June, 27, 2017
Bridging the digital and financial divide
01 Jun
2013
Posted by POORNIMA KAVLEKAR

Shriram Vyapar wants to be pan-India in the next five years with a presence in over 40,000 locations and with 500,000 agents servicing its clients from the B, C and D class towns in sectors such as real estate, vehicle buying and selling, insurance collections, travel, loans and other related services

44-S-2Typically, how would one go about the process of scouting around for a second-hand two-wheeler? The buyer would normally spread the word around, approach local dealers or go through advertisements in newspapers. Chennai-based Shriram Vyapar offers you more options. You can widen your search net to other cities in Tamil Nadu like Coimbatore, Salem, Tirupur and so on through the Internet and expand your search based on your budget, distance clocked and number of prior owners. “With our agents in all these places we bring the vehicles matching the criteria from these cities to the customer. On short listing the vehicles, we help with its evaluation till the final closure and ensure that the vehicle is brought to the customer’s doorstep on completion of sale,” explains Sudhakar Raja, CEO, Shriram Vyapar. 

Shriram Vyapar was born out of a simple thought of replicating the travel industry’s success in using agents to make bookings through the Internet to other sectors such as real estate, vehicle buying and selling, insurance collection, travel, loans and other related services. The company’s agents will help its customer buy a travel ticket, sell a tractor or agricultural land or identify the right investment portfolio. 

Founded by Sudhakar Raja and A.V.S. Raja in 2012, the company aims to bridge the digital and financial divide especially in the B, C and D class towns where Internet penetration is low. Sudhakar Raja, who started his career in KPMG in the U.S. as a strategy consultant and later joined Oracle, returned to India to become the CIO of Shriram General Insurance before its formal inception in 2007-08, where he streamlined the business processes using open source technologies. A.V.S. Raja, after resigning from the Indian Railways in 1974, founded the Shriram Group along with R.Thyagrajan and T. Jayaraman.

The company was formed using family funds and plans to raise a Series A round soon.

Tapping the potential

Only 9 per cent of India has Internet access and, out of this, over 74 per cent are below the age of 25. “This shows a huge market potential for the kind of services we offer. This apart, total e-commerce in India is around US $8 billion of which US $7 billion comes from the travel sector,” states Raja. He continues, “Yet we see travel agents around every street corner. This made us realise that the US $7 billion comes from agents booking the tickets online.”  Language barrier and poor education in most parts of India makes Internet penetration even more difficult. “60 per cent of the people who use the Internet use regional language sites,” he says. Internet companies like Shaadi.com and BharatMatrimony.com have offline store presence, which has only validated Shriram Vyapar’s concept. Moreover, Raja adds, “The losses made by e-commerce companies strengthened our views about this sector.”


Training the agents in non-travel verticals is no cake walk. We think of this as a barrier to entry for other players as we master the art of penetrating and organising this space. We are following the lines of selling shampoo at Rs.1 by operating at costs and levels unheard of in the market.


The operational factors

The company aims to operate through the neighbourhood agent’s business model. “A neighborhood agent is someone you know and trust and has a place of business right next to you,” says Raja. The business associates usually operate out of a 100 square feet to 200 square feet space and are equipped with technology. They are trained by the company to help its customers in various verticals such as real estate, vehicles, furniture, electronics, premium collection, loans, travel, advisory and so on. Agents are also appointed to help and thus generate employment to thousands of people. “The entire process is handled via technology and intelligence built into the system. We emphasise on agents training to ensure that they are able to complete the transaction without our help over a period of time,” says Raja.

The advantage that the company offers over other local agents who deal with the various categories of services is that at Shriram Vyapar, the same agent is able to offer a range of services at a competitive price. “We have partnered with almost every major player in these verticals so that the customer need not shop around,” says Raja.  

Commenting on its revenue model, Raja says, “For our direct sales team in real estate, we get commission from sales and purchase of property.” For other real estate and vehicle sales, Shriram Vyapar charges a listing fee. For loans, the company gets a referral commission from banks and NBFCs. For travel and insurance premium collections, it gets a fixed assistance fee and for financial advisory services it charges a consulting fee depending on the assignment.

It currently operates in cities of Tamil Nadu like Chennai, Coimbatore, Salem, Trichy, Erode, Kumbakonam and other rural areas surrounding these places. It has recently signed up over 1,500 agents and over 100 business associate locations across Tamil Nadu. 

Overcoming challenges

The company is targeting rural and semi urban areas where English language penetration is not so high and the only way it can deal with this challenge is through human interface, namely, its agents. “There is no technological way we can tackle this issue,” says Raja.

Training agents across the state is no easy task. “We are organising a disorganised market that has varied language and education levels,” he explains. The power cuts also make it hard for the agents especially when they need to use technology and, in some cases, connectivity is a major issue.   As a result, it takes agents more time to understand how the company operates. “Training them in non-travel verticals is no cake walk. We think of this as a barrier to entry for other players as we master the art of penetrating and organising this space. We are following the lines of selling shampoo at Rs.1 by operating at costs and levels unheard of in the market,” says Raja.

Commenting about increasing awareness of it services amongst the rural and semi-urban audience, Raja says, “Agents are our voices. They are our brand ambassadors and market makers. Training them and ensuring their success is where we believe our success lies. We just provide them with the tools to ensure their success.” With its strategies in place, Shriram Vyapar wants to be pan-India in next five years with a presence in over 40,000 locations and with 500,000 agents servicing its clients.  “The number of services we offer will also increase as and when we see competition trying to enter this space. Our plan for the next five years is already laid out in a way that it will set us apart from competition,” concludes Raja.


SNAPSHOT

Shriram Vyapar

Founders:  Sudhakar Raja and A.V.S. Raja. 

Year: 2012

City: Chennai


Concept in brief:

The success of the travel industry’s strategy of using agents to make bookings through the Internet gave the founders, Sudhakar Raja and A. V.S. Raja, the idea for Shriram Vyapar. The founders want to replicate this success to other sectors such as real estate and vehicle buying and selling, insurance collections, travel, loans and other related services. The company’s agents will help its customer buy a travel ticket, sell a tractor or agricultural land or identify the right investment portfolio.  The company currently operates in cities in Tamil Nadu like Chennai, Coimbatore, Salem, Trichy, Erode, Kumbakonam and other rural areas surrounding these places. It has recently signed up over 1,500 agents and 100 business associate locations across the state. 

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