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Inside PriyoShop’s Ambitious Rural eCommerce Play

PriyoShop has turned 7 this month. It is a huge feat for a local ecommerce company to survive 7 years and then thrive in a market like Bangladesh. Founded in 2013, PriyoShop started its journey out of a 600 sq. ft. office and with a tiny 3-member team. Like many other successful businesses, it was a result of a side project PriyoShop founder Asikul Alam Khan and his team was working on.

Although it focused on 3C products in the early days, it quickly expanded to a comprehensive range of other products. Today, through its b2c online marketplace, PriyoShop offers clothing, fashion accessories, electronics, gadget, bikes, home appliances, daily needs products and everything in between. It handles thousands of transactions daily. It has invested in warehouse and logistics - one of the earliest ecommerce players in the country to invest in in-house logistics.

Over the past two years, PriyoShop has seen steady growth. It has expanded the team. Expanded product categories. Invested heavily in customer service, growth, and geographic expansion. Grown both in terms of the size of its business, team, and operation.

It has made strategic moves that are likely to have long term impact on its future. One such move is its aggressive rural expansion, albeit through various partnerships and small initiatives.

PriyoShop’s rural ambition

PriyoShop has been working on a strategic shift over the past two years: rural e-commerce. “Our team has grown significantly. Our office has expanded. Besides, we now have a large agents base across the country, particularly in the rural areas, says Asikul Alam Khan in an upcoming interview with Future Startup. PriyoShop has developed a long list of partnership with various government and private entities as part of its rural expansion plan. As PriyoShop expands, these partnerships will help it in distribution and reaching out to more customers.

The central assumption is that it would reduce distribution and marketing cost for PriyoShop. While there are questions regarding long term effectiveness and challenges of these partnerships, they do serve a purpose for PriyoShop now.

A nationwide coverage through partnerships

For example, PriyoShop has partnered with A2i under which it works with Union Digital Centers (UDC) across the country turning them into PiryoShop distribution hubs and in the process reaching customers who PriyoShop might not reach otherwise. There are 5400 UDC across Bangladesh and you can get PriyoShop services from all these centers. You can place orders and get your products delivered from there. “We are also giving after sales service through these centers,” says Khan.

Apart from UDC, PriyoShop has a partnership with Microsoft Bangladesh. Microsoft has tech hubs in 64 districts in Bangladesh. Under the partnership, people can get PriyoShop services from these 64 Tech Hubs, “which means we have our own presence in 64 districts,” says Khan. When a customer orders a product through a Tech Hub, PriyoShop delivers the product to the Tech Hub and customer collects it from there or a local entrepreneur at the Tech Hub delivers the product to the last mile. “Through this process, we have also found a solution to last mile logistics problem across the country”. PriyoShop has also partnered with Banglalink which allows PriyoShop to use Banglalink customer centers across the country as PriyoShop point as well.

A micro-merchant program

Apart from all these partnerships, PriyoShop has also launched a new village distribution program called micro-merchants, a group of local entrepreneurs who visit customers at home with PriyoShop app and collect orders. “Micro-merchants are like digital ferrywalas,” says Khan. “They take our product to the last mile. They carry a tab with them and go to households and show them products on PriyoShop platforms and generate sales and deliver to the last mile.”

PriyoShop now has over a thousand active micro-merchants. “Our goal is to take it to 10,000.”

Rural e-commerce offers real opportunities for PriyoShop but it is not without challenges

This move offers two benefits to PriyoShop 1) it helps expand PriyShop distribution network and reach a wide range of users across the country in a cost-efficient manner which would have not been possible otherwise 2) it helps PriyoShop to create brand awareness and build trust in a segment of population who are not essentially into the world of ecommerce yet. This development should help PriyoShop build trust, expand its business and build a solid lead in the rural market across Bangladesh. It would prove extremely valuable for PriyoShop in the future when these people join the ecommerce en masse. “This has helped us to address the trust gap that exists when it comes to ordering online from a remote village,” says Khan. “People often struggle to trust an ecommerce company based in Dhaka when ordering online from a remote village but when they do that same thing through UDC or a person they know, it solves the trust issue. We are working on these trust issues.”

The challenge for PriyoShop would be ensuring that these collaborations and partnerships drive results for it. Historical data shows, these sort of partnerships seldom go far because priorities are misplaced and partnerships are seldom the core priority of any of the partners.

PriyoShop says it has figured out the challenges and has a dedicated team looking after the operation. PriyoShop has a growing rural business. It says 45% of its transactions come from outside Dhaka.

The second challenge would be keeping the partnership active for the long term. Naturally, the partnership has to evolve as PriyoShop grows and expands its business. The limitation of third-party partnership, if it's not a direct distribution partnership, is that it would be difficult to evolve them as well. In order to avoid a potential fall off, PriyoShop has to have some strategy in place. Compared to its third-party partnership, its micro-merchant program is a better long term bet for the company.

The rural opportunity

“A big part of our strategy centers around rural areas of the country,” says Khan, “how can we serve the needs of the people in different parts of the country. We are calling this rural e-commerce.”

Every other ecommerce companies aim to penetrate the rural and suburban population in the country - the biggest e-commerce growth opportunities. If you crunch the numbers, it is the biggest untapped market. PriyoShop seems to have a plausible strategy in place to exploit the opportunity. Its partnerships with government and private companies are a good start.

While there are potential holes in its existing strategy, it should give it a leg up in the race and help build the initial momentum. The next phase of growth will certainly depend on how it leverages this initial gain in penetration and awareness.

PriyoShop’s rural e-commerce strategy does not end there, it aims higher. It does not only have a rural distribution strategy, but it also aims to enable rural small and medium entrepreneurs to sell their products on PriyoShop. The startup says its Made In Bangladesh Program aims to empower Bangladeshi local products.

“The second part of the strategy is what we are calling made in Bangladesh. Different parts of Bangladesh is famous for different products,” says Khan. “Some are for Jamdani Sharee and others are for NaKshi Katha and so on. These products have nationwide demand and some are popular in abroad as well. We did a study on the pricing of these products and came to see that many a time the makers don't get the best price. But the product price goes up when it goes through the various stages of the supply chain and by the time a consumer gets the product, it is almost 3 times of the original price that the maker gets. Through our rural e-commerce initiative, we are not only selling products to rural areas, but we are also empowering rural entrepreneurs to sell their products through our platform. As a result, customers could buy the same product for a better price and the entrepreneurs also get a better price by directly selling to customers. The objective is to enable village entrepreneurs.”

These are two distinct strategies with independent imperatives. Done right, a combination of these two strategic moves should benefit PriyoShop in achieving long term growth and create a competitive moat. The most important job for PriyoShop would be finding the common thread between them and doing a great job at execution. We have to wait to see whether PriyoShop could pull it off.

Ruhul Kader is a Dhaka-based writer, researcher, and entrepreneur. He is also the co-founder and CEO of Future Startup and the author of Rethinking Failure: A short guide to living an entrepreneurial life. He writes about entrepreneurship, business, strategy, technology, and culture. He can be reached at [email protected]

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