India's retail market is estimated to reach $1.5 trillion by 2030, from $0.8 trillion in 2020, indicating that there is a massive opportunity for growth. Healthy economic growth, changing demographic profile, increasing disposable income, urbanisation, changing consumer tastes and preferences are some of the factors driving growth in the organised retail market in India.
How can one justify the burning
by the startups? I don't want to mention the name of startups or B2C commerce
players who are trying to bring discount war and luring consumers just for
nothing. Is this an innovation?
Take this incident that occurred
in the city of Jaipur.
Four days ago, my neighborhood
friend told me about a start-up that is delivering #saras and #amul milk at a
discounted and below market price, providing a 7-day free milk scheme. I tried
to go in to find out more about it and when he showed me the transactions it
was actually there. He bought milk for 350 rupees free of cost in 7 days. and
later, he continued but with a discounted price. Saras milk price is Rs. 48 per
Ltr for toned milk and for fat, it is Rs.62. He is still getting Rs.2 per Ltr
discount from the market price ie. price at Saras booths are selling at.
This is what the consumer is
gaining from such #disruption.
Yesterday I went to a nearby
Saras stall to buy milk for myself. I started the conversation just to find out
what he thinks about these new milk delivery startup/e-commerce players.
Suddenly he burst into great pain. He said that two months ago his daily sales
were 35,000/-and about 250 customers used to come and buy milk at his stall,
but now these numbers have dropped to 22,000/-per day. what was your intake? he
said, due to inflation, people started consuming less milk, and that's why his
daily sales numbers are going down. But he wasn't aware of the online customer
drift. I told him the real reason why he is affected.
This is how the market works and
there no one can control the market forces to be favorable, but at what cost
are these developments happening? Saras is the milk brand of Rajasthan dairy
cooperatives which has more than 5,500 milk stalls supplying milk to more than
0.7 million families in Jaipur city and more than 5,000 small retailers.
Just to facilitate or for the
sake of adoption, these startups are doing quite a bit of burning. Just for the
sake of offers, end consumers are buying milk from them. Even if a family has 5
members and they all have smartphones, one after the other they are using the
offer in the same place. It means that a family is getting 35 days of free milk
because they are offering a 7-day free milk program. Is this a way to create
loyalty? or adoption or customer acquisition cost?
We all know that the Indian
ecosystem is different and it is full of diversity. Amid such uncertainty of
the diverse mindset of end consumers, how long do we think about customer
stickiness? and at what cost by giving a big dent in the traditional ecosystem.
It would be wise if such startups
are getting profit out of such activities then fine but they also know that
their efforts are not real and just an act of building a funding story. I am
worried about the traditional players who are there for decades and earning
bread and butter for their families. 1/3 of India's population is living below
the poverty line. Millions of Retailers, Wholesalers, and distributors are the
backbone of our retail ecosystem. These are the 12-15% contributor to national
GDP and even they are contributing up to 10% in generating employment.
The ecosystem of Indian grocery retail:
Estimated Retailers 12-13 million, Wholesalers 300K+, Distributors 30+, and
more than 5K national brands and thousands of regional and local brands.
Altogether they are driving a retail economy of USD 800 billion and would be
more than $ 1.2 trillion in the next five years.
We need to redefine the
definition of #disruption. Do we really need #quickcommerce #homedelivery of
milk #fruitdelivery? Is it really needed to have merchandise in 10 minutes? It
would be better to walk to your nearby retailer and buy from there. This will
be a healthy movement for the body, society, and for the nation.
We need to bring ideas,
innovation, and efforts to empower the existing ecosystem. We should not create
threats to them but tune with them and align our business model in such a way
that brings efficiencies and empowerment for the traditional ecosystem players.
Being a retail professional, I am sure
that the traditional ecosystem will get more wings to grow in the near future.
Here the only thing is that MSME or SME needs to bring more clarity that how
they are going to formulate policies for traditional retail ecosystem players.
The Department for Promotion of Industry and Internal Trade (DPIIT) should also
bring in some strict norms so that online players operate in a regulated
environment and do not affect traditional players just for the sake of
discounts and promotions. Also, all retail associations should work in the
right direction and should safeguard the interest of traditional ecosystems.
Organizations like #rai and #cait should act as the apex body but seems they
are more inclined towards these giants and nurturing them by doing nothing for
the traditional ecosystem.
Even domestic e-commerce players should
also bring under the disciplinary ambit of DPIIT and they should not be allowed
to start a discount war on their websites.
This also applied to brands. Brands
have to bring discipline in channel management & bringing uniform PTR so
that every connector in this ecosystem can earn their share of profits. This
would be a red flag for national brands whose PTR is in the hands of price
cutters. If they fail to harmonize channels, they will be locked out and
replaced by the regional players.
The last three years were very much dynamics because of the fortified events of developments going on in the retail sector in India. Startups were getting huge funding and at the same time, Investors were enjoying the curry. Investors' big love remain with the tech startups and were ready to burn the money like crazy.
But now the scenario is changed. There is a list of eB2B players who raised billions of dollars during the last 3 years. Most of them become unicorns. Expanded to other cities like crazy. Some of them infused millions of dollars in setting up distribution centers, employing a big army of manpower, burning millions on marketing, and building up losses. Retailers were in the middle of every eB2B startup.
In this movement, more than a hundred startups are working in bits & pieces in their territories but few of them could succeed to play at the national level. If I count on fingers only three or four startups are working very closely in Grocery retail. Some of them are working in 28 locations i.e. states including 200 cities and more than 10000 pin codes, and some are working in one or two states but all have the same set of problems that they are encountering in their daily operations.
I will not mention the names of those startups working closely in eB2B grocery retail but yes you will understand who will be all about. First of all, I will try to explain the need for eB2B players in this ecosystem of grocery retail and will discuss why they are not able to provide the so-called solutions.
The emergence of Technology: Till 2012 speed of the internet was paced mildly by the broadband connections and had limitations of reach to many tiers 2 and tiers 3 cities. We can't say that e-commerce was not there at that time. Most of the B2B players were using web applications so they were sticking to their seats only and thus could not find it more aggressive. Startups like Indiamart, TradeInida, and many other e-commerce players were the pioneer of their time. Still, Indiamart is doing good. It is all about the vision of Promoters. Transactions started taking place with the availability of Chinese smartphones in the Indian market. Retailers and consumers started using the best features of these phones. Marketplace models like Amazon and Flipkart started onboarding sellers on their platforms. end Consumers started ordering merchandise through Mobile Applications. This has given a big momentum to the B2B players and they started focusing on technology. A fever of investment cartels started coming to India from Silicon Valley from 2013 onwards. VC i.e. Venture Capital funds cartel employing IIM Alumni as their fund manager and they started collaborating with Technocrats. A kind of lobby was built, however, it is not that true as the founders of Oyo, and Paytm were not from that background but yes 70-80% of startups and investors are from top B-schools. Last week I met a former founder of Payment QR fintech. He said that if you are not from IIT or IIM or from Oxford or a top funding company you will not get funding. It is sure that 99% of the chance is that you will not be entertained by investors. This is a big cartel of like-minded people. and like-minded is all about being from the same community. But, my mindset was not to take it with me so why should it happen. I am a businessman carrying a business mindset and I know how to run a profitable business so I know about it. How fresher who came from IIT or IIM know about business sense. But, I can't discuss this here as it is a different matter and thought.
Startups started working on Ideas and started disrupting the existing markets. There was only one feature that was working at that time - Technology led startup or Tech Driven founded by the IIT-ians or technocrats. The focus was given to the Retail sector keeping in mind the size of the market and opportunities. The thought behind eB2B commerce was to disrupt the market through direct reach to the retailers and that had happened only by way of eliminating the middlemen. But, what made them start these business models in India. Let's work on this.
Why eB2B players entering Grocery Retail
Indian retail market is huge in size. GDP of the entire African countries included with many European countries is equal to the Indian Retail market size. A market of USD 800 billion itself a huge amount to count and out of which 60 % market is grocery retail. As per the market sources, this size will be more than USD1.3 trillion by 2030 or more. More than 14 million retailers represent the market. Indian retail mainly in FMCG is channelized by a robust distribution system. More than 35000 distributors are working in FMCG & Grocery sector carrying brands of more than 5000+ manufacturers. The traditional system of distribution was carrying the middlemen like CFA, Super stockiest, Distributors, and wholesalers. The retailers were their customers. Indian traditional distribution system is robust and it got these wings after years of hard work and innovations. FMCG companies like HUL, P&G, Dabur, Nestle, and many more have robust distribution systems.
Now, startups started working on this segment by way of creating efficiencies. What were those efficiencies?
Reaching Direct to Retailers
Eliminating middle man
Technology-driven - Mobile Application in the hand of retailers & their FOS.
They found that retailers are facing various issues like dealing with multiple distributors, uncompetitiveness, price discovery, ease of reordering, not getting the benefit of bulk buying, and Not getting proper credit in managing vendor Payments, expiry, and space almost they find that retailers need to be empowered in a way of giving them centralized supply solutions. This is the problem they are facing in a big way. Providing Centralise Supply to Retailers is the solution and giving Sellers/ Brands a one-stop distribution solution that they don't need to go behind traditional distributors. This way brands can save money, time, and energy working. As such, there is no issue in the business model. Technology is giving wings to it and everyone can manage their stuff. This way their target customer is Retailers.
Year 2017 onward we have seen many big names in eB2B, some of them started working as marketplace models, some started as standalone direct-to-retail models, and others started on hybrid models. Few of them were category masters. At the time of their investment pitch, they said their technology-driven business model always remains Asset light. But, later on, eB2B players started working on Asset heavy model i.e. setting up distribution centers in metro cities. I have seen that few have a DC capacity of 3 lakh sq feet in one location, they started employing thousands of salespersons to drive their DTR sales to retailers. Huge infrastructures were built in the name of the Asset Light model. I would say that investors have no idea about the business they just bet on the business model and they do believe in technology-driven models and burning. I am taking readers to the actual scenario which is the backbone of any company working for a profit. following calculations will give some light on the factual status of business these eb2b players are doing.
We can understand this through an example: This study was done taking one eB2B model in the center of my study. I was closely watching the whole operations of an eB2B marketplace startup. They started their business in 2017 and later on after receiving huge funding they moved to other cities very aggressively. An average 50000 sq feet distribution center facility is built up in one city and today they have more than 40 cities where they have physical warehouses/ DC. Setting up their own DC has a different cost and taking them with 3PL has another cost as some go fixed and others go variables.
Let's have tentative figures: I will try to explain them through the below-mentioned table.
(Capex taken higher side, which includes verticals shelves, Pallet Trucks, etc)
The above calculation will give a visual clarification that why eB2B players are not making money. This calculation I have worked out for one location i.e. One city like Delhi or Indore or Jaipur.
If you talk to them you will find that they are working on 11% -15% opex cost/revenue and in return generating GP 3% to 6% if we take benefit of business growth.
Now, Let's bring some light on critical things which are hampering their growth as well as profitability.
The problem faced by eB2B Players
eB2B startups have huge coverage, they have thousands of retailers on-boarded on their Applications, also thousand of Feet on the Street ( FOS) visit retailers daily. They have competitive pricing, availability, and convenience in providing timely deliveries but still, they are not making money. Why?
Every eB2B startups claim to have millions of Retailers on their Application, having a presence across 10000+pincode, and for attracting investors, they are dividing States into Cities so that they can show their milestone in a larger prospect. But again what is wrong with their financials. Few challenges are there which is choking their bottom line irrespective of having million-dollar top-line numbers. Let's put a light there:
High Operating Cost
Product Mix Issue
Restrictive Behaviour of FMCG companies
No Credit Facility to Retailer.
High Operating Cost: eB2B startups or any startups who want to scale their business, need to go with the system and process. And when any organization goes with the system and process there is always a cost associated with it. Proper functional departments must be in place which in turn stamps with a heavy cost. However, operating cost is a business element and business has to leverage it but due to the improper projections, they are employing manpower in a big way and paying them high salaries. cost of retaining every employee is high as has to give other benefits too and also infra cost is too high. Most of the infra is managed by 3PL but is not able to use full capacity. Only 40-50% capacity is being used but fixed cost is there to make it high operating too. The cost of delivery is too high as MOQ is not adhered to by the retailers. In the above calculation, I have taken 50/- per order selling & distribution cost which is too low but again they are not getting sales to the MOQ.
Product mix issue: No doubt they have sitting on a very high operating cost. However, it can be covered if revenue to the tune is generated but again improper product mix is melting the bottom line. If you can analyze the product category mix you will find that retailers are using them only for main staples like Oil, Ghee, Sugar, Pulses, etc which is again a convenient buying to retailers because they are getting everything under one roof. Staples is only contributing to the top line so having up to 80% contribution in their revenue, but if you go by the gross margin level you will find that staples in bulk or in a popular demanded brand are very thin. like Oil and Ghee for a popular brand, no one can earn more than 2% except for market volatility. The same is with Sugar and Pulses. Majorly traded in bulk packaging. If one has 70-80% contribution of Oil & Sugar in their revenue then you can imagine the bottom line. Apart from this 2% is the RTV cost including the in-transit damage to the merchandise.
Restrictive behavior of FMCG companies: Since FMCG companies have a robust traditional channel in place so their FMCG brands do not want to disturb the GT market for these players, however, they want to sell on eB2B but they never compromise on pricing. In one incident, Parle company fought a case with one B2B startup and denied giving them their products. It is their helplessness to buy at their Price and then through a discount from their end, they sell on their platform. demanded product is the requirement of these startups because there is something needed that shows engagement with retailers otherwise, retailers will not entertain or will use its limits. They need FMCG national-level brands so that Retailers give space to salesman to stay at their counter and can cross-sell other merchandise. How they will sell new brands having high margins or can build a healthy category mix. You can see the contribution of such products.
Credit to Retailers: Since startups are working on systems and processes and they are more dependent on technology-driven stuff so they have limitations somewhere. May be from the business model side as they got funding on it and they can't let open the credit in the market. All are selling their stuff against COD or through some fintech arrangement like channel funding. But, it is true that Retailers will not buy any products except demanding one against cash. Even FMCG distributors are providing credits to retailers. Local Mandies especially for staples are providing 5-15 days of credit to retailers. Retailers are buying stuff from eB2B players. This is one big factor that they will not be able to generate more revenue from retailers without giving open credit. Open credit means based on trust. Like local distributor and mandi traders has for them.
Above are the pinch of problems I tried to figure out. But, I have a concern that without disturbing the existing distribution system startups from eB2B will not scale their business but they will not make money. For making money they have to work on a different scenario. Still, they will remain eB2B but few things will be aligned otherwise they will never make money.
Last year remain investor dry weather in India. They understood the fact that burning will not bring earnings even in the long run. Retail will only use these eB2B platforms for their best selfishness but never contribute to scale. Disturbing the existing ecosystem is a costly affair for them and if they don't take them with their journey, they will be finished mid-way.
eB2B startups have to adapt a few things which will help them to sustain themselves. My best advice for them is to pivot the business model in the right direction and don't think to disturb the existing channels. If possible think about how you can associate with them and take them on your journey.
I am working on this, creating a scalable and profitable business model.
How we treat friends and who are our friends. This is not a difficult question to ask. We all have friends. Love for animals in Europe and US is mostly seen for Cats, for them, cats are their best friend but for a few of them not all. for many, they treat dogs as their best friend. This goes with living creations but there are some amazing things about non-living things like cars, Phones, TV, bikes, houses, etc.
Yesterday, I was watching a famous TV serial " Tarak Mehta ka Ulta Chasma". You must know about the Poppet Lal. He is in the character of a journalist. He always carries an Umbrella with him. He is treating his umbrella as his best freind. In one episode, Poppet organizes a birthday party for celebrating the tenth birthday of his umbrella. At this event, Poppet was mocked by his guest as it was suspense kept by him and guests were of at no clue whom birthday Poppet is celebrating, but when a member of Gokuldham society came to know that this birthday party is organized by Poppet for his Umbrella they laugh at him saying how an umbrella can be a friend of someone. Strange for those who take it as a kind of psychological imbalance. but for normal people it is fact. Friends are friends, we can't compare them with their shape, and size. We like their sentiments and belongingness. The same is with our mindset.
In the same reference, we must have heard many times that Books are our best friends. I can say that they were right. Books are best friends because it helps us to learn new things about life and life behavior. We learn academics from these books, learn spirituality and read stories of our past, and history. Books help us make our future the best we want.
There are a few books which I like the most :
Think and Grow Rich
Rich Dad Poor Dad
As a Man Thinketh
The Power of Your Subconscious mind
Here is a little library of my choice.
During covid time I bought many books and in fact, I got time to read them all. I never read books 5 years back but when I first read the Book " The Power of your subconscious mind, I learn and understand the importance of books in my life. When you sit in your chair and take a book soulfully, you will see the magic. You will feel that someone like a teacher is sitting in front of you, guiding you on the subject and you are following his instruction. This way Books are the silent Guru, the mentor.
I am managing my books in my way in the following tabular form. Stating the name of the book, its author, MRP , Nos of Pages, and Number on the book. I put numbers on each book so that I could know if any books is not on the shelf. This is my way of keeping. Maybe your way is more systematic and IT-driven.
The purpose of demonstrating the books here is to show how important they are to me and how I used to keep them on my reading table.
Every day read 10 pages of your favorite book and share your views on Linkedin, blog, and Facebook. Send your story to me on my email " email@example.com or send me Whatsapp on my phone: +91-9968313005. I would love to hear from you and write back to you.
I have seen many start-ups growing from their
initial stage to the stage of recognitions and status, however these stories
were not written in the study room but executed on the ground, thus witnessing
many ups and downs by many startup founders. Despite all this, we can say that
those who got good traction they became unicorns like gems of luck.
The Indian startup ecosystem produced 100+
unicorns across different segments which shows strong traction in terms of
getting funding, making the enterprise scalable and creating valuations. All is happening because there is a bond
between founders and investors which shows trust that both will be benefited if
the venture scales the business.
More than 85 unicorn built a large sphere in the following sector and
many more are in the line to touch the unicorn status by end of September,
Sector wise: Broad Level
4.Financial Tech including Equity market
5.Retail Tech more onto b2b side
Tech – E-commerce
& Logistics (Transport Tech)
Sector wise – Micro Level
to refresh the current knowledgethere
are three sectors which has produced more Unicorn in India and those are in
Enterprises Tech, Financial Tech and Retail Tech including E-commerce, about
62% of total startup in India comes from the said sectors.
figure out the sectors where they got a good status and further more they will
be profitable apart from scalable point of view. They are purely basis on adoption where
startup has to burn money to bring the adoption in long run so that they will
have more top line and bottom line to make themselves sustainable. I will put such startups in Business skill
category where each entrepreneur is committed to bring sustainability in the
company and accordingly working on it by taking ample risks. Business skill always comes through
experience, and it teach us to handle the situations in wiser and it helps us
to understand it in more responsible way.
Sometime we assume that business sense will come with the experience,
yes it is true but more likely it is inherently god gifted within us that
cannot be replaced easily by any management trainee or technocrat. To some extent it is true but we can’t ignore
the modern way of management lessons which is being taught by the renowned
institutes and those are aligned with the modern techniques of technologies.
can figure out that 99% of unicorn startups were built by the Technocrates or
masters of management from top management institutes. So, the fact of business
skill is taken over by the Skill set is true that Skill set is stronger.
of Skill set is technology that is helping them to think beyond periphery. 80% startups are working on IT driven solutions
so they are from skill set i.e. technocrats.
They are most trusted by the investors because they are master of management
where they have analysis and gut feeling that skill set will take over the
support of the above fact, let’s take example of Flipkart, BYJUS, PayTM,
Swiggy, Polygon, OYO Rooms, Dream11,
RazorPay, Ola Cabs, CRED, Postman, PharmEasy, PhonePe,
Zomato, Icertis, Ola Electric, Pine Labs,
mentioned startups have created great valuations and are in the club of over $5
billion valuation. If you take a look on their founders and co-founders, you
will understand why they built an empire in a few years. They were not from a
business background, so I would say that most of their business mindset was not
in line with the original and not naturally formed, but they built unicorns.
more than 15 tech based startups are in line to become unicorns in the coming
months. The founders of these unicorns are either masters of management
administration or they are technocrats. The same is with investors. VC funds
are owned by the network management administrators of LPs, PE funds or angel
investors. Overall they are driving by the skill set in the industry they are
in. But one aspect is more relevant which I will mention in the following way,
and that is the business mindset. Business mindset is very much needed in
business where the movement of goods is directly managed by the founders of the
startup. Here more emphasis will be with the fundamental side and the market
Why Business mindset is important?
are more refined word when we talk about building an organisation by a person
because he uses skill set wisely with business mindset. He is the man who find certain problem in the
business ecosystem and through great ideation they build an organisation.
Certain parameters of industries have to be complied while working on the
solution side. Now a days we are giving
these organisation new name “ Startup”.
years ago the co-founder of a B2B marketplace came to my Jaipur office. When I
asked him about business thesis and fundamentals. He said with confidence that I
really do not know the business and about its mindset. We are technocrats so we
know our technology better that it will do business. I was astounded to hear
the answer that responded so quickly how could anyone say "I don't know
business". The said founder was from a large funded eB2B Seller platform. With
due respect I said, you are doing good in B2B retail. In this reference would
like to say about Ofbusiness, a startup. OFB is a tech-enabled platform
raw material procurement and credit for SMEs with focus in the manufacturing
and infrastructure sectors. Founders of OFB comes in the skillset group but the
way they gave directions to their business, I must say that they are using
business mindset somewhere to align the executions. When physical movement of
goods directly comes into business then one must go with business mindset approach.
That's how I'm trying to understand.
I met some investors in LPS from Sequoia, Accel, Tiger Global and several VC
funds and I asked the same question. Is the business mindset worth them or are
they part of a cartel of skillset? I asked them why they are investing in such
and such sectors and what cartel they are part of? They said, we don’t know the business what
startup is doing, we are only concern about the solution they are providing, is
it scalable a technology driven. They are concern with the returns and risk
they are expecting. I am highly inspired by Mr. Sanjeev Bikhchandani, founder
of Info Edge, a successful VC fund in the ecosystem because he is a successful
businessman who build naukri.com and many other ventures. He is full of
business mindset. Investor should learn from him that how to find a business
mindset founders and when to invest.
sure that founders of startup & LPs of investor fraternity will oppose my
thoughts on business mindset or skill mindset because most of them is using
skillset to drive their business.As per
them they are building a business empire so they are business people, True,
those are running businesses are business people.A layman will have this thought and
agreement.But, I am taking about
business mindset that is something different which has many dimensions.We cannot expect that a fresh graduate of age
20 or 30 will have those thoughts and mindset.Just check the following and then compare it with your skillset.
mindset is only important factor that will make or break a venture’s success
·Understand the market trend & forecast
Know himself and market as a domain expertise – Business side
·Dare to face failure – Risk Appetite - Resilience
is imperative to say that business owner should have business mindset first and
skill set he /she can get through taking higher /professional education or can
have it through experience.Few
characteristics are making difference in the above statements.Business mindset has some inherent tools in
his/her mind that he/she use while making decisions. It should be like that.
Two #equation = purpose is same , what is best suited for entrepreneurs.
Startup with Business mindset + Skill set = Entrepreneurs =Enterprises = Profitability =Sustainable business (Medium Term, ration of Success is 85%)
If you have ever noticed, how many small scale
brand companies are involved in the FMCG sector in India? You will be surprised
to hear that there are around 30000 small-2 brands of Grocery and consumer
durables, footwear and clothing catering to the needs of 80% of the population
in India but we are in light of only 20% of the corporates who rule the FMCG
sectors. Some of them are HUL, Dabur, Marico, Colgate, P&G, Bajaj etc but
they are feeders for 20% of the demand. It gives us space for a future where we
might think there's still a big room to grow.
You will find that different brands have a
presence in a range periphery and it goes to different 2 areas. According to
market sources more than 10000 brands were launched during the COVID time in
2020-21 in different parts of the country. The momentum in the FMCG sector is
products of over 30,000 brands operating at small and medium scale cater to a
majority of the country's population, while only 20 per cent use such items
sold by big corporate houses, a survey said. Products of Fast Moving Consumers
Goods (FMCG), consumer durables and cosmetics from over 30,000 small and
medium brands are catering to the demand of 80 per cent of India's population,
according to the survey by traders' body CAIT. The survey was conducted on the basis of use of item
including food grains, oil, grocery, personal cosmetics, inner wear, ready-made
garments, beauty and bodycare, footwear, toys, educational games and healthcare.
a myth that about 3,000 big brands of corporate houses, particularly in the
FMCG sector, consumer durables and cosmetics Etc are catering to
the needs of the people of the country. In fact, more than 30,000 small and
medium but regional level brands are the largest contributor in meeting the
demand of the people of India," CAIT (Confederation of All India Traders)
survey said the demand of a vast majority is fulfilled by the products of small
and tiny manufacturers sold in loose quantity.
brands are in demand among people of higher and upper-middle class due to
extensive media and outdoor publicity and endorsements by celebrities, CAIT
secretary general Praveen Khandelwal said.
On the other hand, brands of small manufacturers
are sold through one-to-one contact between customers and shopkeepers, also
through word-of-mouth among people of medium, lower-medium income groups and
those belonging to economically weaker sections, he added.( Originally
published on Apr 17, 2022 )”
New candidates are entering this segment,
especially after the funding to varioius D2C Brands. Mamaearth and many other
brands received a good amount of funding. Now, we can say that VCs are
interested in investing money in companies where the future of private label
brands is more visible and they can see 20x growth in terms of ROI.
Many more will come up with many newer ideas.
Recently "One Dry Fruits Brand Happylo" has got good funding.
Platforms like Amazon and Flipkart are providing great opportunity to brand
makers to showcase their products to millions and even billions of consumers.
This is the power of the platform.
Developing a distribution channel is going to
be a challenging task for small and small brand owners as not everyone is able
to find a place on the eB2C platform, so that they can eventually find a place
in the kirana retailers. Again it is a huge task to provide the self-space to
their products at Kirana Stores. Retailers are also facing the problem of space
at their stores. Every day 5 new brand sellers approach them. There is no doubt
that the products are good in terms of packaging and quality but without
finding proper retail location one cannot think of bringing it to market for
the consumers. And the retailers have limits on the amount of space in the
store so that they can entertain or not.
More than 70% of new brands are off the shelf
within six months of launch, or at most one year. And those who do manage to
make a living are struggling to stick to the shelf space at those retail
Many small brand owners are not in a position
to allocate huge market budgets or depute a skilled sales team or expand out of
the region in a short period of time.
The other main issue before the new brands is
to find willing distributors for their products/brand as the distributors are
not interested in selling the new products on credit. Margins are also thin as competitions
also go stiff. Retailers want new
products on credit terms but if distributors are not able to provide it, one
cannot expect that there will be coverage in the target market. If somehow they
hire distributors in the respective area they are not able to sell them to the
retailers due to lack of FOS (feet on the street) skills and low payment and in
lack of incentives or motivation.
will go on and off but it is time to fix the retail ecosystem by giving it a
centralized distribution system backed by robust IT platforms. It is time to
consolidate the supply chain and make the best use of capabilities and bring
operational efficiencies, then small brands would get a common and unified
platform for their products and would be able to expand into new areas with the
help of aggregation. Things will progress for the better but in the way we do things.
The time is coming for those
brands where you will get a small brand which will have a national presence. He
will no longer be called a regional player.
We are working to deliver
solutions to food and grocery manufacturers and connecting them to a large
network of retailers through a one-of-a-kind block chain solution and
hyperlocal distributions channel
Written by : Balwant Singh Rana: 18.05.2022,
Startup with Business mindset + Skill set = Entrepreneurs =Enterprises = Profitability =Sustainable business (Medium Term, ration of Success is 85%)
Startup with Skill Set = Scalable = Negative EBITDA (if+ Business mindset join) = Entrepreneurs=Enterprises =Profitability =Sustainable business ( Long term, ration of success is 15%)
#business #startup #mindset #entrepreneurs #sustainable #success
#retail #retailers #businessanalysis #skillset #grocery #kirana