Is Vegetable Business Profitable In India?
Vegetable business is perhaps the oldest business to have ever started. It is an industry that was very unorganized, however, in the last ten to fifteen years, there has been tremendous growth in organized vegetable and grocery industry.
Starting a vegetable business at this rate is a huge risk both financially and physically as the market is pretty much occupied. But this cannot stand as a means of a hindrance for starting a new idea in this industry as well as starting a retail vegetable store.
Currently, the vegetable industry has following type of businesses merged in it.
- Trader (importing and exporting)
- Cart vendor
- Franchise-model retailers
Farming in India is a cultural and traditional business. One can become a farmer and start selling vegetables, however, this requires a lot of capital to buy land as well as an ample amount of time, technique, and labor to produce crops. Farming is different as it is not considered as a business and there are several courses in agriculture.
Farming can be very profitable under certain circumstances, however, not everyone can place themselves in these circumstances so as to make a profitable farming business.
Becoming an Agent or an Auctioneer is quite a difficult task. An agent and an auctioneer are the people who buy produce from farmers and transport it to traders and wholesalers.
For a person to become an agent or an auctioneer, he/she must have a network of farmers that are dedicated to selling the produce to him/her regularly. This is important since there is extreme competition in this field and farmers tend to sell their produce irregularly.
Becoming an agent or an auctioneer is more of a self-employed mode of income rather than a business.
Trader and Distributor
Trading and distributing are similar businesses. Distributors get the product to retailers and cart vendors and traders transport produce too long distances to other distributors and traders. Sometimes traders also supply to long-distance vendors.
Becoming a trader can be quite profitable especially in cases where if one can identify demand and supply of various vegetable products in different countries and can set up a distribution network, it is profitable. But, from an outsider perspective (who doesn’t have any idea on how to become a trader), it is quite and risky to establish such a business as there would be a lot of risk involved as well as trust not only for the outsider, as well as people who trade with the outsider.
If one can overcome the risk and is able to maintain a good steady relationship and business with different traders and vendors to import and export the products (which happens over time) then the profits are tremendous. The risk involved can be anything from the demand of the product as well as supply-chain of the business since the business is very volatile in the beginning, a simple mistake can create distrust in the customer. These are the following brief steps or points that one needs to keep in mind while trying to become a vegetable trader
- Register a company; it creates trust in the customers who buy the product as well as help you in accountability. A company can be registered either online or taking the help of a Chartered Accountant. You can register your company with GST by clicking on this link https://reg.gst.gov.in/registration/.
- Registration with APEDA (agricultural and processed food products export development authority) is mandatory if products are exported to different countries. There are several licenses to be taken for different kinds of products. Food licenses, trade licenses, and labor licenses are common licenses to be taken.
- You should apply for the FSSAI (Food Safety and Standards Authority of India) here https://foodlicensing.fssai.gov.in/index.aspx. To know the type of license you require and how to apply to check Everything you need about FSSAI
- Labor and trade licenses can be applied through respectable state portals. To know more read all the licenses required to open a business in India.
- Depending on the vegetable/product there are other government-related permissions and licenses to be taken and thus talking to a Chattered Accountant would be a quicker way to get all the knowledge as well as to attain necessary permissions and licenses.
- Identifying the product that is to be imported or exported; along with it also identifying, all possible means of transporting the product, potential buyer of the product (a large scale buyer), distribution method of the product, and demand of the product (if it is a new product/vegetable in the area, then experimenting its demand is a must).
- Packaging, pricing, value-addition, etc can be done depending upon the product or vegetable being imported or exported. There are many other factors that one must look for as it is impossible to list for every product.
- A huge capital would be needed at every step of the business so as to make it beat the odds and become successful.
Hence, a vegetable trader can have high profitability if he/she is able to overcome risk at every step of the business. He/she must be calculated and is required to invest heavily.
Becoming a distributor is again a difficult task to work on. Already existing distributors are so strongly rooted in the market and they have strong bonds with their existing customer base.
Existing distributors have a good set-up system, though it can have flaws, people have adapted to them and make it work. A typical vegetable distributor distributes large quantities of vegetables from one place to another say, it can be from an agent to a wholesaler or a wholesaler to a retailer.
Generally, a distributor has transportation and employees who keep track of and distribute products. It is extremely difficult to enter a well-established and occupied distribution network however, one can become a vegetable distributor if he/she is able to identify unexplored routes and areas where new kinds of products/vegetables can be distributed.
Becoming a wholesaler of vegetables, just like distributors and agents, is a quite difficult task as most of the market is occupied. It is suggestible to start a wholesale business with a huge investment rather than starting the business as a start-up.
A wholesaler has a network of retailers and cart vendors who buy from him/her regularly. Wholesale business depends on a whole lot on trust, as it is common to have due payments from several retailers. Having a large network of retailers in itself is a huge task and cannot just be done using some simple steps. Having efficient staff, who not only distribute products but also encourage retailers and vendors to buy more of the products to attain profitability.
Becoming a wholesaler can work in unexplored areas and for products that are new or not common. There is profitability in becoming a wholesaler, but it also involves heavy risk, time, and capital.
Retailers and cart vendors are the final business owners that sell the products directly to customers. Retailers can be small vegetable shop owners, small supermarket owners, Kirana store owners, communal markets held locally have vendors who are also retailers, and cart vendors.
In all these cases, the best business to start is owning a small vegetable shop/store that can be further scaled to a franchise-model retail business. Opening a small vegetable shop has work that is common for any other business.
In 2020 and the future, a well-maintained, attractive vegetable shop with a proper branding would definitely yield profits and would also serve the community it is in.
Here are the important points and steps to be kept in mind while starting a vegetable business:
- Registering your store with necessary licenses. One can register the firm as an LLB or a sole proprietorship. You can register your company with GST by clicking on this link https://reg.gst.gov.in/registration/. Food, trade, and labor licenses are mandatory. There can be permissions and other licenses to be taken in case of selling any non-common vegetable or while setting up the store. You can apply for the food license https://foodlicensing.fssai.gov.in/index.aspx. Labor and trade licenses can be applied through respectable state portals.
- Since, COVID-19 is on full rise and its effect on mankind is evident, taking necessary precautionary measures in maintaining the staff and the store is a must. Taking extra precautionary steps and being strict about it can increase the trust customers would have in the store, this can act as a value-addition.
- Since, vegetables are perishable goods, a keen eye and mind is mandatory while buying stock.
- Running such a small yet trusted and well-maintained store would easily help you marketing your store which can lead to scaling up of your business.
There is also another option, to start a vegetable selling retail-store, taking a franchisee of a successful and trustable vegetable business.
Cart vendors and street vendors have been selling vegetables from age-old times. It is hard to define what definition of profit is for every individual, but generally speaking, cart vending is not a profitable business. In fact, it is a form of self-employment.
In conclusion, starting a vegetable-selling retail store is the best (profitable) vegetable business especially taking a franchise as there is, yet a little less risk involved.