The Covid-19 pandemic hit the world just as the Kudumbashree Mission was experimenting with digital platforms, bringing a slew of unexpected challenges with it. Fearing the pandemic’s rapid spread, the Indian government imposed a 21-day lockdown beginning March 24, 2020, followed by two additional extensions until May 31, 2020. Local containment measures included the temporary closure of marketplaces and the closure of fairs and weekly markets. These measures had a significant impact on raw material supply and disrupted existing marketing channels. With the pandemic and subsequent lockdown, Micro-enterprise Consultants found it increasingly difficult to visit micro-enterprises and provide market intelligence, exacerbating the enterprises’ problems. Much of the progress made by women micro-entrepreneurs through micro-entrepreneurship was jeopardized as a result of these changes. After their livelihoods were jeopardized, several women micro-entrepreneurs were forced to work to supplement their income.
While Kudumbashree Mission attempted to address this slump by capitalizing on pandemic opportunities such as mass production of masks and sanitizers, sale of essential supplies and food kits, and so on, it felt critical that micro-enterprises develop more versatile market access channels in order for their businesses to be more resilient.
This convinced the Kudumbashree Mission to continue with the pilots of the three different digital platforms they had started, namely:
- Kudumbashree Bazaar, the in-house online portal,
- E-Commerce platform of a market-leading online retailer, and
- Annasree, a hyper-local app.
In 2020-21, a comparison of sales revenues from all channels revealed that digital platforms contributed only 1%. Although the Mission is eager for Kudumbashree micro-enterprises to have a presence in digital marketplaces, it is unclear whether the current models are completely appropriate for the purpose. It is past time for the Mission to weigh the pros and cons of the models it has tested and to introduce a model that retains the benefits while effectively addressing the drawbacks. In this context, an investigation into the appropriateness and feasibility of a platform co-op model becomes especially important.
While a platform cooperative model appears to be appropriate for addressing the unmet needs of Kudumbashree micro-enterprises, it is also necessary to investigate whether such a model is feasible in the current Kudumbashree context.
Gaining support for the idea of forming a co-op and recruiting micro-entrepreneurs may not be difficult, given Kerala’s long history and tradition of cooperative societies. Furthermore, Kudumbashree women have advanced knowledge and experience participating in governance processes. The Kudumbashree community network, of which they are all members, is governed by by-laws that are based on a participatory and democratic approach to governance. Furthermore, Kerala has a policy that requires 50 percent of elected members in local self-government to be women. Despite coming from the most disadvantaged socioeconomic strata, Kudumbashree women hold 60% of these positions!
Instead of limiting their participation to ownership and governance, Kudumbashree may be able to include micro-entrepreneurs (and other Kudumbashree members) in day-to-day management and operations. This aspect will also be familiar to Kudumbashree women, as they have been involved in program management in Kudumbashree since its inception through the community network of Neighborhood Groups (NHGs), Area Development Societies (ADSs), and Community Development Societies (CDSs). The elected representatives in the ADSs and CDSs have always played critical roles in Kudumbashree’s planning, budgeting, implementation, and monitoring processes.
Occasionally, the Mission has considered entrusting the day-to-day management and operations of the digital platforms to Kudumbashree members. Every time, it refrained because it was unsure how to structure the business and revenue models so that the costs involved do not become a disproportionate overhead that eats into the meager profits that micro-entrepreneurs currently receive. The Mission currently provides managerial and operational support, and their salaries and other costs are borne by the Mission. Many participants in our interviews expressed a willingness to pay a fee for centralized managerial and operational support. It may be possible to create a starting business and revenue model by combining the fee from the micro-entrepreneurs and the amounts that the Mission is already bearing. As the model matures and sales volumes increase, the Mission may be able to withdraw all financial support and allow the platform co-op model to operate as a financially self-sustaining entity.
Platform co-op models bestow their members with the opportunity to co-create structures, processes, and technologies that best suit them. The designs they generate are meant to promote the economic participation of members albeit in varied ways.
The platform co-op model may permit the Kudumbashree micro-entrepreneurs to co-design the operating models in ways that balance their needs for autonomy and collectivization. For instance, by tweaking the operating model to include individual logins on the platform, they may be able to independently track their sales and engage with customers directly, which may make them feel more in control. Similarly, they may be able to collectivize the marketing activities in ways that benefit all members. This could include: pushing for common branding and packaging with professional help, designing promotional campaigns, introducing product strategies that provide economies of scale while pre-empting cannibalization, streamlining logistics by engaging economical and reliable partners, adopting pricing policies that do not eat into profits, and devising faster payment processes.
This allows them to organize their business activities differently, thereby reducing their risk exposure and creating opportunities for other members’ economic participation. Efforts in this direction have begun to emerge. Having recognized the collective harm that fragmentation can cause, for instance, a number of microentrepreneurs have already taken the initiative to organize themselves into a production cluster. Others see the possibility of transforming Home Shop, which is essentially a distribution channel, into a fully-fledged logistics arm. With 4.5 million members in a state with a total population of 35 million, Kudumbashree has greater reach and penetration at the grassroots level than any other company. Kerala has seen Kudumbashree members that carry out most of the state projects that require grass-roots access for years now. The app Annasree is moving in this direction.
Co-designing and operating digital platforms requires technological knowledge, which the majority of Kudumbashree members lack. In the past, they have demonstrated the ability to acquire new skills, but mass upskilling will require substantial effort and resources. Notably, there is a second generation of well-educated young adults who are the children of Kudumbashree members. This group, which would otherwise be required to seek employment elsewhere, may possess the necessary technical skills and knowledge to create and maintain the platform. As many of the first-generation members who joined Kudumbashree when they were in their forties twenty years ago begin to contemplate retirement, this will also be a way for Kudumbashree to remain relevant to the next generation.
Platform co-ops can indeed work in the product sector in a manner that helps micro-entrepreneurs to enhance their market access, provided the platform meets their autonomy needs and makes collectivized support available.
Nonetheless, we must emphasize that the organizational structure and operating model underlying platform co-ops must be tailored to the membership. In the case of Kudumbashree micro-entrepreneurs, a number of favorable contextual conditions may facilitate a smoother transition to platform co-op status. As members of Kudumbashree, they are already united under a shared identity to which they feel a sense of belonging and which the public respects. They have extensive experience facilitating the success of multi-party organizational arrangements and are conversant with cooperative philosophies. Nevertheless, their lack of digital skills may prove to be an impediment. Existing conditions may facilitate the formation of platform cooperatives. The initial groundwork must be directed toward their creation if they do not already exist.
In this section, we explore a few more platform-based alternatives based in Kerala. PCC’s research investigator, Deepa VM led this section of the research. We explore the different reasons for the unique growth pattern in Kerala (though with many inherent contradictions) are often attributed to a number of factors, including land reforms implemented by the communist government in the 1960s, migration of a large portion of the labor force to Gulf countries, which resulted in a ‘pay cheque’ economy, the emphasis placed by successive governments (again under the influence of a strongly Left-leaning society) on education and health sectors, and the strengthening of the public sector in both, and the social reform movements that addressed head on the inequalities of a caste-ridden society. Despite its many shortcomings, the ‘Kerala Model’ sustains a well-educated and comparatively well-off society, its offshoot being affluence and affordability of new ideas and technologies. As a result, Kerala has become one of the major suppliers of software engineers to the rest of India and the rest of the world. Almost every middle-class Kerala family has an IT professional as a member or a close relative. As a result, it is not surprising that, in comparison to the rest of the country, Kerala has taken the lead in integrating the traditional cooperative model with the digital platform.
For this section, we thank Deepa VM for her research contributions.
In Ernakulam, Kerala’s commercial capital, a number of intriguing digital platform cooperatives in the food delivery and transportation sectors are emerging. Collaboration between private organizations, labor unions, small and medium-sized businesses, and government agencies is encouraged through these initiatives. The Kerala Metropolitan Transport Authority, a newly formed city transportation authority, is also supporting and initiating some of these initiatives. This research looks at three of these platform cooperatives.
Rezoy: The Cooperative Model Food Delivery App Run by Kerala Hotel and Restaurant Association
Rezoy is a food delivery app that is owned and operated by the Kerala Hotel and Restaurant Association (KHRA), a statewide organization of hotel and restaurant owners. This case study looks at how an existing organization of small and medium-sized dine-in hotels and restaurants, which has traditionally served only as a bargaining platform against state control, rises to meet the competition posed by the recent entry of food delivery apps such as Zomato and Swiggy.
Muhammed Mustafa, a hotel owner and KHRA member, proposed the idea of creating a food delivery app for the organization and its members. He also worked in the IT field in Dubai before returning to Kerala and opening his own hotel. Muhammed Mustafa, like many non-resident Keralites, had returned to Kerala with the intention of settling down in his village with his family and running a successful business with whatever savings he could save from his years in Dubai. His personal experience as a hotel owner in a market where private aggregators were stealing business from him, combined with the desperation of the entire hotel business community facing a sudden loss of control, forcing them to do business through Zomato and Swiggy. Muhammed Mustafa’s personal journey thus played a significant role in this story and fueled the organization’s attempt to migrate to a digital platform that can compete with Swiggy and Zomato. The entire community of small and medium hotel owners has also shifted away from dining-in and toward door-step food delivery.
Muhammed Mustafa is currently the CEO of Rezoy. He briefly described the trajectory of engagement that Kerala hotel owners had with Swiggy and Zomato to this researcher. These are the food delivery apps that have grown in popularity in Kerala, as well as in many other parts of the world, in recent years. Initially, what these private aggregators offered to small and medium-sized hotels appeared to be very appealing. The hotel and restaurant owners’ food delivery agreement with private food delivery aggregators began with the hotel and restaurant owners paying no commission to the aggregator. When the market gradually opened up to the door-step delivery trend, the aggregators demanded a 10% commission, which the hotel owners were willing to pay. Customers gradually shifted away from dining out in favor of these online food delivery apps, a trend that peaked when Covid 19 lockdowns became the norm.
As their business expanded and hotels became more reliant on them, private aggregators increased their commission from 10% to 30%. As a result, many hoteliers began to lose money, and many even closed their doors. This was the circumstance in which Rezoy was conceived. Rezoy used a cooperative society model that included all of the Kerala Hotel and Restaurant Owners Association members. The members of this association own the digital platform collectively. Muhamemd Mustafa believes that the restaurant and hotel owners’ sense of ownership in Rezoy will help their venture survive the ferocious competition from Zwiggy and Zomato. Rezoy’s current operating area is Ernakulam district, particularly Ernakulam town, the district capital.
We met and spoke with Ernakulam restaurant owners. Hotel Empire Plaza and Nandanam are two restaurants that offer food delivery through Rezoy, Swiggy, and Zomato. The owners of both of these hotels expressed reluctance to completely abandon Swiggy and Zomato and commit to delivering food solely through Rezoy at this time. They believe that the Rezoy app and its delivery network are in their early stages and that they lack professionalism, sales volume, reach, and service delivery. Their words revealed that the sense of ownership that their organization expected of them in relation to Rezoy had not yet materialized.
The hoteliers believe that, despite the high commissions paid to Swiggy and Zomato, the volume of sales compensates for this disadvantage. Swiggy and Zomato pay them once a week. Rezoy’s hotel payments are also made on time every two days. Not to mention that Rezoy charges only a 10% commission. And this commission is returned to the association, which is made up of hotel and restaurant owners. Still, restaurant owners are skeptical of the venture’s success, believing that without a significant investment in advertising, Rezoy will struggle to reach customers directly and compete with private food delivery aggregators. The Rezoy app is not as user-friendly or sophisticated as the private aggregator apps, but the food delivery is prompt and the prices are lower than what the private aggregators charge. The Rezoy team claims that they are only charging the customer the Maximum Retail Price (MRP) as required by law, and that private aggregators frequently violate these standards.
Rezoy is a cooperative model, but it still lacks the spirit of cooperation and participation. Even though it arose from a perceived need shared by all members of the organization, ordinary members were rarely involved in its conception and implementation. It started with one person’s idea and vision of a digital start-up, which was later reluctantly but hurriedly adopted by the association. During a strategy planning session in Ernakulam town, we discovered the organization’s leadership attempting to marry the cooperative model with some kind of public-private partnership model. Members appeared concerned about frequently expressed doubts about the success of cooperativism—the potential threat of politicization and excessive government intervention. It appears that the day will come when all members of the organization decide to exclusively deliver their food via Rezoy and refuse to work with the exploitative private aggregators in the field. Rezoy is receiving inquiries from hoteliers in neighboring districts and intends to expand to Thrissur and Kottayam, both of which are relatively close to Ernakulam.
Interventions by the Kerala Government
Kerala has only one metro rail service, which is the Kochi metro. Kochi Metro connects various parts of Ernakulam. Kochi Metro began operations in 2012. According to the rules established by the Indian government, any metro rail project must be accompanied by the formation of a unified metropolitan transport authority.
In Kerala, the plan was to integrate road transportation (including the state government-owned Kerala State Road Transport Corporation, metro, auto rickshaws, privately owned buses, and taxi services already beginning in 2006. Kerala’s Unified Metropolitan Transport Authority (UMTA) was established by government order in 2013. UMTA began its efforts in 2014-15 to bring all private buses (around 800) into a common digital transportation platform, and bus owners were persuaded to form seven companies because there were many bus owner organizations with varying political affiliations.
All seven bus owner companies merged in 2017 to form a single bus operator company. That company’s app enables bus owners to track ticket sales and take advantage of group discounts. The digital bus transportation platform operates as follows. A bus ticketing app has been created for bus owners. This app allows bus owners to access real-time ticketing data on their mobile phones. Previously, bus employees would steal a portion of the money collected from ticketing. Following the implementation of the app, bus owners’ earnings have increased from Rs.1000 ($13) to Rs.2000 ($26) per day. Riders of the metro and buses receive a single card as part of this digital platform. This card can be used to ride the bus, make internet payments in stores, hire a taxi, and travel by metro rail. The one-cards are compatible with the bus ticketing machines.
Owners of private buses operating in Ernakulam are already reaping the benefits of this aggregation. The app allows bus owners to pool their spare part purchases and thus receive discounts. The oil companies have also been giving them discounts when they use the bank transaction card issued in their aggregate company’s name. The bus owners’ companies own 51% of the shares in the public limited company they formed, the government owns 20%, and the public owns the remaining 23%. Twenty percent of the 23 percent public shares are reserved for non-resident Keralites. This is critical in ensuring the project’s sustainability in Kerala, where the influx of foreign money from Gulf countries is a major driver of development. Even though this venture is not a cooperative platform in and of itself, it is linked to the digital cooperative platforms that are already in place for taxi and auto rickshaw services in the city.
Yatri and AuSa Apps: Two Digital Cooperative Models Promoted by Kochi Metropolitan Transport Authority
Effective 2020, the UMTA Kochi Metropolitan Transport Authority, was responsible for integrating Kochi’s various modes of transport.
Early in February 2021, the authority decided to launch the ‘Yatri’ app for taxi services and the ‘AuSa’ app for auto rickshaws. Both the ‘Yatri’ and ‘AuSa’ apps have adopted the cooperative organizational model. These models of cooperative societies are directly proposed by the government agency KMTA. The overarching objective has been to address the social inequality that prevents auto-taxi drivers from receiving a monthly wage, pension, etc., in contrast to government workers and other more privileged worker groups.
The idea is that taxi and automobile drivers should enjoy the same job security as government employees. Hari, a former UMTA member, believes that there should be pay stubs with which they can obtain loans, and that they should be able to wear their uniforms with dignity. Currently, a car or taxi driver is susceptible to the income-inconsistencies of whichever trips they are able to secure or risk losing when competing with one another. There are 2500 taxis in the city of Ernakulam, but only 1000 are affiliated with various trade unions. The remaining drivers are unorganized and, as a result, are exploited by travel agencies and private aggregators such as Uber and Ola, who take a hefty commission from their earnings. These private aggregators share a small portion of their aggregation profits with their customers in order to gain their loyalty, whereas drivers receive no such benefit. The result is that customers migrate to the aggregators, leaving the traditional taxi and car drivers unemployed.
Yatri is a platform cooperative for taxi drivers that operates as part of the Kochi Open Mobility Network project. The taxi and auto drivers who join the newly formed cooperative society are given access to this digital platform. There are 250,000 auto rickshaws operating in the Ernakulam district, and 10,000 in the city area. As this report is being written, the project has completed its first thousand trips. Already 2200 auto-rickshaw drivers have joined the cooperative society.
What is envisioned is a one-of-a-kind model with significant benefits for members. The majority of taxis and autos that operate in Kerala are owned and operated by their driver. By joining the digital platform, each taxi/auto owner or driver will receive a double benefit. They will be members of a cooperative society that will share the profits of the digital platform. When they drive their vehicles, they will also be members of the cooperative society. There will be three shifts for each vehicle (if the owner wishes), and they can work one shift while receiving rent for the other shifts ridden by other drivers. As a result, the vehicle is used to its full potential, and the owner earns an additional income. The customer’s payment for the ride will be credited directly to the cooperative society fund. The drivers’ salaries will be paid from this fund, with a set minimum wage. Each driver will have a one-day week off during the six-day work week. As a society employee, you will also receive other perks and benefits, such as a provident fund. Even students who do not own taxis or auto rickshaws but want to supplement their income can work evening shifts. ‘Yatri’ takes no commission from the drivers. The drivers/owners can buy fuel at the fuel stations simply by showing their ID cards as members of the cooperative society. The fuel vendor will be paid directly by the cooperative society.
To ensure passenger safety and accountability, each driver must obtain a police clearance certificate. They also sign an agreement to abide by all of the rules of the cooperative society in which they are members. Any violation will result in the membership being canceled. Many drivers, when approached in person, welcome the move because they believe private aggregators such as Uber and Ola overcharge them for commission, which can amount to up to 25%.
The digital platform for auto rickshaws has yet to take off. The restrictions imposed in the aftermath of the Covid 19 pandemic had a significant impact on this vertical of the project. The general body meetings scheduled to explain the project details to the auto drivers could not take place as planned. One KMTA member who was instrumental in organizing bus owners into the KMTA digital platform expressed reservations about adopting the cooperative society model in the Kochi Open Mobility Network (KOMN), the agency formed to integrate various modes of transportation using technology. He claims that political parties and labor unions support the cooperative society model for a variety of reasons. According to him, the cooperative society laws in India require that the board of directors of a cooperative society be entirely elected by the members. This allows political parties and trade unions affiliated with them to exert undue influence over the functioning of society. Each cooperative society has one vote in the Taluk credit cooperatives of their geographical location’s board. This vote is extremely valuable to political parties in order for them to maintain control over these cooperative banks. Because of the existing legal loopholes in the cooperative society model, the board of directors of any cooperative society is likely to be made up of non-experts. This could lead to a considerable lack of professionalism.
In order to sustain the digital platforms for the auto rickshaws and taxis integrated into the KOMN, KMTA is paying the cloud rent to server providers such as Amazon. In this digital cooperative model, at least at this early stage, this cost is not much compensated by the ride profits. Instead, this expenditure is expected to be covered by the operational savings such as when the drivers/owners collectively purchase tyres, spare parts, and so on. There are also provisions where the auto/taxi drivers can have bulk insurance coverage where they will get 10% of their money back. However, this can happen only when the drivers/owners are enlisted in this project en-masse.
Many auto rickshaw and taxi drivers and owners are still hesitant to participate in the project. They are unaware of the benefits of platform cooperatives because the KMTA’s awareness campaigns have been stifled by the pandemic. Even the CITU taxi union, the strongest trade union in Kerala and a Communist Party of India (Marxist) affiliated trade union, is having difficulty enlisting its own members. Mr. Harilal K.J., the leader of the CITU Ernakulam city car drivers union, who is working with KMTA to make this project a reality, remains optimistic. He claims that the delays and missed deadlines are due to Covid 19 restrictions. He also admits that city-wide meetings should be held to raise awareness among auto/taxi drivers.
Kerala’s Unique Networks of Cooperation
It is difficult for local competitors to succeed through the platform cooperative model in a market where private aggregators such as Swiggy and Zomato can promote brand recognition over profits — at least temporarily — and where they command access to funds given with the sole purpose of building brand recognition and network effects. The observations made by the various stakeholders with whom we interacted reflect this. They also believe that government control over cooperative societies is overbearing. Despite these reservations, preliminary data from Ernakulam platform cooperatives’ experiences show that these ventures are growing slowly and steadily. For stakeholders, the most significant advantage of the platform cooperative model is that they own the technology, eliminating the exploitative presence of any intermediary. Customers’ interest in adopting these new technologies is also growing, as evidenced by the growing number of Kochi Metro one-card holders. Metro, taxi, and bus rides are currently partially integrated into the Kochi Open Mobility Network and its one-card. This project has also included small and local private cab aggregators like Yellow Taxi. A user who books a taxi through the ‘Yatri’ app can select from a variety of cab services in the city. Local drivers can also join the platform by downloading the ‘Yatri Partner’ app. In addition, there is no third party involved who charges a commission on the ride. The platform network plans to include ferries and rental bicycles, as well as services such as electric vehicle charging stations and parking spots. Efforts are being made to launch the ‘AuSa’ platform and add auto rickshaws to this network as soon as possible. All of the apps are designed to communicate with one another in real time and in the same language.
It is becoming clear that once the ‘Yatri’ and ‘AuSa’ platforms are fully operational, this network of platform cooperatives could pose serious competition to the field’s dominant private players. Rezoy’s case study demonstrates how stakeholders in any sector can limit the exploitation of intermediate aggregators by collectively commanding the technology involved. This initiative has been successful in providing hotel and restaurant owners with an alternative, a different (and even better in the near future) option. Crossing the private-public divide and empowering local communities are two other distinct features of all three platform cooperative initiatives. The KMTA experiment demonstrates that a government agency’s role as a facilitator of platform cooperative networking places vast infrastructural resources at the disposal of the stakeholders involved. These hybrid models are evolving, and there will inevitably be unexpected challenges. However, these experiments are worth taking those risks because they present the possibility of long-term socioeconomic empowerment to the local communities and customers involved.
