Propelled by
their Network, can Mumbai Dabbawalas catch the new sunshine?
Objective: How
could the Mumbai Dabbawalas [lunch
box carriers] lead themselves into the emerging business opportunity of grocery
home-delivery with the help of Social Networking Analysis?
The Mumbai Dabbawalas and the Dabbawala Model: That a barely literate mass of 5000 dabbawalas
[lunch box carriers] transports around 175,000 to 200,000 dabbas [lunch boxes]
in a single day with error of less than 1 in 6 million deliveries, awed no less
than the case study writers at the Harvard Business School. This 125 year old
network of lunch box carriers in the commercial capital of India, Mumbai
services working professionals, who leave home early in the morning but prefer
to have home-made food for their lunch, often cooked by their home-maker wives.
The dabbawalas pick the lunch box from client’s home between 9 – 10 am every
morning and deliver it to his [rarely, her] office around noon during the lunch
break. The dabbawalas are not controlled by any sophisticated corporation but
are a self-organized mass of workers with almost no hierarchy. Each dabbawala
brings his own capital to the business by way of a bicycle, a lunch-box carrier
and some investment money. The profits from the business are then uniformly
distributed across all the dabbawalas. This unique business model without any
large cut of profits for any managing agent keeps this service extremely
affordable for the masses. On the other hand, since each dabbawala owns the
business, he is extremely loyal and reliable in his conduct.
Changing needs of
changing times: Even though the lunch-box delivery service is quite popular
in the city of Mumbai as on date, it is likely to hit a plateau and dwindle in
the coming years. The reason for likely slow down is the changing
socio-economic life style in the city. Today most homes have nuclear families
with both husband and wife leaving home at the same time for their respective
work. There is no wife at home who would cook fresh meals to be delivered to
her husband at office. Further, the emerging IT companies offer plush canteen
services to its employees. Various service providers offer food delivery
solutions including but not limited to pizzas, sandwiches and rice meals.
On one hand we see the need for the dabbawalla service
moving downward while on the other we see a rising need for the emerging
business of grocery delivery services. The very rise of husband and wife -both
working families, leaves no one at home to manage grocery purchases. These
include daily supplies of food and other consumables. These would also include
the green-grocery or the vegetable supplies, which constitute significant
portion in a typical Indian vegetarian meal. With the husband and wife both
returning home beyond the extended working hours [quite common for Indian IT
employees], there is no fun in traveling to the grocery store in the highly
polluted traffic environment of the city. Limited parking facilities make it
inconvenient to stop by the grocery store. As a result a home delivered grocery
pack as per need of the day would be a highly sought service by the select
Mumbai households.
Rise of Grocery
Delivery Service in Mumbai and the Challenges: To service the emerging
need, a vast number of first generation [or emerging] entrepreneurs have started
dial-up or online grocery services in the city. With first few seen around
2005-06, serious players were not seen until 2008-09. Even as of 2012, the
service largely remains fragmented and at most places is bleeding to death. The
reason for no business pulling up to this need is not the lack of market but
the lack of execution ability demonstrated by hitherto corporate business
models. It is very difficult to raise and maintain an army of loyal field men
who will travel on the hectic city streets, be it heavy monsoons or scorching
summers, to dutifully deliver the grocery pack. More ever to make such a
service economically viable, companies have to insist high amount of minimum
purchases, which turns down many customers. A typical Indian household prefers
fresh deliveries in small quantities and likes to refrain from bulky weekly or
fortnightly purchases. Several grocery delivery businesses have been unable to
solve aforementioned challenges and investors are now skeptical in extending investments
to start-ups in this area noticing that many have not been able to live up to
their initial promise.
How could Dabbawala
Model aid the Grocery Delivery Service?
We hypothesize that the Mumbai Dabbawala Model can best be
applied to the Grocery Delivery Service in Mumbai owing to following reasons.
1. 1. The conditions of lunch box pickup and delivery
are similar in nature to grocery pickup and delivery. The similarities are in
the uniqueness of the delivery packet, small size and geographically dispersed
clientele.
2. 2. Both the businesses are highly based on customer
networks for publicity and servicemen networks for delivery.
3. 3. The essential challenge in both the services is
network driven field-level execution.
Hence, to service the need for a low-cost, just-in-time
Grocery Delivery Service in the city of Mumbai, the model of Dabbawalas could
best be applied by the Dabbawalas themselves. However, before plunging onto
this new avenue, a systematic social network research is in order. This is
important in order to assess the likely customers and grocers the business can
rope into its network to successfully launch itself as a sustainable business.
How can Social Networking
Analysis help?
Social Networking Analysis [SNA] can assist important
decisions in application of the proposed Dabbawala model for Grocery Delivery
Services in Mumbai. SNA will provide help in two phases. In first phase, it
will help us decide whether the Dabbawalas could take plunge into the grocery
delivery service. It will provide useful insights into 2 questions:
1.
Whether network based promotion will lead to
sufficient number of clientele?
2.
Whether network promotion will yield sufficient
growth rate to sustain the business?
In the second phase, SNA will equip us with knowledge to
locate and identify key resources and areas to launch the business so as to
reap maximum benefit by collecting the low hanging fruits in early stages.
1.
Which localities are most optimal for the
network based grocery service to work?
2.
Which sub-team of dabbawalas is best geared up
to initiate the grocery service?
3.
Which network of grocers could most ably service
and support the proposed delivery model?
4.
What is the likely number of customers this
business will attract and what is the expected growth rate?
5.
Would this be a self-sustaining business model?
Research questions:
Following are the critical research questions to assess the
success-likelihood of the proposed model for Grocery Delivery Service using the
Mumbai Dabbawala network.
1.
Out of existing customers who need grocery
delivery service?
2.
Can existing customers give referrals of other
customers who need grocery delivery service?
3.
Who among Dabbawalas would be willing to provide
the grocery delivery service?
4.
Who among the Dabbawalas’ social network [ego
network of non-dabbawalas such as relatives or grocers in acquaintance] would
be willing to provide the grocery delivery service?
5.
Which grocers are willing to network in the
grocery delivery service?
Hypothesis and
Relevant SNA measures:
[We use the abbreviation DEC for representing the
Dabbawala’s Existing Customers. These are the households who avail of dabbawala’s
existing lunch box services and could potentially help to propel the proposed
Grocery Delivery Services either by way of direct application or by way of a
referral.]
H1: Dabbawala’s
Existing Customers [DEC] are well networked with their neighbors.
Measure: Network Density
H2: DECs make
active service suggestions to their neighbors
Measure: Outward degree
for DECs
H3: DECs
neighbors actively seek service suggestions from DECs
Measure: Inward
degree for DECs
H4: No person
holds significant power in influencing customer decisions.
This is important in order to rule out the possibility of a
giant corporate hijacking the network by seducing highly influential customers.
Measure: Between-ness
is low
H5: Services
offered to certain people are more likely to spread by word-of-mouth
Measure: Eigen
values
H6: Grocery
stores are closely related to each other so as to procure material in demand
from each other without much loss of time owing to long supply chains
Measure:
Closeness
Possible conclusions
from application of SNA techniques:
1. 1. A high degree of network density among the DECs
of dabawallas would be a positive indication for success of proposed model. It
is likely that initiation of services at few households could potentially lead
to a words of mouth promotion.
2. A high Outward degree would indicate that DECs will actively promote the services among the neighboring households by sharing their experience.
3. A high Inward degree would indicate that the DECs neighborhood will actively learn about the new service.
4. A low value for Between-ness in the network will indicate that no member is significantly powerful than others and as such only a grass-root level promotion will be most successful. This would mean a sustainable competitive advantage for the dabbawalas.
5. Identification of high Eigen value customers or high Eigen value localities will help the Dabbawalas identify early starting points for the launch of their new service.
6. Grocery stores’ network with high degree of closeness will ensure that supplies can be procured from within the network without much loss of time owing to long supply chains.
2. A high Outward degree would indicate that DECs will actively promote the services among the neighboring households by sharing their experience.
3. A high Inward degree would indicate that the DECs neighborhood will actively learn about the new service.
4. A low value for Between-ness in the network will indicate that no member is significantly powerful than others and as such only a grass-root level promotion will be most successful. This would mean a sustainable competitive advantage for the dabbawalas.
5. Identification of high Eigen value customers or high Eigen value localities will help the Dabbawalas identify early starting points for the launch of their new service.
6. Grocery stores’ network with high degree of closeness will ensure that supplies can be procured from within the network without much loss of time owing to long supply chains.
Conclusion: The dabbawalas
are one of the exemplary business models run by a vast network of self
organized employees. Owing to the changes in socio-economic demographics of
Mumbai, their existing business does not offer any promising future. At the
same time, there is a rising opportunity which the dabbawalas could uniquely
service using their most precious asset of self owned, well co-ordinated, and
most reliable service network. The dabbawalas can leverage on their battery of
network by linking it to a network of grocery stores and demonstrate yet
another case to the business schools of the world. Social Network Analysis will
help them assess the success likelihood of the proposed model and will also
facilitate identification of right resources i.e. grocery stores and
within-city areas i.e. customers to see the rise of possibly a new sun!
References:
2. 2. Going hi-tech and expanding business: http://cmuscm.blogspot.de/2012/02/mumbais-dabbawalas-go-hi-tech.html
3. 3. Keeping fingers Crossed: http://www.moneycontrol.com/smementor/news/starting-up/mumbai%5Cs-first-e-grocer-keeps-its-fingers-crossed-791843.html
Author: Pranav
Patil can be contacted on pensafe@gmail.com
Date: 16 Dec 2012
1 comment:
Love this one. The idea of using the dabbawalla network for other things is very good. Good interpretation of use of SNA techniques. You should do this study!
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