Open Village Marketplace

Project report

Ace Institute of Management, EMBA Spring 2010 Kathmandu, Nepal December, 2011

Open Village Marketplace

Project report
Submitted to
Mr. Mohan Das Manandhar Dr. Nama Raj Budhathoki

As a fulfillment of individual assignment on Organizational Development

Submitted by
Siddhi Lal Kayestha
[skayestha@veriskhealth.com]

Ace Institute of Management, EMBA Spring 2010 New Baneshwor, Kathmandu, Nepal December 2011

Table of Contents
About Open Village Marketplace Project ......................................................................... 1 OVM as an Organization .............................................................................................. 2 Why Open Village Marketplace? .................................................................................. 3 Limitations of intervention ........................................................................................... 3 Literature Review ............................................................................................................. 4 Conceptual framework of Crowdsourcing ..................................................................... 5 Crowdsourcing and Communication ............................................................................. 5 Motivational Area of Crowdsourcing............................................................................ 5 Analysis and Discussion of Process .................................................................................. 7 The Producers .............................................................................................................. 7 The Intermediary .......................................................................................................... 7 The resellers ................................................................................................................. 7 Findings ....................................................................................................................... 8 Proposed intervention ................................................................................................... 8 Anticipated Outcome ........................................................................................................ 9 The Producers .............................................................................................................. 9 The resellers ................................................................................................................. 9 Personal reflection ...........................................................................................................10

Acknowledgements
I would like to acknowledge and extend my heartfelt gratitude and sincerity towards faculty members, Mr. Mohan Das Manandhar and Dr. Nama Raj Budhathoki for guidance and providing opportunity to work and complete this paper entitled Open Village Marketplace as a partial fulfillment of individual assignment in Organization Development and Change.

It has provided an opportunity to enhance our knowledge in broader aspects of Organization Development, both in traditional as well as emerging approaches. Different theories of social science and management, linkage between them and their practical implications and analysis has really helped to understand many organizational change activities around us in real life to greater details.

Thank you and Regards, Siddhi Lal Kayestha

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About Open Village Marketplace Project

People living in urban area are getting very much health conscious and trend of healthy eating is growing. People want to have fresh and healthy food and vegetables at their neighborhood store. Trying to meet this demand of customers, sellers or producers started using preservatives (basically chemicals which are hazardous to health) to preserve food and vegetables for longer time. These helped to cater fresh food and vegetables at local store but are not healthier one.

Need of healthier food has given rise to a high demand of organic food & vegetables. Many entrepreneurs started organic farming as a prospective venture. But the products get expensive as it involves high cost in compare to ordinary farming which uses chemicals for higher productivity. The organic farmers have a difficulty in selling their product at local market because of high cost and need to search for one who likes to consume organic products for quality health. Niche market of people who are health conscious and at the same time willing to pay high and few start hotels which serves quality food to its customers are existing clients of organic vegetables. But a huge mass of consumers could not get benefit from this.

But specialized local products are produced at different parts of the country. It is possible because of nature, or skill sets of people living there or may be because of some other reasons. Many of these products have a huge potential market. But these products hardly get exposure to big markets. Either producer is not aware of the marketplace or a person who buys it has less or no information about the product and its availability. It creates a huge economical loss at sellers end. And consumers will loss an opportunity to consume it. To take an example in our context, apples produced at Jumla, oranges and fresh vegetables from Dhading, milk produced at different places like Panouti, Hetauda and the like, and meat produced at Chitwan are few examples. There might be many more which are even not in our knowledge.

Open Village Marketplace (OVM), implementing crowdsourcing, tries to assist in bridging a gap between two parties producers (sellers) and buyers (here it is reseller), in fulfilling needs of both parties to make successful transaction happen. It

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will ultimately help end users (real consumers) to get product at reasonable price. And the product that was never exposed to end market gets sold to earn money.

OVM basically will be a virtual marketplace based on web technology, where sellers can provide details of their supplies (product details, price, location, contact details etc) and buyers can find them as per their requirement (product, place and price basically). Once buyers and sellers are able to meet each other (virtually in web), they communicate either online or offline to make real business transaction. Goods are supplied. Price is paid to seller. Buyer (or reseller) will make these goods available to end users through stores. Customers can get quality product at their neighborhood in reasonable price via these stores. Customers enjoys quality product and suppliers gets return to his investment and hard work.

OVM as an Organization
OVM is a conception of a web portal. The website will be a virtual marketplace to registered buyers and suppliers. Registered suppliers post details of products that they would like to sell. These products will be listed in a portal. Interested buyers can surf the website, or search product of their choice and other criteria via advance search options. If the buyers feel that they have found what they are searing for and want to use the features of website to connect with supplier, they get registered (if had not registered before). It will be a free registration. Major chunk of primary marketplace functions will be hence crowd sourced. The functions are:

1. Matching Buyers and Sellers a. Determination of product offerings (product details will be filled in by sellers) b. Searching product (buyer will search products via web tool) c. Price discovery (interaction between sellers and buyers)

2. Facilitation of Transaction a. Logistics (Intermediaries which can again be a community to perform logistic activities or separate entity providing service)

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b. Settlement (OVM process assists this function for transfer of fund or parties involved in transaction can mutually agree to do it) c. Trust (information is with communities and shared by them for themselves. It is collaboration among communities and trust exists)

A lean team will be working in an organized way to maintain and administer OVM portal. Big community of buyers and supplies will be providing and exchanging major sources of information required to themselves and others who are interested.

Why Open Village Marketplace?

Open Village Marketplace has certain objectives. Anticipated objectives of OVM are mentioned as follows: y Help establish easy, efficient and cost effective trade between buyers and sellers for local products including food and vegetables y y y Provide local suppliers an exposure to a larger market Boost economic activities by facilitating trade between rural and urban areas Create a knowledgebase of locally available products

Limitations of intervention
y This project will only focus on marketplace for all kinds of goods (not services) that are produced by local communities (like locally produced tea, vegetables, fisheries, meat products, fruits, dry food, handmade local products made of raw materials found locally etc). y It will try to establish direct contact between producers and buyers by marginalizing mediators who plays to gain maximum benefit creating infliction to producers and customers by paying low to producers and charging high from customers.

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Literature Review
In an existing business model, organization uses different distribution channels to take its goods up to its end customers. Many parties get involved in this activity of distribution supply chain management. The more tall structure of supply chain, more costly will be a product of organization. Many organizations tries to reduce cost incurred in supply chain by working out different models of supply and distribution management. It will help to create cost advantage. Less intermediate means less cost in supply and distribution, which will ultimately, gets added to product price. But this is only possible in case of traditional organization.

Besides organization, still there exists other entity in a society individuals or small group of people who works together to produce goods like organization do for their living. And we can find that they are mostly from villages. For instance, a farmer with his own piece land may grow vegetables, fruits, or other cash crops. Similarly, other may have kept some cows to sell milk for living. And some skillful person may try to craft useful goods and plan for living by selling them.

These individuals or group of people are focused on producing goods. They either have to take their products and sell in a local market or need to depend on mediator who buys goods from them at low price, take it to marketplace, sell it at high price and enjoy maximum profit. More is the number of mediator, higher will be a price of goods in the market that customer has to pay. And the difference between price that customer pay and producer receives is significantly very high in case of unorganized entity like this.

Traditional supply chain management in this scenario cannot be implemented as no organization exists there. Mediators come into picture as a separate entity to manage this problem. But the cost of providing solution is very high as they are also not organized. Producers and customers feel this act of mediator an infliction. But with traditional business model, there is no solution in trading goods without them especially when it is not organized. But there exists a philosophy which can provide a solution to this kind of problem but is not utilized to solve. It is crowdsourcing.

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Conceptual framework of Crowdsourcing

Crowdsourcing is about disseminating specific task (especially problem) of an organization to crowd preferably via web as a distributed problem-solving and production model, in search of best solution. Basically it is made available to a large network of potential people in the form of open call.

Crowdsourcing has two primary benefits. First, it can get solution by attracting an interested, motivated crowd of individuals capable of providing solutions which is superior in quality. Next, there will be a cost benefit. Instead of recruiting highly paid experts to solve problems, it will pay comparatively low cost to the solution provider.

Wise use of crowd wisdom is helpful to bring positive change for the betterment of society by bringing down cost and time and providing service to customers at low cost.

Crowdsourcing and Communication

Crowdsourcing also helps to reduce complexity of communication. Complexity of communication or disseminating information grows with the increase in number of people in a group. Scale of complexity grows faster and higher than that of people in a group. This is because of unmatched preferences of individuals with in a group. And each one cannot interact with other in person directly.

In an organization, a hierarchy system is created, which is commonly known as organization chart to cope with problem related to communication. But in case of OVM, where it tries to bring together a community of buyers and sellers, such things like hierarchy cannot exist. A web portal plays vital role to establish communication, which is crowd sourced. It will help to decrease transaction cost of communication.

Motivational Area of Crowdsourcing

Motivational factors of contributing members (e.g. Volunteerism, Leisure, and social production of knowledge) describe why people participate in crowdsourcing. Individuals engage in volunteerism to serve the following six functions, collectively called the volunteer functions inventory (VFI): (a) Value, (b) Understanding, (c)

Open Village Marketplace

Enhancement, (d) Career, (e) Social and, (f) Protective. Different motivational factors which have evolved as volunteerism, leisure, and social production of knowledge, are further broken down into intrinsic and extrinsic factors of motivation and is summarized to know how they contribute to crowdsourcing.

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Analysis and Discussion of Process

The Producers
Local communities produce goods. These communities are scattered around the country. They basically belong to remote areas and lives in villages. They are involved in farming, animal husbandry, crafting and the like using materials available locally in a community. Besides regular work needed to produce goods, it is very hard for them to market the product because of following reasons; 1. Marketplace at local is not big and has less value to the product they sell 2. They cannot sell product regularly 3. In a community level, most of the product are similar thus results low consumption

The Intermediary
To overcome the problem of marketplace and selling local products, mediators come into picture as a separate entity to manage this problem. But the cost of providing solution is very high as they are also not organized. Most of the times goods are transferred from one mediator to another in many folds till the goods reach in the hand of end user. Significant amount of cost get added because of this transactions among intermediary. Producers and customers feel this act of mediator an infliction. But with traditional business model, there is no solution in trading goods without them especially when it is not organized.

The resellers
Finally these intermediaries delivers product to resellers. These resellers can be wholesalers, and big stores. One level of transaction again happens at this point. The retailers buy goods from wholesalers. But this is obvious for distribution channel.

End users of goods, i.e. consumers, purchase goods from these resellers as required which are located at convenient neighborhood.

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Findings
y y Buyers and resellers are not organized. They are scattered. Availability of information is lagging. Primary stakeholders (i.e. buyers and resellers) do not have clear information about availability of goods, price, place where it is available or where it needs delivery, and contact details. y Because of this lagging information, communication is not smooth. Resellers only have access to mediators at the lower level of supply chain. And this gradually moves one level up in a same manner till one reach to producer. y Producers do not have direct contact with reseller and dont know where (or in which market) their product will get sold and at what price. y Mediators play games in this series of transaction and takes maximum benefit for low effort that they have contributed. These group of people have lots of information about demand and supply of goods, its market, price and so on.

Proposed intervention
It is identified that in the process of successful transaction in supplying locally produced goods to urban market, transactions happens in many folds. Each transaction adds cost to goods. In a traditionally structured supply chain management, as it is not organized too, every level of transactions seems necessary.

But this is just because of lack of information. Individual at one level has to depend on other level to make transaction happen. Individual at each level tries not to furnish with necessary information or create barrier in communication and the existing supply process.

The proposed intervention to improve this supply chain process is to introduce collaborative model of crowdsourcing as a new business model. This model will use web technology to cut down transaction cost of communication and furnishing information to the community at a same time. In case of villages, telecentre (if any) can be used to facilitate communication. It will bring buyers and sellers closer and make direct interaction possible by sidelining mediator.

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Anticipated Outcome
The Producers
Local communities producing goods, which are scattered, will form a virtual community via web portal of OVM. They will furnish detail information of product they want to sell with all other necessary details. In case of villages, if there lacks computer literacy and has access to telecentre, they can utilize it to ease communication and to provide collaborative input. This will help them to 1. get exposure to big market 2. sell goods at higher price 3. can communicate directly with reseller and 4. will have idea of market and current market price of goods

In idle case there will be no mediators. Goods are transferred from producers to reseller directly in most cases. Significant amount of cost get reduced because of this transactions among two directly concerned parties. Producers and reseller feels satisfied and build a trusted relationship.

The resellers
Resellers search for required product and communicate with producer via web portal of OVM. These resellers can be wholesalers, and big stores. They can get detail information of producers and analyze them before making transaction. They can purchase goods at relatively low price as the deal will takes place directly with producer. Only the extra cost that has to be incurred is for logistic.

End users of goods, i.e. consumers, purchase goods from these resellers as required which are located at convenient neighborhood. But now the end users can get products at relatively low price. This makes them feel satisfied as they get goods that are value to money they spend.

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10

Personal reflection
It is not true that organizational development and change can only be implemented in a typical organization that really exists. Not only an existing organization but systems which exist in our society can get better and cost effective if we try to enhance its operation process.

There can be many solutions that organizational development process can suggest for the betterment of organization or system. But a new concept of organizing organization or systems is rapidly growing with an introduction and development of web technology. Philosophy behind this is not mature and clear though. But it has really challenged the way traditional organization operates. It is crowdsourcing.

It is not sure that if philosophy of crowdsourcing can entirely replace traditional organization. But it is sure and is proven that partial implementation to solve problems works fantastic for traditional organization. But one has to carefully follow it and in a correct way. The rate of successful implementation of crowdsourcing is very low. Know how of web technology still lacks though it has became cheap and easily available even at remote places. Crowdsourcing largely depends on this new technology.

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11

Comparative System flow and benefits of OVM

The Producers
The producers are basically from remote areas and lives in villages. They are involved in farming, animal husbandry, crafting and the like using materials available locally in a community.

Poultry Farm Agricultural Animal Husbandry Product

Local Manufacturing

Existing System
The producers depend up on other people to sell their products at local level or sell products at local market in cheap price.

System with OVM

The producers will try to sell their products on their own via using OVM portal. They furnish product information, contact details and other required info.

The Intermediary
To overcome the problem of marketplace and selling local products, mediators come into picture as a separate entity to manage this problem. Significant amount of cost get added because of this transaction among intermediary. OVM Host server a web portal helps to link producers and resellers. Resellers can search for required product, contact producer, communicate and can purchase goods at fairly good price. Producer too gets high value for product. NO transaction cost will incur as there will not be an intermediary. Logistics (Intermediaries which can again be a community to perform logistic activities or separate entity providing service)

The Resellers

These resellers can be wholesalers, and big stores. They need to communicate with Intermediary. This will add cost and can NOT sell at cheaper price in the market. Customer need to pay high price.

These resellers can be wholesalers, and big stores. They can visit OVM site and communicate with the producers. No intermediary required. This will save cost and can sell at cheaper price.