Previous

Page - 4

Business

One of the major benefits of e-commerce is that it can provide a cost-effective way to expand into the global arena and run ones own business. It can lower transaction cost by interacting directly with overseas supplier and customers and streamlines ones business.
Not only that, it can help in removing the intermediaries and traders in the supply chain of global giants. This, along with higher responsiveness and speed at which business takes place has helped in reducing transaction cost, and increase profit margins. This is especially true in case of agricultural commodities. A very good example of this would be e-choupal by ITC. The case below will explain it in more details.

ITC’s e-Choupal: A Process Worth Looking Into

Agriculture produces 23% of GDP, feeds billions of people and employs 66% of workforce. Farmers, who are the key focal points in this whole cycle, are in most cases illiterate. They have only approximate idea of the price trend and have to accept the price offered to them at auction. As a result, they are exploited by the intermediaries such as traders who buy from them and sell to the customers. Thus a common Indian farmer is still where it was, fighting to earn money which he deserves owing to the system wide inefficiencies. A typical value chain is as shown below: -

Next

* Contributed by: -
Nishant Waghela,
Alumni of IIM Ahmedabad,
Working at SBI, Mumbai.