Market Fit in Startup Ecosystem
Hyperlocal, Last-mile connectivity, Omni-Channel, Retail Ecosystem, eB2B, Social Commerce, Otif, Disruption, Angel, Bootstrap, Burning, Minimum Viable Products (MVP), Shadow WHR, Dark warehouse, Hubs, CM-1 & CM-2, Supply chain Aggregator, Many more in technology
Supply Chain terminology like hyperlocal and last mile is also, a part of market fit today. these all words emerged from a way of doing and it is " Disruption". Disruption is business or can we placed it as market fit. Yes, it is that's why we often talk about new things, ideas and concepts then find someone who believes in it. The startup is all about innovation. Some brilliant people say it "make it start and scale it fast" but it is something different and can not be easily spelled.
Market fit is covering all major aspects of marketing i.e. Product, Market, distribution and Team, and many more things are there but in the current scenario, I am adding few things to it:
- KYM: Know your Market
- KYC: Know your customer
- KYT: Know your Team
- KYD: Know your Distributor or Distribution System
KYM: Know your Market first
For Market fit, first, we need to understand the market that's why it is called focus market. We all do this exercise, yet, we have to dig more to understand the market well that's why first know your market. It should cover complete demography, geography, and also a deep working of a competitive analysis is required so that one can project their revenue for the market share in coming months or years. Before starting a business or at the ideation stage one should do deep study otherwise chances of failures are there always. A deep understanding of the market comes from various resources, maybe you are coming from that background or your cofounder has such exposure, and if not then market survey agencies are there in the market. But I will suggest that you should visit the market areas, should meet the channels first and then should meet customers. In retail ecosystems, customers are Retailers, semi-wholesale, wholesalers, Mandi traders, cash & carry, etc. The market is the real teacher who teaches us very well that's why KYM is a must before moving with products.
“Understanding ground realities is the first foremost stage of Market Fit”
Know Your Customer - KYC
KYC is the first task before entering the market but in Market fit, I take it second after KYM. KYM is macro working for clicking a panorama view so here before we go for solving the large problems of our customers we should understand them well and within time. Before that, you need to know - Who is Your Customer? if your customer is B2B, things will go differently and if your customer is the end consumer then it will have different aspects. here I am talking about B2B aspects so that accordingly write-up go in that direction.
Knowing your customer is a behavior trait. Many things vary from market to market like Customer buying habits, demography, Regional language, size of business, Population and density, Competition, and Trade of Terms. For ease of understanding, I am taking the example of Kirana Retailers. Kirana The retailer in Rajasthan more or less selling 50% common products as customer preferences are more or less the same compare to retailer in Delhi where 80% consumers come from different-2 regions and cultures so a hyperlocal assortment of one area is different from the adjoining area. change in the ratio of hyperlocal assortment is 80 % in Delhi. Mumbai has 70%, Bangalore has 60% and so on but in the Eastern part of India we will find it more favorable as less deviation has been seen in taste and culture. for our market fit we should know our customer well then only it will help us make strong business plan and projections. The current scenario is a little bit noisy as many minds are working on disrupting the ecosystem via funding and so here one should always be vigilant on every side of strategy. This will also help you to understand that how much a customer can buy your products per month and how many customers are there in the market who are buying such category products from competitors. This is a must so that your revenue projects should not go wrong. A wrong projection can lead to a blunder in the production and distribution systems which is ultimately a financial loss. i.e. example of average per month buying from Cash & Carry or organize distributor is appx 7K. For a single brand like HUL they have more depth but other brands like Bajaj, Dabur, Reckitt has per retailer average below Rs. 5000 per month. Here competitor analysis matters.
Understanding customer is one of the first work to do: Here you need to get certain data about them: Strength, Category, size, average monthly business, and the overall ratio of potential customers in the focus market. for example, you can expect a certain amount of buying from all the customers as each customer has their priorities and way of working so always take an ideal average which you can suggest to your distributors and sales team. Based on your such micro-level working your sales team can produce great results.
“Customer preferences are the foremost Important Aspect of marketing where you sit in their stomach for a shorter period but Desire go longer”
KYT: Know your Team
In the startup ecosystem, the Team is one of the main ingredients which play an important role, they ensure that execution goes smooth in the stream. It comes from top to bottom. First of all, the founder has to be aligned with the vision and should have proper synchronization of thought processes among them. The same wavelength of thought process should flow from promoters to Peon, and it should be visible in the ecosystem. Certain measurements are there to implement like corporate ethics from the very beginning. If the team is not aligned with the vision and they do not mend according to the business ecosystem then things will not move as desired. Knowing your team is the foremost task that every founder has to take care of. Few things need to be taken care of while recruiting department heads and middle management level manpower.
ü Functional level: Always recruit industry-specific and experienced manpower, like in Sales, Sourcing & Warehousing & Logistics always enroll from the same industry with relevant experience. At HOD level must have min 5-year experience. Remember – your organisation is not an institute so always recruit industry veterans.
ü Business Development: Business development in any business always has few dynamics which anyone can apt. So, here you have to recruit people who either worked in Telecom or beverages segment. They are fundamentally strong enough to drive any type of business development so they will help a better uplift in a shorter period.
ü For supporting department like Finance & Accounts, compliance, IT, HR, marketing only academic and somehow relevant experience is required because kind of work they do need pre-defined formulas and a mix of working culture
Build a great team because they will do special things for you and help you built a ship in a shorter period for further sailing in the market of great opportunities.
“When a great team meets a Great market, something
KYD: Know your Distributor or Distribution System
Distribution is a key driver of your overall profitability. The distribution system is the foremost and integral part of any business stream, without a perfect distribution channel no product reaches the consumers. It is a series of businesses, sellers, and other intermediaries through your products to reach end consumers.
A good distributor is the first person who takes initiative, employed workforce and logistics, risks his financials in the market, and works day and night for brands. He is the person who connects channels and changes the mindset of retailers and ensures the placement of goods in the frontend. Brand building journey starts from him. Without a strong and eco-friendly distribution system, we can not think about market fit. Selection of A distribution channel is a rigid and lengthy process but the current ecosystem is making it easier, however, it remains a low-cost and owner-driven business so everyone has to struggle a little bit. Since margin is thin in the retail segment so most of the mid-level channels are driven by small entrepreneurs. To make your product-market fit one has to work smartly.
Before we go for selecting the right distribution channel we must know good about :
- Ø Products
- Ø Market
- Ø Middlemen
Being an important task you need to go smartly and should know about :
- Ø Competitors in the market
- Ø Evaluate Cost and Benefits
- Ø Priorities the option
- Ø Growth plan.
The best way to find a Distribution channel is to start your survey from retailers i.e. the last mile, they know them very well, also area wise penetration and SWOT will help you to understand more. No doubt, it is a time-consuming task but reliable. The second option is to enquire with existing C&F, CFA, and market leaders. If you have the right business development guy, then 50% of the task will be done by them being experienced in the ecosystem that’s why it is always recommended to enroll industry-specific manpower.
Establishing a reliable distribution network can therefore be a strong competitive advantage and help your business stay competitive. Some of the main benefits of a distribution network are reduced costs, more transparency and collaboration, wider customer reach, and faster growth (source: https://www.mixmove.io/blog/what-is-a-distribution-network)
Making a product-market fit is a challenging task for every organization but without it, no one can think about building a brand. It is advisable to align first focus market, focus consumer, your team & distribution Channels.---Writer: Balwant Sg Rana