How Hesa Is Transforming Rural Commerce, Catering To Village Entrepreneurs And 10 Lakh+ Aspirational Families

India is home to 720 Mn consumers residing in 6.9 Lakh villages and the country’s population will remain dominantly rural until 2050, per a NITI Aayog study. Nevertheless, a paradigm shift is happening in rural India due to an economic and societal transformation driven by access to better infrastructure, elevated education levels and a surge in rural income. 

With the rural population growing increasingly internet-savvy – as many as 352 Mn active users among the country’s 646 Mn – there will be ample headroom for the growth of the digital economy across Bharat. In essence, it is projected to usher in the next billion aspirational consumers who can leverage technology to connect with improved and inclusive products and services crucial for an Atmanirbhar Bharat.

But this is easier said than done as the entrepreneur couple Vamsi Udayagiri and Hema Nandiraju soon found out. Even today, the rural internet is largely used for entertainment, communication and social media networking, but Bharat has a long way to go to catch up with essential financial services like digital payments, savings and lending, B2B marketplace integration, insurtech or even online shopping. According to the Nielsen report, just about 12% of rural users with the internet access opt for online shopping compared to 22% in urban India. The reason: Rural India still seeks the traditional ‘human’ touch in all fields, be it farming, business or buying everyday essentials.

Udayagiri, a Mechanical Engineer and Supply Chain Professional, was aware how a ‘phygital’ worked effectively for Bharat due to his exposure to technology and supply chain for nearly two decades. He launched a supply chain-based IT venture called Riddles ‘n’ Clues in 2000 (sold in 2006), followed by a stint with storied brands like Ramco, Gillette, PepsiCo and Ray-Ban as a supply chain professional. His second venture, Rural Yellow, came in 2012, and wife Nandiraju also joined the cause. 

Upon recognizing the unique challenges associated with working in rural settings, the duo concluded that a phygital approach, which seamlessly combines physical and digital elements, would be the most sustainable solution for covering the entire value chain of rural commerce. To make this endeavour successful, Hesa has left no stone unturned as now they have trained and introduced more than 35K Hesaathis or village-level entrepreneurs (VLEs) with over 14k+ women HeSaathis and have 8 lakh families regularly buying from them and selling their agri-inputs. This has led to consumers getting cheaper rates and improved access to products and services. 

Hesa’s solid backend tech efficiently manages the challenge of establishing a supply chain network in Rural areas. Overall, the aim is to develop a comprehensive rural commerce and  ruraltech super-app, by integrating digital, social and physical elements to connect the rural ecosystem and mainstream markets for win-win outcomes and empower rural entrepreneurs. 

For instance, Hesa has partnered with agri platforms such as Dehaat BigHaat, Ninjacart and Samunnati to provide market linkages to local farmers/FPOs and enable agri loans. It also offers agricultural inputs from top brands like Bayer, Coromandel and Mahindra and provides advisory services to help farmers make informed decisions.

Hesa has established a robust portfolio of strategic partnerships that span a diverse array of industries, including AgriTech, FinTech, and FMCD, among others. This impressive network includes prominent names like Himalaya, P&G, HUL, Mahindra & Mahindra, TTK Prestige, GoDigit, Crompton, HDFC Life, and Airtel Payments Bank. By leveraging these relationships, Hesa effectively extends its innovative rural commerce across India, enhancing accessibility and empowering rural communities with essential products and services. Each partnership is a testament to Hesa’s commitment to driving rural development and expanding economic opportunities in underrepresented markets.

Hesa enhances the value chain by helping farmers and SHGs improve their products and increase income through collaborations with innovative startups and organisations, fostering rural entrepreneurship.

Apart from piloting lending services, it plans to enter savings (FDs) and insurance verticals by next year.  Earlier, it offered a bunch of basic financial services, including Aadhaar-enabled payment services (AePS), direct money transfer (DMT), bill paying and more. 

However, its biggest business is assisted buying and selling, covering agri inputs, daily essentials, a vast selection of consumer goods, including FMCG products, essentials, groceries and household items. Customers can order online, via Hesa’s App, or offline, through Hesaathis, the company’s call centres/helplines, at community events or other gathering points. It also does last-mile distribution to ensure customer convenience (more on its operations later). Today Hesa is present in 1 lakh many villages and has helped 14000 women with generating their own income through value intervention.

Hesa’s revenue comes from multiple channels, including transaction fees (for financial services), ecommerce markups, ad revenues and promoting partner brands which cater to rural consumers and widen the reach of rural entrepreneurs by helping them sell in urban markets.  

Currently, it has a customer base of more than 10 lakh customers in 5 states, and claims a 73% customer retention rate.

How Hesa Runs Rural Commerce Powered By Hesaathis & Techvantages 

Udayagiri, who hails from a village near Vizianagaram in Andhra Pradesh, firmly believes in the potential of rural economies and the benefits of a seamless Bharat-India connection. He and his wife also visited around 4K villages before setting up their second venture and eventually launching the one-stop aggregator service for rural India. However, there were challenges galore and the duo had to find relevant solutions..

The trust factor and hand-holding: Setting up an advanced rural commerce company for seamless transactions and quick access to products and services was mandatory. But physical networks of local consultants were equally important to convince and acquire rural consumers who depended on trust, credibility and personal recommendations before making decisions. Plus, they are price-sensitive, value-conscious and bet big on locally sourced/traditional products due to limited access to information and technology. Moreover, people often plan big-ticket shopping based on agricultural cycles (when the crop is sold, money flows in) and cash is still king in rural markets   

Keeping these in mind, trained VLEs operating as Hesaathis promote Hesa’s offerings within their communities through community events, word-of-mouth and door-to-door marketing. They also browse, search and purchase products directly from the Hesa app after a thorough review of product features and customer feedback. 

Hesaathis, serving as vital community facilitators, typically earn between 5,000 to 15,000 INR monthly through their efforts, with exceptional performers achieving earnings upward of 100,000 INR in peak months, reflecting the scalability of their entrepreneurial endeavours within HESA’s ecosystem.

Hesa also collaborates with local influencers, community leaders and local organisations/NGOs to enhance customer engagement. Loyalty programmes are implemented and incentives are provided to encourage repeat purchases and brand loyalty.

Hesaathi positions are open to individuals with local knowledge, communication skills and an entrepreneurial mindset. They are primarily farmers, small business owners and community leaders, of which 40% are women. Training is paramount here as trained farmers distribute agricultural inputs and provide customised recommendations based on local soil conditions and crop requirements, helping buyers make informed purchasing decisions. Those working as Hesaathis receive necessary resources (product samples, marketing materials and more) and extensive support (on-site, helpdesk services and remote troubleshooting) from the business to address issues promptly and minimise disruptions. The startup also recognises and rewards top performers.

End-to-end order management and robust supply chain: The Hesa app enables end-to-end order management, including order placement, digital payments integration, status monitoring, real-time order updates and customer relationship management (CRM). Additionally, it features an inventory management system, analytics dashboards and a tool for report generation.

Hesa optimises inventories by analysing historical sales data, seasonal trends and consumer preferences, as well as real-time inventory tracking. It has partnered with brands, wholesalers and logistics companies to ensure an uninterrupted supply chain and maintains buffer and safety stocks at the grassroots level. Feedback regarding product preferences, stock availability and demand patterns is also collected from shoppers and Hesaathis.

Coping with infra, offline and online: Businesses in rural India are poised for exponential growth if connectivity improves, but transportation, power and internet penetration still have challenges. Hesa addresses these operational challenges by optimising logistics routes and partnering with local service providers to bridge infrastructure gaps. Its tech solutions are simple, scalable and data-driven, so Hesaathis can improve business processes and expand operations based on user needs and business requirements.

Hesa’s USP: Empowering Rural Communities, Village Entrepreneurs & Big Brands

From Commerce and trade services to e-finance and agritech, Hesa has embraced an inclusive approach to serve the entire rural value chain, unlike other rural tech startups which cater to specific segments. As a result, the company and its ubiquitous Hesaathis are empowering at least three distinctive segments – rural communities (including farmers), village-level entrepreneurs and microenterprises and partner brands keen to cater to the next billion Bharat customers. Here is a quick look at how Hesa’s involvement and impact could result in better benefits.

Consider this. In a Hesa-powered village, people can buy or sell various products, pay utility bills, raise loans, invest in financial products, or purchase insurance without visiting a bank or FI. All it requires is visiting a Hesaathi/local VLE who logs in to the Hesa platform and does the transaction for the customer.

But there’s more on the earning side than the itinerant selling of village goods or the transactions involving agricultural produce. No doubt that’s a plus for small farmers in remote areas unable to sell at a fair price. However, Hesa’s growing association with local projects and its fast-expanding Hesaathi network have helped many VLEs start their businesses and earn big profits.

Here’s a few case in point of Hesa’s Value Intervention 

In 2022, The Basulimata women’s self-help group from Balasore district in Odisha partnered with the platform to set up a cold-pressed oil unit. The SHG now distributes its Basulimata Oil through Hesa’s network, clocking a 40% rise in average monthly income. Again, Sarojana, an entrepreneur from Warangal in Telangana, became a Hesaathi and later set up a unit that makes cold-pressed oil, spices and rice flour. The business has created job opportunities for other women and the products are distributed through the Hesaathi network.

Narasimha, a local kirana shop owner; Krishna, a cocoon farmer, and thousands like them have joined the Hesaathi network to earn a decent living.

Hesa also helps big consumer brands cement their presence in rural areas through BTL campaigns and brand promotion and distribution through its network of Hesaathis. It provides logistics and supply chain support and offers data analytics and insights into consumer behaviour, market trends and competition. The startup has partnered with industry behemoths such as P&G, Hindustan Unilever, ITC, Wipro Consumer Care, Himalaya, Nimson, Sleepwell and more to drive sales and satisfy a rising class of conspicuous consumers. At least a part of rural India is changing, given this crowded brand foray.

Can Rural Commerce Make Hay? 

There are a couple of critical questions that will likely plague Hesa’s business core. Is something special happening in rural India, a ‘wealthgain’ of sorts, and is an aspirational volcano waiting to erupt? Or will rural India only witness incremental changes on the fringes, with ecommerce and ecosystem building remaining an urban phenomenon?

The founders acknowledge multiple hurdles regarding seamless connectivity (online and offline), hassle-free digital transactions, and after-sales services, which often lead to long waiting periods. Also, rural consumers need to travel long distances for product repairs/servicing, which is inconvenient and expensive. 

Additionally, rural markets are still price-sensitive, and popular brands may not go all out to acquire customers at once. Moreover, there is not much quantifiable data to determine if assisted marketing and two-way commerce are ushering in significant development.

The new crop of startups, including Hesa, Mall91, Rozana, and ElasticRun, want to implement change at scale, and Udayagiri is confident that a two-pronged approach at the private and public levels will accelerate growth.

“Government initiatives promoting rural development and boosting agriculture create an enabling environment for rural commerce. Policies focussing on financial inclusion, skill development and infrastructural boost are also expected to support the growth of rural businesses,” he said.

Industry projections further indicate that by 2030, India’s rural per capita consumption is expected to soar 4.3 times, outpacing the 3.5x growth projected for urban areas.

Given the projected rise in rural income (and consumption), it is not surprising that Hesa has ambitious plans for the next two to three years, starting with a bigger funding round in H2 2024. It will also enter new markets, grow its customer base with help from more Hesaathis, increase its product range and upgrade its technology, including AI-related solutions, for better outcomes.  

Hesa raised funding twice from Venture Catalysts (VCats) – INR 15 Cr in a seed round and INR 18 Cr in the Pre-Series A – besides raising funds from a clutch of investors, such as Unicorns, IP Ventures, Keiretsu Forum, We Founder Circle and Faad network.

The funding played a crucial role in helping Hesa build its business strategy through collaborative discussions and strategic planning sessions. With help from VCats and access to valuable connections within its extended network, Hesa could scale up its operations, identify new growth opportunities, forge strategic partnerships and spend more on product development. 

“It enhanced our reach and visibility, positioning the company for long-term success and impact,” the founder said.

“Hesa will continue to forge strategic partnerships and collaborations with key stakeholders, including consumer brands, financial institutions, government agencies and NGOs to help empower rural entrepreneurship and foster economic development to better serve the evolving needs of rural communities. These measures align with our goal to provide a comprehensive suite of solutions for rural commerce,” the founders said.

As most of us are aware, multiple Indias have existed in this country of nearly 7 Lakh villages (6.5 lakh, as per the 2011 census), with abundance and non-development existing side by side. As per NCAER data, just 17% of the villages account for 50% of the rural population and 60% of the rural wealth, leaving a vast population outside the development domain. Can Hesa and its ilk bring a transformative change across the ecosystem so that a stronger rural India emerges soon?