|dc.description.abstract||Mr. Asif Iqbal, Chief Operating Officer of Shwapno (brand name of Advanced Chemical Industries (ACI) Logistics Limited, a subsidiary of ACI), stood at the window of his Dhaka office one afternoon of January 2010. He had just returned from a meeting in which ACI’s Chairman, Managing Director, Executive Director (Agri-businesses), and Executive Director (Consumer Brands) had announced that Shwapno, a chain of 32 retail outlets, would expand by more than 100 countrywide retail outlets by January 2011, to address everyday household needs of consumers.
This news greatly pleased Mr. Iqbal, who had been one of the creators of the Shwapno supply-chain concept. As car horns blared in consistent cacophony outside his office, Mr. Iqbal envisioned the Shwapno outlets that would collect fresh materials from rural areas, far removed from the streets of Dhaka. Millions of farmers scattered across Bangladesh spent their days in doubt as to whether they could sell their products at a fair price, or at all, even if they had bumper production in their fields. Most of the farmers, fisherman, and meat producers of the country were victim to typical interest business Dadan, a business system in Bangladesh in which middlemen purchase produce from farmers at a low price and sell it at a high price to consumers. Lots of vegetables grew moldy in rural areas, because farmers did not find enough buyers who would buy their goods, whereas city dwellers paid extra to meet their vegetable needs. Additionally, poor transportation infrastructure contributed to inefficient flow of agricultural goods from rural to urban areas.
Producers were on one extreme end of the value chain, and consumers were on the other extreme. A shopper in an urban area often lost his or her interest in shopping in the market, due to untidy ambiance, such as muddy floors, insufficient space to move, unhygienic arrangement of products, the bargaining process, and inconsistent pricing. Even though the market was flooded with a wide range of products, a large portion of the population, especially farmers and end-users, were deprived of an efficient and convenient retail process. Producers did not get appropriate prices for their production and consumers invariably were deceived by sellers, who often sold inferior goods, inaccurately measured goods, and so on.
Understanding this gap in the value chain, ACI had initiated to establish a new business, namely Shwapno, to eliminate the gap, uproot the cartel, and ensure reasonable prices for both farmers and consumers. The objective of this subsidiary was to engage in the business of buying, selling, importing, and exporting of agri-products directly to consumers. The company, a unit of ACI Group, claimed that the venture would also ensure fair prices for farmers, who often got poor returns on their yields, mainly due to market manipulation. The ACI’s business decision to add at least 100 retail outlets throughout the country over the year would bring a number of challenges. Mr. Iqbal and his team would need to decide how to procure produce and create a viable strategy to build outlets.||