Understanding the nuances of digital transformation of street vendors

Informal sector in India

The informal or unorganized retail sector is one of the largest employers in India. In the financial year 2020, the retail and allied sector has been found to be the second highest employment generator after agriculture, in India. Informal retail can be divided into two categories: those who operate from fixed shops (e.g., Kirana shops) and the others who do not (e.g., hawkers). Generally, it is the latter category of street vendors that is closer to the bottom of the pyramid for want of resources.

Emergence of digital technologies has created new business models and innovations that can be used by both informal and formal sector enterprises. Almost all digital innovations are sector agnostic. Convergence of emerging and existing digital technologies can create effective hybrid innovations thus enabling informal entrepreneurs including street vendors to optimize their business practices. The Digital Street Project focuses on such underserved contributors to the Indian economy and their digital inclusion.

To facilitate any such process, it is important to first understand the current challenges and opportunities. This would help in developing a framework for facilitating digital transformation of street vendors which is based on social dimensions of development and modernization.

Digital Street Project

The project is jointly conducted by Friedrich-Ebert-Stiftung (FES) India and Centre of Excellence for Digital Transformation (CeDT) at the ICFAI Foundation for Higher Education (IFHE), Hyderabad with research support from IBS centers in Bengaluru, Jaipur, Kolkata and Dehradun.

Here is a teaser video for the project.

Click here to watch the full video

A two-way approach is being followed in the project. One part consists of city-specific consultations with participation from development sector experts, street vendors organisations, street vendors, industry thought leaders in the digital technology space like platform technologies and space technologies, gender experts, government representatives, researchers and academics, start-ups, environmental groups and advocacy groups. The other part consists of interviews through field visits in these cities by teams comprising of students and faculty of IBS centers. Vendors, at their place of work, are interviewed on an array of issues ranging from daily routine to use of digital technology like fintech to building identity. Aspects related to gender, climate change, health and education are also explored. Responses from the consultations and observations from these field visits have provided rich insights into the issue.

The Story So Far

The consultations have provided interesting perspectives. The vendor leaders pointed out main problems as lack of fixed location to carry on daily business and the danger of eviction. Lack of awareness of schemes like PM SVANidhi, provisions under the Street Vendors Act and grievance redressal in case of payment frauds were cited as other issues. Most of the street vendors confided their businesses suffered due to COVID and even after opening up of economy, the income is not increasing.

Street vendors have been forthcoming in requesting for help with creation of social media channels for marketing their products and training regarding various digital payment tools. They were also interested in geo tagging their locations. They expressed the need for developing a mechanism through which they can avail easy loans and provide feedback to the government regarding their plight. The involvement of students has been most appreciated in this regard, as they have offered skills, time and expertise to help vendors address these challenges.

Street vendors mentioned that digital transformation is far off their minds. Basic problems, such as fixed place for vending, availability of loans, toilet facilities near their vending locations, and government support, need to be addressed first. This could involve low-tech solutions, but no such solutions are available as of now.  It has also been observed that street vendors run the most sustainable businesses. Their energy usage is minimal, and their businesses have low carbon footprint.

Click here to view a short video on the Story So Far.

The Framework

Broadly, the framework could be derived from these lenses: -

Risk Mitigation should be the priority. The biggest fear of street vendors is “eviction“ and loss of livelihood/identity. Multiple government agencies and development sector organisations are working towards creating processes and platforms to ensure that the street vendors’ right to livelihood is protected.

Income Generation may be a particular outcome of the digital transformation of street vendors. Platforms facilitate access to better markets, better credit and other financial products, and efficiency in scaling businesses.

Skill Building through platforms can help street vendors to improve their business skills, assist vendors in conducting their daily businesses more efficiently and  reduce the drudgery associated with many manual processes.

Empowerment through digital transformation can bring profound change to our society. Street vendors are amongst the most vulnerable sections of society; even within them, women, the disabled, and migrants bear the brunt of the oppression and drudgery of being on the street.

Read here the full report from the Digital Street project. The report encapsulates insights from all regional consultations and field work carried out as part of the project. FES and CEDT are thankful to all the experts, resource persons, opinion makers and stakeholders for sharing their knowledge and time during the project.

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Sanjay Fuloria is a Professor of Operations and IT at ICFAI Business School. He has more than 23 years of experience of which 13 years is in the industry.

Mandvi Kulshreshtha is Program Adviser of the Socio-Economic Transformation  program at the Friedrich-Ebert-Stiftung India office in New Delhi.

For more information about the FES India work on Socio-Economic Transformation program please contact the India-based Friedrich-Ebert-Stiftung Office and follow the facebook page for regular updates.