A 2007 report by Toxicslink mentions how Mumbai generates 19,000 Tonnes of e-waste per year, and yet imports furthermore. In the heart of Jari Mari Industrial Area in Mumbai is Saki Naka, the focal point of electronic waste trade in India and the centre of a large low-income slum area. There are approximately 100 shops of computer waste located in Teen Number Khadi (Bay No. 3). Kurla, Kamathipura-Grant Road, Jogeshwari and Malad are other centers for computer waste in Mumbai. Entrepreneurs with the capability to scavenge, salvage and re-engineer products out of e-waste have created a vibrant economy of unorganized retail for computers and consumer durables across Mumbai. Hundreds of such retailers use Chaupaati as a medium to reach tens of thousands of consumers across Mumbai, many of whom are located in slums in the same areas.

Sayed Asad, owner of Best Computer Solutions, is headquartered in a prime location in Saki Naka. He purchases old computers, laptops and printers from leading banks and corporations, then re-furbishes and upgrades them with multimedia and entertainment capabilities, then offers them at unbelievable prices for education, home and office use. He provides replacement warranty for all his products and has broken a price barrier that no one in Mumbai is able to match, especially for entry-level configurations. He has 10 branches across Mumbai and 25 full-time engineers. Sayed says, “Now we are proud we made it easy for all to purchase computers.”

When Sayed first heard about Chaupaati on June 15, 2008 (10 days before Chaupaati launched), he was immediately convinced because of our focus on second-hand products, and he is one of the best in the business for old computers. Sayed Asad was one of the first dealers to advertise his deals on Chaupaati and then went on to be a party to Chaupaati’s first known phone pe deal on July 4, 2008, within 4 days of launch.

Since then, Sayed has acquired over 1,000 customers from Chaupaati and he says “For every 100 inquiries received from Chaupaati, at least 25% get developed into deals”, and says “we have been able to build a brand across Mumbai. Since we joined, Chaupaati has resulted in significant growth in business development for us.” Compared to newspapers, Internet, flyers and other media, he finds mobile as the fastest and best medium for interaction. After a customer is generated, “we get an immediate alert by SMS. This is followed up with a quick conversation, prompt visit, and fast deal.” Chaupaati has sent him inquiries from all corners of Mumbai (Vashi - Eastern corner, Vasai/Virar - Northern corner, Colaba - Southern Corner) and the customer profiles include low-income, middle-class as well as corporate buyers.

It is customers like Sayed Asad that help us fulfill the promise of “best deals in Mumbai” for computers.

From the time Chaupaati started, we have always felt that our eventual success would NOT rely on how much of the market we are able to capture, but what market we are able to create. Mobilizing an existing market is not as attractive for start-ups, as fulfilling a latent need. Solving solved problems is not as interesting as solving an unsolved problem. Though we are miles away from being disruptive innovators (addressing non-consumption), we discovered some early signs of fulfilling a latent need, not entirely by design.

One of our regular customers Rakesh Rane, a computer dealer from Lamington Road said to Kiran Patil, Chaupaati’s head of sales: “Yaar tumhare buyers non-serious hote hain, lekin unke saath deal hoti hai.” (Your buyers are non-serious, but they convert to a sale). Kiran was stumped by the irony. Isn’t conversion the only criteria for lead quality! He pealed the onion, however, and connected the dots for us.

The way Chaupaati works is that we advertise hot deals across categories using a variety of media - print, SMS, flyers, online, etc. Consumers call 922-222-1947 and a representative directs those callers to their favorite deals within their locality, budget and feature preferences. Many of our deals appeal to consumers who have not yet made up their minds about buying a product, are usually first time buyers for those products, are attracted by a too-good-to-be-true deal and call us to learn more.

To Rakesh Rane who has advertised his deals on Chaupaati and also advertised his business in a yellow pages, the lead received from Chaupaati is quite different from the one received from the talking yellow pages companies. In case of Chaupaati, the consumer with a latent need asks stupid questions about the computer and does not know what to ask. This consumer wants to be told and sold. In the other case, the consumer with a specific need asks pointed questions (that she is also asking 7 other similar businesses in the list) and is a savvy comparitive shopper. This consumer wants to ask and task. For this customer, one of five Chaupaati leads converts to a sale, whereas one in thirty five yellow-pages leads converts to a sale.

Of course, we continue to figure out how to address the savvy consumer, and whether the higher conversions are a result of the tender-love-and-affection of a small company or is it a product flow that works. We would love to hear your thoughts.

A lot of you have asked us about the localities that Chaupaati users call from?

Here is a view of our user base on the map of Mumbai. Red balloons represent low user density, Blue is medium, and Green is high. When we went live in July 2008, our user base was primarily along the Central suburbs, but over time there are more greens along the Western suburbs between Dadar to Borivali. Customers from Chaupaati call everywhere from Murbad to Vasai, Churchgate to Virar, and Masjid to Bhivandi. Call 922-222-1947 to connect with these users for buying or selling whatever it is that you care about. Sorry for not providing an interactive map. Maybe when we hit a million users…

While the evasive $100 computer remains a pipe dream in the research community, Chaupaati’s dealers have been selling them aplenty for many months now! Computers are income opportunities in India. Renting out computers for access to applications such as data entry, resume building, gaming, photos, e-mails, Internet, mobile downloads, chatting, etc. make it an alternate income opportunity for urban slumdwellers. The progressive urbanites also recognize the role of the computer in secondary and higher education of their kids, thus resulting in job opportunities as knowledge workers at the call centers, back offices, small offices, etc. These jobs pay higher than traditional jobs, bear higher social status, and have better working conditions. Given the income growth at the urban bottom-of-pyramid, share-of-wallet growth in education and the growth in youth population; Rs.5,000 ($100) is a magic number that now makes the computer a popular item amongst a large number of consumers.

Here are 10 selected deals available on Chaupaati for computers under Rs.5,000.

Assembled computer with Intel P4, Nerul - Rs.3,000 by Sujendra Rao
4 Year, 40 GB Hard disk, 1.7 GHz, 256 MB Ram, Keyboard, Mouse, Speakers, 17 Inch CRT Monitor, Printer, Good Condition

Computer with Intel Celeron, Saki Naka, Andheri East - Rs.3,500 (negotiable) by Rajesh
2nd Owner, 40 GB Hard Disk, 256 MB Ram,14 Inch Digital Monitor, Working Condition, Good Condition, Keyboard, Mouse, Speaker, CD Writer

IBM Computer with Intel P3, Ghatkopar East - Rs.3,500 (negotiable) by Shridhar
1.5 Year Old, 40 GB Hard Disk, 256 MB RAM, with CD ROM, Multimedia Keyboard, Mouse, Good Condition

Assembled Computer with Intel P3, Kurla West - Rs.3,750 by Zahir
128 MB RAM, 20 GB Hard Disk, 810 Motherboard, 15 inch CRT Monitor, Keyboard , Mouse, Speakers, Good Condition
 
Assembled Computer with Intel P3, Nerul - Rs.4,000 (negotiable) by Salman
Celeron 400 MHz, 64 MB Ram, 10 GB Hard disk, 15 Inch monitor, Keyboard, Mouse, Good Condition

Assembled Computer with Intel P3, Thane West - Rs.4,300 by Sunny Bajaj
1.12 Ghz processor, 40GB Hard Disk, 256MB RAM, CD ROM, New Keyboard Multimedia, New Optical Mouse, 15″ Monitor

Assembled Computer with Intel P3, Andheri West - Rs.4,500 (negotiable) by Mohammad Rafiq
P3, 128 MB RAM, 10 Hard Disk, 14 Inch Crt Monitor, Keyboard, Mouse, Good Condition

Dell Computer with Intel P3, Borivali West - Rs.5,000 (negotiable) by Viral
128 MB Ram, 20 GB Hard Disk, CD Rom, Keyboard & Mouse, 15 Inch CRT Monitor, 2 Years Old

Wipro Computer with AMD, Bhayender East - Rs.5,000 (negotiable) by Siddharth
40 GB Hard Disk, 256 MB Ram, 16 Inch Monitor, Combo Drive, Keyboard, Mouse, 5 Years Old, Good Condition

Assembled Computer with Intel P4, Charni Road, Marine Lines - Rs.5,000 by Amit
15 Inch CRT, 40 GB Hard disk, 256 RAM, Compaq mother board, CD ROM, With Computer trolly, Good Condition

To get any of these deals, call 922-222-1947 and talk to a friendly Chaupaati representative

Arguably the most common culture across all corners of India (besides Bollywood) is our obsession with food. The desire to consume freshly ground spices and flour is deeply rooted in our psyche, especially in rural India. For a visual, remember the movie Mirch Masala with the spice mill where the women gathered in the final scene. Most Indian preparations involve ground spices and flour. Grinding them yourself (as against industry-packaged food) characterize purity, freshness and cleanliness.

Urban India does not have the luxury of space nor can it afford the noise, air and water pollution that accompanies traditional grinding of spices and foodgrains in a local mill or backyard. The solution is GharGhanti - automatic atta chakki (flour mill). These are spice-mills-in-a-box that automatically replicate the stone-against-stone grinding motion, serve enough quantity for one household, operate in a closed box, do not consume much power and are available for about Rs. 7,000. Milcent, Sharp and Nissan are some of the brands that make automatic flour mills, besides several local makes. While Gharghantis are hard to find, finding technicians to repair your 20-year old Gharghanti is even harder.

Interestingly, GharGhanti (like sewing machines) are income opportunities for neighbourhood women who want to earn hourly and daily wages in an urban slum.

Call 922-222-1947 in Mumbai to connect with sellers and technicians for GharGhanti and sewing machines.

It is always fascinating to see what users are buying and selling on Chaupaati, outside of the marketed categories of mobiles, computers, electronics, furniture and automobiles. To get these deals, call 922-222-1947 between 8a to 10p 7-days a week.

Top 10 outlier categories, each with about half a dozen active listings:

10. Rentals: 1BHK, 1RHK, PG, Room-share (e.g. 1 room-hall-kitchen chawl in Virar East)

9. CD’s: movies, computer games, console games, music, software (e.g. PS2 and PS3 games without box starting Rs.1,000)

8. Fitness equipment: treadmills, walkers, stretchers, pullies (e.g. Jaipan machine with walker for weight loss, magnetic therapy for Diabetes, vibration therapy for blood circulation for Rs.4,995)

7. Garments: ladies, gents, underwear, jackets, cloth material, branded clothes (e.g. imported men’s underwear, X2X brand from London)

6. Coolers: Videocon, Kenstar, Samrat, Symphony (e.g. 5 year old cooler for Rs.1,000)

5. Sewing machines: Singer, Merritt, Assembled (e.g. Merritt with folding leg machine)

4. Water purifiers: Aquasure, Aquaguard (e.g. unused Aquasure for Rs.1,500 with bill)

3. Shops for sale: 200 sq ft to 900 sq ft (e.g. 167 sq ft carpet area shop in Bhandup E for Rs.2L)

2. Collectibles: coins, stamps, matchboxes, watches, pens (e.g. 1/2 anna 7-metal alloy coin from 1616)

1. Open plots for sale: from 1,000 sq ft to 18 acres (e.g. Rs.100 Crore plot on Worli sea face)

Top 10 outlier listings, which even the categories fail to capture:

10. PCO Coin box in Matunga West for Rs.25,000 (Qty 10 phones, 6 machines, STD/ISD Facility)

9. Antique Locker in Santa Cruz East for Rs.10,000 (75 yrs old, box type, Cub from London)

8. Two-seater Pram in Andheri East for Rs.3,000 & Car seat in Thane West for Rs.1,000

7. Canvas Painting in Andheri East for Rs.3,500 (3.5 Feet Length, 2.6 Feet Height, Bought From Udaipur)

6. Cruise party in Andheri East for Rs.2,000 (Unlimited Food, Drinks, Dance, 8PM-8AM, Market Rate Rs.3380)

5. Zirassic Time Share Plot in Dadar West for Rs.4,00,000 (Part Ownership of the Land, Time Share Holiday Arrangement, Double Surrender Value After 5 Years, One Week in Resort Each Year, IN GOA NEAR BEACH)

4. Match box covers in Dombivali West for Rs.2,00,000 (1000 different match box covers)

3. Mercedes Logo in Mahalakshmi for Rs.6,000 (Brand New, Qty 3)

2. UK Sterling Pounds in Ghatkopar West (Rs. 75 per pound, upto 200 pounds)

1. 9-Bullet Revolver in Charni Road for Rs.90,000 (with bullets, metal, with license, want licensees only)

The laws of supply and demand tell us that when price of goods go up, the demand for them goes down. A set of consumers either find substitutes for those goods, or altogether stop consuming towards that need. However, there are some needs for which non-consumption is not an option, such as eating food to survive. For these goods, demand actually goes up as prices go up. Consumers of higher priced goods in the category (meat) come looking for substitutes, whereas consumers of the cheaper goods (staple vegetables and food grains) are unable to find substitutes. These cheaper foods are Giffen goods. Economists worldwide have a renewed interest in this long-forgotten theory (since Alfred Marshall’s 1895 book The Principles of Economics) after two Harvard economists demonstrated in 2007 that rice and noodles in poor parts of China behave as Giffen goods.

At the time of writing this article in Dec 2008, India has over 300 million mobile subscribers and over 100 million mobile handsets have already been sold this year. Mobile phones are found in over 80% households in the major metros and over 55% households nationwide. Currently, 40% of all new mobiles sold in Mumbai are first-timers. There are Indians who do not have reliable access to electricity, drinking water, health-care and primary education but have reliable access to a mobile phone connected to the network. Behaviorally, mobiles have now become an essential part of the earning Indian’s work life; be it a farmer in rural India, a small businessman in semi-urban India or a day laborer in urban India. Mobiles help these citizens stay connected with information and opportunities that trade and employment depends on. Mobiles have found their place as a basic necessity in the life of an Indian.

Mobile handsets in India are dominated by North European, American and Korean brands and Chinese and Taiwanese parts. Even for handsets that are manufactured and assembled in India or close to home, reliance on imported parts has a direct impact on cost-of-goods-sold as the dollar rises and the rupee falls. Earlier in November, the largest mobile handset maker for India – Nokia – anticipated a 15% hike in handset prices for all new models. This price hike will quickly trickle down to the extended food-chain of mobiles in India, where the longevity and re-use of phones and parts is a vibrant and developed economy. Earlier this year, a large mobile retail store had estimated that 1/3^rd of all Nokia handsets sold in India are used and sold by unauthorized dealers. Nokia alone sold close to 2.4 million new phones this calendar year (estimated) in Mumbai alone and has 75% market share.

Consumers would find options to buy six-month old phone models at less than half the price of new phone models of the same series. Gray markets that have perfected the art of salvaging mobile parts, then repairing and re-furbishing used mobiles, can expect to get more business from the price-conscious mass of consumers, especially the replacement customer. Due to the dependency on mobiles as a basic necessity, especially for new customers, the consumption of mobiles in the lower-end is unlikely to be impacted by a price hike. Consumers might take the extra effort to find more options that help them save a few hundred rupees on a good deal. Used mobiles will turn out to be a Giffen good.

Inspired by a post by Anand Rajaraman: Is Search Advertising a Giffen Good?

You can call 922-222-1947 to find great deals on used mobiles and other electronics items, connect directly with sellers near you and do phone pe deal. You can also use Chaupaati to directly reach buyers for items that you might want to sell.

The idea of Chaupaati, the business, is founded in the unique trends and characteristics of India, the country. We are not nationalists, we are not political, we are not socialists, nor is the purview of our fascinations, thoughts and experiences limited to one country. However, we do believe that our ideas apply to India like no other country in the world. Here are the team’s top 5 books related with India that influence our thinking.

India After Gandhi: The History of the World’s Largest Democracy by Ramachandra Guha

The best researched history of independent India.

Small Is Beautiful: Economics as if People Mattered by E. F. Schumacher

A critique of modern economics since the 1970’s

A Fine Balance by Rohinton Mistry

A novel about four ordinary lives in Mumbai in times of Emergency

City of Djinns: A Year in Delhi by William Dalrymple

A travelogue about the historical capital of India, New Delhi

Everybody Loves a Good Drought: Stories from India’s Poorest Districts by P. Sainath

Research findings of poverty in the rural districts of India

Other influences: Amartya Sen, Clayton Christensen, Jim Collins, Marcus Buckingham, Amitav Ghosh, Vikram Chandra, Salman Rushdie, Vikram Seth, Khushwant Singh, George Orwell, Christopher Hitchens

We receive least number of calls on Sundays and most on Saturdays. The Saturday call volume is more than double that of Sunday. Now some of this call volume can be attributed to marketing campaigns that go out on a particular day. But it is still interesting to note that the call volume almost monotonically increases through the week - Sunday to Saturday - the only outlier being Monday.

% Call Volume by Weekday

We’ll keep you posted with more such trends at Chaupaati. Meanwhile, what’s your take on the above trend?

“250 rupees for all three bundles,”

“I just want one. How much?”

I was bargaining for a bundle of white lilies wrapped in cellophane paper at a traffic signal outside the J W Marriott in Bombay. A lovely fragrance wafted from the flowers and mixed with the humid breeze that blew from the ocean.

“120 last price,”

“20 rupees,” I told the kid. 10 years old. Barefoot, ragged clothes. I don’t think he ever saw school.

“20 is what we buy the flowers for, Sir,” he slipped. “Give me 60 rupees.”

“Waah, you buy these for 20 and want to sell them for 120. Profit 100 rupees?” the auto-wala turned around and chipped in.

The kid gave him a stare which did not fail to tell him buzz-off-mind-your-own-business. The digital clock on the traffic signal ahead was ticking away … 20, 19, 18 … I knew and the auto-wala knew and the kid knew. If we did not close this deal in another 15 seconds, the Honda Accord behind us would honk so hard, it would blow our eardrums. 17, 16, 15 …

“Give me 45. Look at them … nice and fresh. 45.” The flower kid knew his stuff. He was reading my body language and was responding with an offer. He was timing it well. He had got me indulged. “40 is a good price for this bouquet,” I thought to myself. “Nice brownie points I will pick up at home.”

“20 rupees. It’s a daily for me,” I said aloud putting up a stern face.

“35,”

Thirty five rupees was lesser than what I had decided I would pay. Now was the time to pull out the money and grab the bouquet. A nice fresh bundle of white fragrant lillies wrapped in a cellophane paper. I would pay a bomb for this had I walked into a flower shop.

5,  4,  3 …

But at that moment, I decided to play a little harder.

“No, no. 20 rupees,” I told the kid. And regretted my offer that very moment.

2, 3, 1. The red light turned green. The kid did himself a huge favour and walked away. The Honda Accord honked. My auto-wala shifted gears and we rolled on.

In those 30 seconds and a Rs. 35 non-deal, I learnt what my five year education did not teach me. The flower kid faked an offer. When he was caught, he quickly corrected it. He got me indulged, he read my body language and he responded well. He responded quickly. And he walked away at the right time. And he walked away like he had nothing to lose. Had he not walked on me, I would have offered Rs. 20 for all flower bouquets every time I saw him or his friends at a traffic signal.

Deal or no-deal? From trying to sell a second hand cell phone to negotiations with a VC; from talks on salary offer to haggling for an antique - a deal and a no-deal are separated by a few seconds, few rupees, few moves.