Usually we don't sort of recognize as a formal industry or a formal business and usually it's referred to in various different reports and documents and Management studies and business schools as the informal industry the marginalized industry as brooke kaio said.
That's been coined many years ago, but it gives you a glimpse of that part of India that we kind of are Indian business that we kind of take for granted.
We forget that this entire Infrastructure and framework which pretty much runs our life on a daily basis is also a former business. And we label them as marginalized Informal unorganized sectors over the next 10-15 minutes.
I actually want to show you how much of injustice we do. By labeling this industry as marginalized Informal unorganized because in every parameter of business metric they very often exceed. What we consider to be the tier 1 companies the ones that are listed in Sensex nifty.
The big giants the unicorns and the branded organizations. I don’t know how many of you are aware that of GDP is contributed by the unorganized industry not by the organized industry. By the unorganized industry and those of you think that.
FDI You know there's a big celebration that happens whenever I’ve come in FDI inflows have never exceeded more than 7 percent GDP ever 50 percent comes from the unorganized industry. The unorganized industry employs close to 90 percent of our workforce.
India has a workforce of about almost 500 million and 90% of that is Employed by the informal industry by the unorganized industry and as I'll show to you. With one example after the other they also perform pretty much in every metric brooke jessica kiao.
Tier one businesses or businesses that we normally consider to be the benchmarks or in many cases the Aspirational companies that we want to join I'm sure many of you must have seen these stores these bookstores these food counters here.
You see an example of a bookstore on a payment you can actually measure that the per square footage revenue and return of investment. That happens in a payment exceeds by several multiples the return of investment that happens in these big malls that you see the shiny malls.
The chrome and glass and the branded stores the payment actually delivers a much better rate of return for every rupee that is invested in a business over there. These books that you see stacked In the payment you would have also noticed that many vendors carry these books in their hand.
Now those of you who are Marketing students or who are studying? FMCG businesses You'd be taught that there is a whole science in placement of products in the shelf space. Actually the self-shell place is very actively.
Contested and fought for and there's a whole design principles that go into it. My sense is that the shelf space that you see this old man carrying. He has to carry the set of books and certify it by his sweat equity he has to make sure that every book that he adds on which is another 200 grams.
Every three to four kilos that he carries on a daily basis and by the way when you carry 3 or 4 kilos for more than a couple of hours It doesn't feel like 3 or 4 kilos it feels much heavier matter of fact I tell a lot of my other friends that if you want to know that you have arrived.
Then you need to find your book in this stack if it is there in this stack then this old man has certified. That your book is going to become a best-seller Right now you see a salesman and he is a sells boy he's a salesman sales boy who is selling flowers in.
You would have seen them in traffic lights and so many other places? This sales boy who has a 30% margin. The flower that he sells to you for 10 rupees it costs him 7 rupees to acquire that and he's got a 30% margin. More importantly he can give you a 50% discount on the spot if he likes your face.
If you try to get even a 5% discount in our organized business, if you are trying to implement a 5% discount that decision has to travel all the way up to the CX. So in some cases the board level and then come down from there, and by the time that decision comes the opportunity has already been lost.
This is an example I want to illustrate to show you how the distribution of wealth in the informal sector is far more equitable than the formal sector. So suppose you eat a plate of idly from a vendor in a footpath, and he charges you twelve rupees for that plate.
He keeps only three rupees of that twelve rupees the remaining nine rupees goes into the entire supply chain the people who watch the utensil the people who grind the dough the people who bring it in an auto rickshaw. They are the ones who get it if you eat the same plate of idle in a five-star hotel.
The bulk of that money is kept by the establishment and a very miniscule percentage of that actually reaches into the ecosystem. The third example I want to show you is the fluidity with which these businesses operate.
What you're seeing over here is a street vendor?
Any idea what he is selling he's selling something for a festival. What festival would that be? Holy this street vendor and millions of vendors like him. They have to change their entire inventory their supply chain their target segmentation their pitch the method by which they sell.
Every month and a half, so they actually change their entire supply chains their entire business model. More than twelve times in a year now compare that with the business transformation on an organizational realignment that big organizations try to do and I'm given to understand from management gurus.
That it takes anywhere between five to seven years to implement organizational transformation. Which this market does twelve times in a year? That's the kind of community that they have - the kind of agility with which they can operate. If you look at this marketplace my sense is I can see more entrepreneurship happening in this crowded marketplace.