahighreturnon
investment.
7. Salesat timescanbe increasedbyinitiatingamarginal dropinprices& increasinginventory
or by lookingintountappedareaswhere thereare nocosmeticstreetsellers.
8. Notmuch competitionobserved3-4vendorsof cosmeticsinAndheri west(lokhandwala).
9. HighBrand productsare soldwithlow pricedforex Lakme eye linerof 299 Rs is available at
100 Rs.Productsare mainlycarriedhome forsecurityatnight.
10. Intial investmentsare lowandare generallymoneyborrowedfromfriendorrelatives.
11. Festivalsseasonsare accountable formore business
Mamta Wathare
The cosmeticbusinessisanovergrowingmarket.The rate atwhichit has grownand is
constantlygrowingisphenomenal.If the IndianBusinessecosystembecomes”Informal
economyfriendly”,growthwillhappenatafasterrate.
1. As a business,inanurbanenvironmentstreetcosmetics isquite worthwhile.
2. Colorcosmeticslike eye liner,lipstick,nail paintsare maximumsalespotentialproducts,
perfumes&deodorantsalsorule onstreet.
3. If,in a day 100 customersvisitthere isno guarantee thatevenfive of themwill buy
products.
4. Risksinvolvedare large.
5. Investmentisn’tmuchandhence people whofall underthe low income strataoptfor
thisas a business
6. There isa certainfearaboutlocal monopoly,local political partiescreatingissues
7. Weekdaysdonotsee much of sale,sale happensduringweekendsandpublicholidays
particularlyinthe evenings
