Empowering rural retailers via franchising

Now-a-days consumers in smaller cities, towns and even rural areas are quite aware of brands and labels. However, the small town/rural consumers have to travel to cities to buy their favourite brands and quality products. With enhanced buying power, these consumers offer substantial untapped market potential for retailers. Further, as ecommerce is fast becoming a preferred mode of retail business for several companies, the retailers are now effectively utilising this model to expand their presence into new emerging markets in tier III cities and non urban areas. One such ecommerce-based concept called FabMart.com has been introduced by, a Madanapalle Retail Pvt. Ltd, a company headquartered in Andhra Pradesh. FabMart.com is an e-commerce site launched in early 2012 that aims at addressing the demand-supply gap in retail sector which exists in smaller towns across India. It’s Ru-Ban (rural-urban) business model brings the retailers, brands and consumers together on a single technology-enabled platform and in process creates ample partnership opportunities for interested franchisees.

FabMart’s Ru-Ban biz model

FabMart has pioneered Ru-Ban (rural-urban) business model. Apart from online store presence, FabMart is also known for its 'local store collect’ wherein customers who do not prefer using a credit card or a Debit Card for an online transaction can opt to pay and collect the product ordered from a local retailer. In this model, the product instead of being shipped to the customer's address is sent to a retail partner who then collects the money and delivers the product to its rightful owner. This offline transaction model also works the other way round wherein a customer can place an order with the retailer (if not online) to purchase products being sold.

Alphonse Reddy, CEO, FabMart.com informs: “We realised that the retailer in the small-town is also not equipped with enough knowledge, infrastructural capacity or investment for inventory to be able to serve these customers. This need motivate us to launch the FabMart, a Ru-Ban business model.” 

Market scope

India’s rural population of 700 million presents a profitable opportunity for retailers, which they cannot ignore. A study by management consultancy firm AT Kearney reveals that modern retail constitutes merely 7 per cent of the $435 billion Indian retail market, thus indicating the potential and importance of the small retailer. The demand for products likes apparel, footwear, mobile phones, accessories, personal care, F&B, etc is grown gradually among the rural consumer but often they find themselves unable to buy these products for lack of retail spaces close to their homes. They are able to buy their preferred products only when they occasionally visit bigger cities. Here concepts like FabMart come to their rescue which provides them a competent avenue to buy products locally through company’s local partner.

Building presence via franchise route

FabMart’s Ru-ban model was abstracted in early 2012 and launched in Andhra Pradesh in September 2012. The company invited retailers to franchise with it and has already received more than 150 registration queries, of which 20 have be scrutinised, selected and appointed, while other registrations are being processed. Further registrations are also being accepted. Following Andhra Pradesh, FabMart’s Ru-ban model has also been recently launched in Tamil Nadu and eventually, the company plans to expand its presence pan India via franchise business model. Reddy shares: “Our franchisees partner would have access to more than 5,000 brands across clothing, accessories, electronics, cosmetics and home décor; the power of technology and the backing of a fast-growing brand. They would have the benefit of a zero-inventory model, reduced storage based risks and an up-to-date product catalogue.”

Unique biz opportunity 

The model differentiates itself from other retail chains as it put the smaller retailer at the centre and gives the great shopping experience for customers in Tier III and IV towns. Till now, not many people have known about this unique business concept, however, FabMart‘s unique Ru-Ban (rural-urban) business model is sure to be successful in near future. Alphonse Reddy insists, “We decided to empower the small town retailers with a great range of branded lifestyle products and depend on benefits of his local-knowledge, experience and exposure to stand-out and boost our presence”. The concept creates a significant market opportunity for local retailers and put the power back in the hands of the small local retailer, by empowering them with technology and training. Moreover, the business concepts entails low investment from franchisee’s end enabling small retailers to join the company’s growing franchisee network.   

Expansion plans

FabMart.com has aggressive expansion plans and is looking for more franchisees across India. It is going to appoint more than 100 franchisees in Tamil Nadu and a total of 750 retailers across South India this year. Across multiple locations, this number is expected to increase to 2,500 by 2013 and further, to 12,000 franchisees by end of 2014. Following the expansion in Tamil Nadu, FabMart.Com plans to enter Karnataka, and eventually across India.

Franchise requisites 

Aspirants who are interested in Fab Mart franchise should be willing to upgrade to a smart-retailer. They should know basic English and computer skills. They must have an excellent reputation in the local market for quality of service and good financial standing. Along with zeal of running the business, the franchisee should have a frontage area of 20 ft to the main road. The required investment for franchisee is less than Rs 50,000. The model is that of zero-inventory, therefore, a major investment on acquiring products and storing them is eliminated. The only one-time investment of the franchisee would be at the time of tie-up, where a nominal deposit of Rs10, 000 is collected as a caution against the tablet device that is provided to them.  

Training and Support 

After selection of the franchisees, the company sufficiently trains its partners regarding sales techniques and basic store hygiene etc so that they can provide consistent retail experience to its customers. FabMart will also help them with necessary branding and signage and marketing support time to time. 

Road ahead

FabMart Ru-Ban concept has the potential of drives India’s economy outside of the big cities. “Small-town retailers own a unique advantage of good-will of customers they have nurtured over years and forming a strong network with them as franchisees for small-town penetration was therefore, not a difficult choice to make,” says Reddy. Moreover, having a local representation makes difference as customer often depends on their local retailer for opinion while buying any important product.

To conclude, the concept of Fab Mart Ru-Ban business model is unique and it seems to have a lot of potential for both retailers/franchisees as well as small town customers. Thus, the potential franchisees aspiring to bridge the gap between urban and rural market can explore this low investment biz opportunity to reap rich rewards in near future.