“ Enhance the channel profitability through effective
use of commercial techniques- Use of internet in
sales management as an engine of alternate
channel of distribution with a case study on how it
A means of distributing products to the
marketplace, either directly to the end customer,
or indirectly through intermediaries such as
retailers or dealers and distributors
All our FMCG / White goods and many other products
reach our retailers effectively through channels only.
Channels involved in this process are :
Retail showrooms / Shops
Internet will extend electronic marketplace and make it electronic
ultimate go between, the universal middleman…..
Background of Internet :
◦ Started in 1970’s
◦ Exponential growth from 1990 till date
◦ Strong penetration in the most urban population and limited
penetration in rural population.
World Region User
2000 – 2008
Asia 17.2 % 469.0 %
Africa 5.6 % 1100.0%
Europe 48.5 % 271.2 %
North America 73.1 % 128.3 %
Latin America 28.6 % 820.7 %
Australia 59.9 % 170.2 %
Source : www.internetworldtstats.com
Internet is one of the greatest revolution of our
times and has created a social change
Internet has also changed the way we conduct
Internet over the period of time has become the
successful sales channel to sell products, services
and solutions across geographies breaking the
How it all started ?
◦ ITC group of companies has an yearly turnover of
US $ 2 billion and its activities span tobacco, cigarettes, paper & packaging,
hotels and agri exports among others.
◦ ITC’s International Business Division (IBD) which is into export of agri
products like Soybean, Coffee, Prawns among others.
◦ The IBD division was facing numerous challenges in procurement of
agricultural products due to unique Indian agricultural environment
characterized by fragmented farms, weak infrastructure and involvement of
◦ ITC initiated a project in 2000 to re-engineer its procurement process with
the help of internet platform for procurement turned out to be the much
celebrated E-Choupal initiative
The farmer sells his produce to a small trader in his locality called “Kaccha adat”
The small trader sells it to larger trader called “Pakka adat”
The Pakka adat takes the products to the local mandi and then sells it to mandi
The mandi traders operate through brokers to negotiate sales to big companies
This long supply chain results in high procurement costs for companies and lost
profit opportunities for farmers due to numerous intermediaries and lack of
This long supply chain consumes lot of time and resulting in deterioration of
quality of products when it finally reaches companies.
Farmers doesn’t have any control over the process
Lack of transparency
Numerous Intermediaries like traders, agents and mandis
Farmers were not getting a fair deal
Lot of wastage of products while transportation and unloading
Enough room for malpractices by intermediaries
Choupal means village gathering place in Hindi .
E-Choupal means a choupal equipped with a computer and internet / VSAT
E-choupal acts as a platform for the farmers and it empowers them with all
information, products and services to improve farm productivity, negotiate
better prices and cut transaction costs.
Farmers can access latest local and global information on weather, scientific
farm practices as well as market prices at the village itself through the internet
portal in regional languages.
Choupal also facilitates supply of high quality farm inputs as well as purchase
farmers commodities at their door step.
A literate individual / farmer called as “Sanchalak” is elected from among the
farmers to run the E-choupal.
Sanchalak’s the lead farmer acts as the interface between the computer and
ITC accumulates information regarding weather, modern farming practices and
market prices from sources like meteorological department, Agri - universities
and local mandi’s (regional market) and upload it into the web portal.
Besides web there are also
All information is customized according to local farmers requirements and
provided into the local language through computer set up by ITC in Sanchalak’s
house. Sanchalak access this information and facilitates its dissemination to
This single point of communication serves an average of more than 500 farmers
within a radius of 5 km.
Each e-Chaupal comes with an expenditure of nearly Rs.1.5 lakh with a maintenance
cost of somewhere between Rs 5,000 and Rs 10,000 annually.
However, the host farmer- sanchalak incurs some operating expense and gets
substantial benefits from all e-Choupal transactions.
From an IT perspective, the solution is one of the landmarks in the rural segment.
The Web-driven project offers scalability and effectiveness of communication
mechanism, as well as real-time information and facilitates collaboration between
various parties for the spectrum of farmer needs.
The allocation of technology requirements in the project include:
VSAT - 52 percent
PC - 28 percent
Power - 11 percent
Printer - 5 percent
Technical support - 4 percent.
VSAT : Short for very small aperture terminal, an earthbound station used in satellite communications of data, voice
and video signals, excluding broadcast television
Equipped with better knowledge and information from the E-choupal portal the
farmers are better positioned to command fair prices and take decisions on
their own with much clarity.
The farmer carries his product sample to the local e-choupal and get a spot
quote for his product from the Sanchalak.
If the farmer accepts the quote then he can transport the produce to the ITC
collection center which has a direct unloading facility to avoid spilling and
wastages and weighbridge for precise weighing
The payment is made in 2 hours and the transportation cost is also
reimbursed to the farmers
If the farmer is located in remote area he has the option of selling the produce
to sanchalak or the local collection center.
E-Choupal facilitates the farmers to order and buy farm input products like
seeds, fertilizers online
Sanchalak also helps the farmers in placing purchase orders for products like
seeds, pesticides and places the orders directly in the internet and thus
facilitate supply of high quality farm inputs.
By this the farmers can order and get quality products locally and at a
Sensing a large business opportunity of marketing a range of products to a
large rural population many firms have started showing interest in selling
Recently ITC has partnered with an insurance company to market its insurance
products to the farmers on a pilot basis.
E-Choupal has revolutionized the way the farmers buy and sell their
produce in the market
Farmers can decide where to sell their produce and know the market
demands thereby enabling them to command better prices
Reduced the transaction costs considerably for the farmers in terms of
loading, unloading, transportation etc …
Farmers save on travel time, costs and less wastages
Buying online gives them variety of options and assured quality
Empowerment is the single largest benefit to the farmers
Tremendous value created to the ITC brand and made a CSR initiative which
is much celebrated in the Indian and international arena. It received several
accolades and awards for its CSR initiative thereby creating a huge visibility
To be specific in terms of benefits to the ITC – IBD business unit is
◦ Successful elimination of numerous intermediaries .
◦ Considerable savings in Commissions paid to intermediaries in the mandi
◦ Assured supply of products with good quality.
◦ Created a proven internet channel platform for marketing and selling its
other products and its partners products to farmers and can gain
substantial financial benefits.
◦ Sourced $15 million worth of products through E-Choupal.
◦ In absolute numbers for example ITC saves Rs.270 per metric ton on soy
Information technology has played a major role in making this project a
reality since Internet and Web based Technology forms the backbone for
Initiated with a Dial-up infrastructure and later moved into a sophisticated
VSAT facility for better Internet bandwidth.
To overcome the power problems in rural areas Solar panels were
established to generate power and operate the computer
www.echoupal.com is the website developed and accessed by the farmers
to avail the services.
Largest initiative among all internet interventions in rural India.
An E-Choupal serves an average of 500 farmers in 10 surrounding villages
within about 5 km.
6500 E-Choupal’s reaching out to serve 4 Million rural farmers.
Spread over 10 states of India (Madhya Pradesh, Haryana, Uttarakhand,
Karnataka, Andhra Pradesh, Uttar Pradesh, Maharashtra, Rajasthan, Kerala
and Tamil Nadu)
Performing transactions in products like soybean, coffee, wheat, rice,
pulses, shrimp and growing !!!
All the major players in the process Farmers, Intermediaries, and the
company is tightly coupled in this initiative
Farmers are the major beneficiaries of this initiative
The project help in creation of local leadership by appointing Sanchalak’s
who become the interface between the farmers and the company. They also
act as the advisor to the local farmers
Sanchalak’s also earn a 0.5 % commission per ton of product sourced
thereby improving their financial status also.
The Intermediaries called as “Samayojaks” are not removed from the
system. They help ITC in setting up the E-choupals by conducting surveys
and identifying the best “Sanchalak's”. They earn 1% commission for
enabling transportation of goods and collect local price data and maintain
E-Choupal has opened a window of the world to the rural community which
was deprived of the facilities and resources from their urban counterparts.
Coupled with higher incomes and changes in farmers attitudes had caused
several shifts in the social fabric of village life.
Children use the computers for school work. For eg. In a place called
Khasrod 2000 local students use the computer to print their grade sheet
there by saving them days of waiting and travel time.
Villagers access global resources to learn about agriculture in other parts of
the world and are trying to take action to follow the best practices.
Youngsters use the computer to research on higher studies, colleges, latest
movies, mobile phone models and cricket news
ITC Plans to invest $200 million
ITC has planned to scale up this model to cover 15 states benefiting 1 Lakh
villages in 7 years time
Plans to diversify into other products like Horticulture, Rice and Cotton
Plans to market and distribute other firms services related to Micro credit,
Insurance, Health care and Education to provide more services to the rural