Entrepreneurship skills from the Street Vendors of India

What business lessons the budding entrepreneurs can learn from the Indian street vendors?


“Masala Dosa Idli Medu Vada” shouts a man every morning at 6 am sharp. The man whom we fondly call ‘Anna’ rides a bicycle to the neighbourhoods of Mumbai carrying two large steel containers of rice batter, a large umbrella, and an oven. For the millennials working in Mumbai city whose day begins with catching the train on time, and cannot spare time for breakfast, Anna is a saviour for them. When we walk around the streets of India, we realize that the way street vendors or local vendors operate their businesses remains unobtrusive. They are the ones with whom we interact and need them on a daily basis. While we happen to interact with them daily, we at times tend to overlook their sheer entrepreneurial skills and business acumen.

It is intriguing to know that without much formal education or being funded by angel investors, yet they run their businesses. The saying ‘necessity is the mother of invention’ feels apt in their case, since the necessity is to earn money and make a living that leads to novel ways of customer attraction and distinguishing themselves from the competitors. According to the Ministry of Housing and Urban Poverty Alleviation, there are 10 million street vendors in India.

Enough said, the business model upon which the street vendors function, strategize, and execute their businesses produces the greatest learnings for the new and aspiring entrepreneurs.

Street Vendors adaptability with the choices

Street vendors are most agile to adapt to changes per customer demands. The snack seller near the office premises sells Poha and Idli in the morning, serves sabji chapati in the afternoon, and in the evening, it serves snacks like vada pav, omlette pav, and tea. One can imagine that there is a massive change in inventory and production within hours. Customer choices and demands change with time. Businesses should fast adapt to these changes to get the first-mover advantage.  Coming to small and mid-sized entrepreneurs, how should they come to know when the needs of the customers are changing and adapt to the changes effectively? Here are steps that will help entrepreneurs to understand the changing customer preferences and choices.

Know it from your sellers and customers

The best way to know about recent consumer preferences is through the shopkeepers and customers. Since shopkeepers are closer to the customers, they have answers to the questions like which is the fastest-selling product of the competitor sold? Which customer segment seems to be buying your product? From customers, always focus more on the negative feedback. 

Create models

Based on the feedback received, generate ideas about how you can modify the product or service on features, pricing, target consumer, etc. Create several models and launch them in the market as a test, since it is not necessary that the strategy designed will be precise to the market signal.

Get feedback again

After creating the possible models based on the responses, it is time to launch in the market and wait for the feedback. 

Refine more

Pick that model for which you are finding it to be “It is good, but could have been better?”. Try to find out from the market, what could have been the features that could have made it better and incorporate them into your product and service. 

In this way, we create products or services with changing customer demand.

Product innovation of Street Vendors

The menu card of a food street vendor locally termed as eatery-joints  in India is incomplete without the Masala Dosa. Masala Dosa, a dish that has been the perfect snack, lunch, or dinner, is relished across the country. We have all known that simple masala dosa to be having the yellow potato filling, but then that is available in every local food joint. To attract more customers and beat competitors they serve variations of a Dosa like  Pav bhaji Dosa, Manchurian Dosa, hence attracting customers who like both Chinese as well as South Indian. Similarly, a sandwich that is a popular snack among youngsters, is packed with vegetables and cheese. But a different variation of it is served as a chocolate sandwich to attract the chocolate lovers.  Companies who strive continuously to bring innovation in their offerings stay in the market for a long time. Here are three strategies that a business should implement to drive product innovation: 

Encourage intrapreneurship

Build the culture of intrapreneurship among employees. An intrapreneur is the one who thinks like an entrepreneur and brings ideas to the company where they are employed. Be it a small or mid-sized company, give employees the autonomy to think and pour in new ideas and instill a ‘no idea is a bad idea’ policy in the company.

Encouraging research and employee forums

 Apart from pitching new ideas, research is essential for innovation. Gathering more knowledge and past case studies help in bringing new ideas. Develop a small team of employees who will be devoting time to research and organize employee forums where they can openly present their ideas and prototypes. 

Listen to customers

Sometimes, research and experiences might not be adequate for bringing the market-product fit. To reduce the gap between market expectation and product, spend more time to know what the market expects. Engaging with focus groups with surveys, using Google search trends or question posts on various support websites of your competitors will help to collect information. From the responses received, we will be able to determine what customers would like to see more improved, thus satisfying customer desires. 

Marketing content

The internet was taken by storm when India’s leading businessman Anand Mahindra, Chairman of Mahindra Group had shared a post on Twitter appreciating a poor cobbler’s creative marketing message on its banner. The banner of the poor cobbler Narsiram read ‘ Zakhmi Juton ka Aspataal’ (the hospital of injured shoes). What caught Anand Mahindra’s eye was the cobbler’s creative way of communicating about his small store similar to how a local clinic or a pathology lab would do. The use of the local language and signing himself as Dr. Narsiram with additional information about the lunch and store timings and the shoe treatment he offers has truly aced the advertising even though he is not a  professional copywriter. Small business owners or entrepreneurs while creating content for marketing should keep the below things in mind:

Clear headlines

The headlines of a message without any ambiguity should be able to communicate about people about the business. The potential customers should be able to understand your business within two seconds of getting to the website or seeing your promotional material. Place yourselves in customer’s shoes and revisit your company’s website pages and content. Think about how your content will easily make the prospect understand what the company does. If not, then rewrite the marketing content. 

Be memorable

What Narsiram did differently is that he didn’t follow the suit of the regular shopkeepers doing the simple name game on the billboard or banner. To be more memorable, skip the corporate language and add some personality to it. For example here Narsiram added the personality of a doctor who specializes in treating injured shoes. 

Speak benefits

This is an old rule in marketing that we do not sell products but we sell solutions to the problems. In Narsiram’s case, he is communicating that shoes in his shops are treated with German technique. Now, imagine for a roadside cobbler, people will be of the perception that the material quality used for repairing will be a substandard one. Now, this is a problem as it would cause the breakage of repaired shoes easily, resulting in frequent visits to the cobbler. To avoid the hassle of visiting again, people would consider buying a new pair of shoes than thinking of mending them. Hence, Narsiram’s mention of the ‘ German technique’ will induce the belief in people that he uses superior ways of repairing a shoe. 

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According to the Ministry of Housing and Urban Poverty Alleviation, there are 10 million street vendors in India.

Street Vendors Know their customers well

Is it possible to buy the right size of a t-shirt or Kurti without a trial room? Well, the garment shop owners of Causeway Colaba have made it possible. The famous fashion street of Colaba that sells fast fashion is an absolute favourite among the youngsters especially women. Every garment shop in Colaba is identical and has the same apparel design. Since, all the shops have the same or identical apparel, the customer has a wide array of choices to buy from.  This is quite challenging for them as the point of differentiation is low. The only way they can differentiate from each other is through better customer understanding. When a prospective buyer approaches their shop, within thirty to forty seconds of conversation and looking at the body they should be able to determine and pick the two best approximate sizes. If the shopkeeper fails to produce the size, the customers shift to the next shop. Giving customers their appropriate size will make them come again to the shop as they go home with the impression that this shop has all sizes. Being customer-centric is the key to competitive advantage. Providing a positive customer experience will result in repeat business and monetary gains. If you are determined to create a customer-centric company below are some steps that will help :

  • Stay in touch with evolving customer expectations, both within and outside your industry.
  • Track evolving expectations within your company and determine how your customers rate you against them.
  • Equip employees with the mindset, tools, and empowering the environment necessary for them to be able to meaningfully contribute as they work to ensure that customer expectations are met consistently. 

A long-lasting business model

Amid the hustle and bustle of Mumbai local trains, during the peak office hours one can find some middle-aged men busy loading and unloading large crates of tiffin boxes at every local station. These men clad in white shirts and pants, donning the Gandhi topi are the famous Dabbawalas of Mumbai, a 130-year-old lunch delivery service that caught the attention of Prince Charles and left FedEx surprised. People commute in the local trains of Mumbai for 1.5 to 2 hrs. To reach the office and board the train on-time they need to let go of the idea of carrying their lunchbox with them as they begin the early morning. Apparently, not a favourable time to wake up your wife or mother to cook food. These Dabbawalas collect tiffin boxes from various localities of Mumbai and ensure that the food reaches the right office address and on time. With a daily count of 1.3 lakh lunch boxes delivered to different addresses, till today there has been no single error of mixing up the tiffin boxes. The Dabbawalas only have 20 sec – 40 sec to load and unload tiffin crates per station. This lunch delivery service operating with not so educated and decentralized employees is a testimony that an excellent organizational system can achieve the goal of on-time delivery for 130 years and achieve the Six Sigma status. So how are they doing it? 

Stefan Thomke, a professor of business administration at Harvard Business School, says that this delivery service stands on four pillars, that are organizational structure, management, process, and culture. Below are the USP’s of this delivery business: 

Structure

They are a flat organization with a workforce of 5000 that provides a low-cost delivery service. This workforce of 5000 is broken down into 200 small teams consisting of 25 members each. The age group of the employees varies from 18 to 65. Each dabbawalla has the autonomy to negotiate prices with customers. Customers pay Dabbawala a monthly rate of Rs 400 or 500. With such competitive pricing, they have no such rivals at their price point and scale.

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A 2010 study by the Harvard Business School graded Dabbawalas “Six Sigma”, which means the dabbawalas make fewer than 3.4 mistakes per million transactions.

Self-disciplined workforce

Mumbai Dabbawala is dependent on the railway timings. The tight schedule of train timings imposes discipline and synchronization. A delay caused by any worker has a cascading effect on the delivery time. In case of a delay, each group has two or three buffer workers who fill in as and when required. All the Dabbawalas have received cross-training in different activities: collecting, sorting, transporting, collecting money, and customer relations.

Decoding the Dabba code

Mumbai Dabbawalas is one of an epic example of street vendors reaching the next level. Mumbai Dabbawalas do not have ERP systems in place to handle the flow, distribution, and transportation of lunch boxes, yet they go error-free. All they do to convey information is through a system of basic symbols. The lid of a Dabba has three markings on it. The first mark is bold that denotes the neighbourhood where the dabba must be delivered, the second one is a group of characters at the edge of the lid that consists of a number for the dabbawalla who will do the delivery, next it has alphabets to denote office building and floor. The third mark indicates the station of origin. Customers supply small bags for carrying their dabbas, and the variation in the bags’ shapes and colours helps workers remember which Dabba belongs to which customer.

Adherence to processes and standards

Lunch Boxes that are unusual in size and do not fit in the crates interfere with the delivery operation are rejected. Also, dabbas that require special handling are needed to pay an additional fee. Customers are also required to abide by the process, if any customer does delay in having their dabbas ready for pickup, they are rejected. 

So, next time when we come across any street vendors on trains or roads, stop and observe their unique ways of doing business.

Shalmoli Sarkar
Shalmoli Sarkar
An MBA in marketing and a BTech in chemical engineering, Shalmoli writes on marketing strategies and business technology for new and aspiring entrepreneurs.

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