Earlier quoted context omitted.
The article mentions that commercial napkins sold for 4 rupees despite cotton being 1/4000th the cost, but also says farther down that the locally produced ones sell for an average of 2.5 rupees each. That's a 38% discount: significant, but it doesn't seem like a game-changing difference to me. I imagine that if this catches on, the larger manufacturers will likely just cut their margins to compete. On a more general…
I would think the decentralised approach would always be able to compete when we factor in transportation costs which usually make up a pretty significant percentage of the actual sales price with centralised mass production. Much more of the money stays in the local economies too. http://www.mapsofindia.com/top-ten/india-crops/cotton.html Even if this particular business model would "only" work in India it'd be a su…
The real genius here is the local factor. We're talking Mary Kay ladies selling sanitary pads. The power of local communities to change behavior and move product is incredible, especially in places where people actually talk to each other. Americans learn about paper towels from TV. If you can't afford a TV, you're talking to people more, and that's a more more valuable channel to engage folks.
End of the day, the product is cheap enough, but there is a powerful incentive to sell, and that's the real magic.