How Mahindra Plans to become the Uber of Tractors

Monday 21st, March 2016

mahindratractors photo

Uber for Tractor? Crazy, isn’t it?

Mahindra is gearing up to implement the exact same thing!

It is planning to rent tractors to farmers whenever they need them- a strategy that has been made popular by Uber.

One might wonder why a leading company in tractor sales would even think about disrupting its own business. Let’s find out!

Backdrop

Tractors are primarily used for farming and quite obviously the major market lives in rural India. However, tractor sales have been under pressure for the last 2 years due to insufficient rainfall. This has reduced the earnings of the farmers and they postpone the decision to buy one.

As a result, the tractor market had been spiraling down due to poor sales numbers.

Mahindra, facing a crisis, has come up with this innovative strategy that threatens to disrupt the tractor business.

Strategy

Mahindra is foraying into agricultural equipment rental services through its organized rental service- TRRINGO.

Through this model, the farmer doesn’t have to spend large sums of money upfront to buy a tractor. Instead, they can rent it for a particular duration as and when required. Through this process, there is an improved cash flow and profitability to the farmer. Also it has been announced that it will operate as a franchise model.

“TRRINGO will be an e-commerce start-up which will provide the brand promise of equipment availability, commitment and performance, to transform lives of farmers, enabling them to rise. We hope to ramp up this offering to five states this year,”  says Rajesh Jejurikar, President & Chief Executive, Farm Equipment & Two Wheelers, Mahindra & Mahindra Ltd.

Business Model

According to Mahindra, TRRINGO will operate on a dual business model. First is where the franchisee invests in tractors and the equipment is rented out. TRRINGO will use a digital platform where the orders will be passed to the nearest franchisee through location-based mapping. The entire system is facilitated through a dedicated app and toll-free number.

Second is a Consumer to Consumer (C2C) model. In this case, large farmers owing high end equipment can rent their assets for optimized utilization. TRRINGO would connect the asset owner to the user-in-need. This way it’ll improve the mechanization of farming to boost yield and prosperity.

Okay, so how does TRRINGO earn revenue?

  1. Franchisee fees: Being a franchisee model, it’ll make money through the fee paid by the owner.
  2. Commission: TRRINGO will charge a commission to both parties for facilitating the business between them.

Will TRRINGO will succeed or not? We’ll have to wait and watch when it’s launched in June 2016.

Key Business Takeaways

  1. Companies have to re-imagine customer’s journey.
  2. Your business should try to solve a social problem- in this case, mechanization of farmers and reducing farmer’s load.
  3. Businesses have to disrupt/reinvent in order to re-emerge in a formidable avatar.
  4. Technology will collide with every industry-you should pro-actively embed technology in your business model.
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