Disrupting Logistics & Revolutionising Rural Distribution In India: Sandeep Deshmukh Of ElasticRun

ElasticRun (ER) was created as a platform to connect the deepest of rural areas in India with e-commerce portals. The founders of ER learnt along their careers in logistics that in the rural parts of India, it is not that the consumers don’t want premium products; it's just that they’re not cost effective for companies to transport. 

Through that insight, the three co-founders - Sandeep Deshmukh, Shitiz Bansal, and Saurabh Nigam - created a model that disrupts that otherwise expensive logistics chain—crowdsourcing and aggregating idle capacities of warehouses, people and vehicles. “We believed that with our technical know-how, we could connect the remotest parts of the country to any manufacturer—at an affordable cost and at a high scale,” says Sandeep Deshmukh, Co-Founder & CEO, ElasticRun.

Founded in 2016, they reached unicorn status by 2022. Today the platform is considered one of the largest, most prominent B2B e-commerce platforms in India, particularly for the rural sector.  But what really gained them traction was their decision to open up their platform for FMCG brands to distribute products to deep rural kirana stores. It gave brands a viable and cost effective channel to connect with the rural market (over 10 million kirana stores across the country) and also gave them deeper insights into each market, enhancing supply. 

Essentially, the way it works is:

“We crowdsource idle capacities and use them at an incremental cost. So our total cost of operation is fairly low compared to any of the traditional, capex models. At the same time, the scalability of the model is high. If I want to multiply my capacity by 10 times, I don't have to hire 10 times more people or real estate. My tech stack aggregates those capacities.” 

A Powerhouse Of Consumer Insights 

It is general consensus that Indians are aspirational. This sentiment holds true for rural consumers too. “Their economic condition may or may not always support their aspirations. But even if there is a spare capacity of 10, 15, 20 rupees, then having the right product available creates an offtake.” Deshmukh notes that the desire for novelty and premium products in the rural markets is extremely high.

With their unique data insights, the ER platform is even geared to notice early signs of inflationary pressures—periods when consumption goes to extremely non-discretionary buying with only sugar, oil and grains. “The reverse is also true—when we see products like high value shampoo bottles getting sold, it means inflationary pressures are low.” Keen observations like this help them switch up the product mix over the next few weeks until the signals change again. At any point of time, many inferences can be drawn from both marketing and economic angles. 

Furthermore, all rural areas aren’t homogeneous. Wide nuances and changes in preference are seen based on factors as simple as the type of water available. “The water may be saline, hard or soft. And depending on that, a national, regional or local manufacturer of detergent will make a dent in that region.” This kind of information needs to get baked into category management engines for manufacturers to know what is going to sell in that market. While ER may have the capability to carry all kinds of goods to markets, their platform helps brands find the right product-market fit.

Tech-Enabled Add-Ons 

ER has monetised this propensity to provide valuable insights through a data channel that produces reflections on consumption in different parts of the country at different points of time, becoming a key decision maker for all of the FMCG companies to plan supply into those markets.

They’ve also built a product for credit where anyone working on the platform can get access to formal credit through different NBFCs and banks. But are rural consumers really tech-savvy enough to make the most of these offerings? “When it comes to things that benefit them, yes.” Deshmukh tells us that one of their most loyal and tech-savvy cohorts are women-run stores. These women are typically mothers who manage both their homes as well as their stores; extracting the most out of every offer ER rolls out. 

The Road Ahead

Since the launch of the platform, Deshmukh attests that average order value in each store keeps going up. Their cost-effective channel has had substantial benefits to rural consumers as well as store-owners. 

“Brands that have been distributing predominantly to the urban cities have now found a cost viable channel to reach out to the rural markets. And there is no other platform that has the kind of wide and consistent reach that we do.” 

Looking to the future, ER wants to add more categories onto the platform, right from pharma to hardware, garments and more. Through their model, they will continue to be an economically viable and scalable channel to reach out to rural markets.