Innovations that create markets

India leapfrogged from manual typewriters to PCs. Are we going to see rural India moving from cycle rickshaws to e-rickshaws?

“Yeh electric hai kya?” (Is this electric?), I asked innocently. “Nahin. Yeh battery se chalti hai,” (no, it runs on a battery) replied the young man. Obviously he had no idea that the two are the same. 

We were going from the IIM Calcutta’s (IIMC’s) Joka campus to the Hooghly resort at Raichak. The plan was to have a cup of tea at the resort and then take the wonderful sunset cruise on the Hooghly river. Our arrival at Raichak was delayed so we missed the sunset. However, we discovered something probably more interesting. Waiting for our bus, my class of 1979 IIMC friends and I were fascinated to see a whole line-up of nice looking three-wheeler vehicles. They did not look like the ones you see in Mumbai or Delhi; and so we got chatting with the young man who was getting out of his rickshaw. After telling us that it was “not electric but it was battery powered”, he also told us that the e-rickshaw cost him about Rs 1 lakh. He charges the battery every night and that costs him Rs 50. On one charge, it runs for around 100 km. His passengers pay him a minimum of Rs 10; the rickshaw can accommodate six passengers comfortably. From what he told us and the quick calculation by the class financial wizard at hand, we concluded that the e-rickshaw was a good source of income for someone in rural West Bengal. 

Please note that he said it was not “electric” but was “battery”. Obviously, he saw these as different types of vehicles. Just as diesel and petrol and CNG. The moral of the story is that the e-rickshaws are attracting a whole new set of semi-literate consumers. 

Later, I chanced upon a report in Mint  which said that India has about 1.5 million battery powered three-wheeler rickshaws. A fleet bigger than the total number of electric cars sold in China since 2011. 

That evening we counted not less than 10 of those E-Tron e-rickshaws in that small town. They all seemed reasonably new and were quite busy ferrying passengers to the resort, the jetty and beyond. The young man was quite happy with the RoI. 

A lot has been written about the need for electric vehicles to help reduce pollution in our cities. But there has not been much debate on why they may actually make sense for rural India. I am hazarding a guess here that they are easier to drive and easier to maintain than a rickshaw powered by an internal combustion engine. So just as India leapfrogged from manual typewriters to PCs, will we be seeing rural India moving from cycle rickshaws to e-rickshaws?

In his book The Prosperity Paradox, Clayton Christensen and his co-authors present a case for innovation. They argue that the right kind of innovation can lift nations out of poverty, by converting a non-consumer into a consumer. These innovations manage to jump over the many hurdles such as skill, wealth, access and time. When they succeed, they create immense wealth for the whole society. They speak of several innovations that changed society from Ford’s Model T to M-Pesa. I feel done right the e-rickshaws have the potential to create a whole new market, in places where an auto-rickshaw may have never succeeded. And create its own pull to draw millions out of poverty. 

In a sense, the Tata Ace created a new market for a small-sized cargo vehicle. The success of Tata Ace created a new chapter in supply chain efficiency in India. 

I submit that vehicles like the E-tron e-rickshaw have the potential to create new markets for products and services. Imagine the e-rickshaw helping a million young men and women reach their place of work every day, without too much hassle. Imagine the same e-rickshaw being used to transport lighter commodities from remote areas to a hungry market. The e-rickshaw phenomenon is as yet new and these are probably assembled vehicles made by new companies. Some of them are understanding the basics of marketing well. They are focusing on the lesser served markets such as rural West Bengal, Bihar and Uttar Pradesh. By segmenting the market intelligently, they can build momentum and create their own markets hitherto unserved by the traditional three-wheeler makers. 

The battle will be truly won if they can ensure that the cost of maintaining the vehicle is low enough and repairing them is easy. Add to the above the availability of easy financing, you do have a winning combination. Something that Prof Chirstensen would gladly approve. 

The author is a brand coach, author and founder of Brand-Building.com ambimgp@brand-building.com