How Adeera re-booted the paper bag market in India

As an organisation that prides itself in working on insights, first principles thinking was a daily exercise. That's how Adeera started when we were trying to establish ourselves. One of the first challenges we faced was to level the playing field. The market imn India was dominated by hundreds of players in a cottage industry who operate out of homes/huts. This means, manual pasting of paper sheets into paper bags. These paper bags were sold to local sweet shops, pharmacies and grocery stores.

Due to the lack of big players this market had set manufacturing standards, as is the norm in the western economies. There were no universal sizes, no quality quotient or packing parameters. The Indian firms in the cottage industry were manual pasting units. And every two kilometres, there would be one which would service the requirements in that district. This fragmented the market and the product-type. For example - customers were purchasing a 9.75 x 15.5 inch bag in a 250-piece packing with 50 bag bundles. Other customers were buying a 10.25 x 15 inch bag in 37-piece bundles without outer packing.

It was difficult for a player like Adeera to compare our paper bag, which was a 10 x 16 inch full size with a slightly smaller bag. More soe, when you consider our competitors were shorting our customers by packing 4-5% less and reducing the GSM of their bags. This meant, our competitors were saving up to 20%, deploying means that we could never follow. To grow, we were forced to think outside the “bag”. And that's how the team at Adeera reverted to breaking down the problem into its smallest unit or first principles thinking.

We were making bags on automatic machines, and so, our quality was superior. This was communicated to our clients. Since we were new, it was difficult to gain customer’s trust. Customers were not ready to accept the fact that they were being taken for a ride for so many years by vendors who were defrauding them. We needed a tech solution as well as a market solution to break through all these issues without compromising on our values.

Firstly, we figured out the buying triggers for our initial set of customers. The answer was lower price. If it was only about price at that point, we needed to find a way to break down everything into simple forms. Our solution to this was sales by weight. We knew 75% of our customers – grocery and sweet shops had weighing scales. These customers were accustomed to transacting in weight so adoption was not difficult. This solution levelled the playing field for the industry. Some players were reducing the GSM or changing the packsize from 46 to 50 pieces to lower the cost. We could neutralise all of it by weight. This made Adeera paper bags go viral. As viral as we can go in this business. 

We were buying our raw materials in kgs / tonnes as we were buying reels to make bags on automatic machines. Competitors who were buying sheets, were buying by piece and could not make the transition to selling by weight. Those who had the same processes as Adeera took two years to adopt our method of sales. This slow response gave us ample time to entrench ourselves into the market. And that's how Adeera continued to innovate and remain ahead of the curve.