How AgroStar leveraged technology to find its North Star

Shardul Sheth is known to be a maverick in the AgriTech space in India. In 2013, he and his brother Sitanshu Sheth cofounded Agrostar, a ‘Direct To Farmer’ commerce platform for agriculture which is touted to be India’s Flipkart for agricultural products. At Kalaari’s recent AgriTech event, #ThePromiseOfAgritech, Shardul spoke about the vision behind AgroStar, stories from its early days, and what the future holds for them.

AgroStar presently operates a mobile and web-based platform for agricultural inputs and had its humble beginnings in 2008. Similar to its contemporaries in ecommerce space, AgroStar has now branched from its original business of selling agricultural inputs, to complementary businesses such as fintech and last mile deliveries.

Shardul started his talk reminiscing the initial days at AgroStar. The first version of the AgroStar’s Customer Relationship Management(CRM) solution was developed by a Bangalore based company that modelled their offering based on existing CRM solutions in the market. Within a couple of weeks of operating the system, AgroStar realised that it had a problem at hand: the CRM mandatorily required an email ID for the purposes of placing an order. Very few farmers who were AgroStar customers in 2008 had email IDs.

So AgroStar came up with a quick solution: they developed a CRM that had a provision to add phone numbers. In the following years AgroStar pushed most of its customers to get email ids and was successful in introducing email to hundreds of farmers.

Like most startups, all of AgroStar’s innovations were a result of pain points they faced and a drive to solve the deep-seated problems in the agricultural ecommerce space.

The second major challenge AgroStar faced in its formative years was the classic problem everyone in ecommerce had faced: last mile deliveries. The problem was even more aggravated for AgroStar since most of its customers were located in remote villages where India Post was the only delivery service which had last-mile access .

In extremely remote areas India Post would refuse to do last mile deliveries, instead asking farmers to come to the post office to pick up their packages. Farmers started complaining because AgroStar had promised last mile deliveries till their homes.

The brothers went back to the drawing board again and decided that to solve this pain point they had, to start a last mile delivery solution themselves. This led to the birth of Agro-Ex, Agrostar’s own franchise-based last mile delivery solution. The introduction of Agro-Ex led to lower returns and faster home deliveries. Farmers could now order the products they needed on an immediate basis and the company would ensure early deliveries. This was a sea of change compared to the India Post delivery timelines of 8–10 days. Shardul noted that presently 70% of the startup’s deliveries are made by Agro-Ex.

After a couple of years of operation, Agrostar realised that their customers were facing a classic problem in the ecommerce space- lack of credit. The problem was aggravated in this case, since the farmers did not have any prior credit history. This meant that regular finance players - like banks and NBFC’s, were not willing to lend to them.

AgroStar surveyed the market further and understood that regular credit models would not work in the agricultural space. A farmer is cash rich only once the harvest is done. So, Agrostar came up with its credit product “Vishwas” and started lending to farmers without any prior credit history. They then came up with the concept of linking re-payment of farmer loans with the time of their harvest.

Shardul end his session by summarizing key takeaways from their journey-

1. Know your customer(KYC)- To get a better understanding of needs of end customers, Agrostar’s UI/UX and tech teams went to villages and spent time with farmers to understand user behaviour and feature requests. They realized that farmers like sharing selfies and pictures of their harvest with others in their network. So, they launched a social network for farmers to connect with each other and it has been a hit, so far.
2. Keep iterating- Get feedback from end customers and keep tweaking offerings to suit current market needs.
3. Don’t scale till you have a product-market fit and avoid selling at a loss at all costs.
4. Keep building symbiotic partnerships- When Agrostar started, the founders visited every big agri-chemical player in India for partnerships. They were asked to return in three years, when they had made more progress and a name for themselves. The founders persisted and kep meeting these companies every year, showcasing their progress and iterating on the mutual benefits of a partnership. This approach led to multiple fruitful partnerships much sooner than was expected.

Acknowledging Subhro Sengupta, a contributor to this article. Subhro is a Kstart Fellow.