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Agritech startups leveraging rising smartphones penetration in rural areas

08-Apr-2021   Mr. Ashish Singh, Designation: Co-Founder & CTO, Gramophone   Author: Aashima Mendiratta

Agriculture is the backbone of Indian economy, employing ~50% of the total workforce. The industry is on the cusp of a revolution and is witnessing the entry of various agritech startups, aiming to transform the sector and support farmers using cutting-edge technologies.  One such startup, in the nascent industry, is Gramophone. In conversation with Mr. Ashish Singh, Co-Founder & CTO at Gramophone, we try to understand the company’s positioning in the industry and what the future entails for the overall agritech space. 

Edited excerpts from the interview: 

Q. What was the idea behind establishing Gramophone? Which pain points in the agribusiness value chain does the company solve?

The name Gramophone was conceived as Gram (Village) plus Phone back in 2016 when we saw an increase in usage of mobile phones in rural areas and thought that we can leverage this to create an impact. Agriculture is the biggest industry in the rural landscape and since we had a background in agriculture, we saw a direct opportunity. We also saw a gap in the sector wherein agri inputs were available to the farmer but advisory and information was not up to the mark. So, farmers had to fall back upon retailers for advisory related to agri inputs, who often put their own interests over the farmers’ and lacked knowledge of innovations taking place. This made us venture into this space by providing advisory services. Soon we realized that offering advisory is not enough as there were several broken pieces in the supply chain. Once we ventured into supply chain, we came across new complexities and the importance of understanding things at the ground level.  

Q. What business model does the startup operate with? What are the major service offerings of the company?

In terms of offering, we have advisory as well as agri input delivery to the doorstep, wherein our prices are very competitive. We also offer a bouquet of inputs in a package kit so that the farmer does not have to buy all requirements to grow a crop separately. For advisory, we have a freemium kind of model wherein we offer free advisory but charge the farmer for specialized advisory. Additionally, we have recently ventured into the output market also and we are helping farmers sell their produce by connecting them with the market. We have launched a ‘Vyapaar’ section on the app recently which enables farmers to list their produce and buyers can contact them directly. 

Q. You mentioned that you also charge farmers for advisory or consultation services. Is it like a subscription model or a one-time upfront fee?

So, for advisory we are not charging for the entire stack and most of it is free. Only in cases where farmers require more hand holding in terms of frequent calls, visits from experts to the farmer, etc, is when we charge. Right now more than 90% of our advisory is free and we don’t charge the farmers.

Q. Which geographic area are you currently focusing on? How many farmers are you currently working with? 

Currently we are focused on Western Madhya Pradesh and borders of Rajasthan and Maharashtra. We are looking to cover rest of MP and moving to other states as well. And we have close to 7 lakh farmers on-boarded on our platform. 

Q. How is the company working towards making the farmers aware of the service offering and what is the process of on-boarding the farmers/customers?

We need different touch points for different kind of farmers. So initially, we conduct a market survey in a region to judge what is the level of farmer awareness about Gramophone & their general awareness about the new age technologies. Based upon the survey, we then take a call. In places with low awareness, we employ an on-ground team to get in touch with the farmers to build trust. And once things are slightly established, we then engage with local entrepreneurs, who work on a commission basis and help us in generating leads and creating awareness among farmers. Additionally, we have also established 6-7 physical retail centers in certain districts.       

Q. In our research, the FaaS & input market linkage segment is estimated to be around INR 250 crores in FY’2020. Do you agree with our estimates? What growth rate do you expect for the next five years?

According to my opinion, it should much bigger than that with the top players in the segment being Agrostar, Dehaat, Gramophone and Bighaat.  As far as growth rate expectation is concerned, we should take into account the current covid situation with cases spiking up again. It is like a double-edge sword, it does help in generating need for new age solutions but also limits the operations. For us, we saw almost a 2x growth during Covid last year and that is what we can expect for the overall input industry also. If we also include other allied services and B2B models as well, the growth might even be 2x to 3x, year on year.   

Q. What are the major challenges faced by players operating in the Input Market Linkage segment in the country?  

I think credit and supply chain are the biggest problems. As we all know providing credit to farmers is quite tricky. Also, existing supply chain network are not build for farmers. So in most of the cases, we have to build that network as well, which takes more time and effort.

Q. So are you working with any 3PL companies or managing the deliveries in-house?

In most of the places we are managing the network and deliveries in-house. However, we have partnered with 1 or 2 vendors in certain areas but that also limited to few product categories only. 

 Q. What are the trends or technology interventions that the agritech industry might witness in the future? 

During covid, the agritech industry witnessed a tail wind and we saw more number of farmers trying out the services. There is a momentum building up in terms of awareness, government initiatives to initiate dialogue and generating a lot activity in the space. We feel that this momentum is going to reach a critical point and explode in the next couple of years. Right now we are only at around 10-20% of the overall potential and it will take another 2-3 years for the industry to grow to its potential. I feel that many more players need to enter the space and there will be a lot of consolidations so that companies can offer end-to-end services.  Right now most players are just focusing on 1-2 sub segments, but in the future we might see the entry of new players catering to the entire value chain. 

Q. What plans does Gramophone have for the future in terms of funding rounds or growth plans? 

We raised a $3.5 million investment, a couple of months back, which was led by Siana Capital. It was done looking at the back-end technology that we have created. So, technology remains our core focus in whatever we do and building a full-stack model. In terms of where we are, we always had plans to start with inputs and then move onto other segments. We have already started doing output market access as well. We are seeing good value in being able to provide end-to-end services to help farmers grow crops and also get them good returns for their produce. Apart from that, we are also moving towards building better advisory solutions wherein we can cater to more crops. We have been able to add more SKUs into our product portfolio and also go further back into the value chain. This is something we have achieved in the recent past and we plan to double down in all these different areas in the coming year. We also plan to expand geographically in other states as well. 

Q. What factors should a company take into consideration before entering the agritech industry or in particular the input market linkage segment?

I think in general, and it was true for us as well, people enter with a bias as to what would be good for the industry based upon our prior knowledge. But I would advise new entrepreneurs to actually spend some time on the ground and to figure out what is actually needed to build an agri product. There are a lot of young, hard-working people in villages. Getting them on-boarded and keeping them motivated can be a key success factor. 

For any queries or feedback, reach out at namit@kenresearch.com

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