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.
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 " firstname.lastname@example.org or send me Whatsapp on my phone: +91-9968313005. I would love to hear from you and write back to you.
The retail ecosystem is witnessing development happening in the retail sector worldwide. Indian retail size is huge which was around $425 billion till 2010 and now as of 2022 estimated to be $800bn. CAGR 6.5% over 10 years period. The next 5-10 year projections are also again going with 10% yearly growth. Market sources are predicting $1.3 Trillion by 2026 and so on. Especially last five years made it a direct uprise which was due to dramatic change in consumer behavior, startup enthusiasm, use of technology, and yes a big thanks to investors for their burning money for making noise, making unicorns, and helping startups to make their ideas live on the ground and thought about bringing disruption.
As a retail professional this is what I was admiring during my first interaction with Sachin Bansal of Flipkart in the year 2012 and I came to know how big is Indian Retail, specially Grocery (Kirana) retail in India. This was the first experience that made my way into retail and soon became a learner professional. I had started visiting Kirana Shops and tried to envisage the ecosystem that was working to make them active and so on demand.
I was looking after backward integration of the supply chain, mainly developing the products and making live the thoughts that how I will transform the staple from its trading in "Loose" to packed in attractive packaging, i.e. hygienically packed products can be made available to high-end consumers. 80% of the merchandise in main staples were traded in loose/bulk size. Traders were selling in bulk packing of 25kg & 50kg to retailers and retailers were selling to consumers in loose using paper bags or cloth bags. In the beginning, there was less interaction of mine with the front-end sales, but soon I realized that without going into the market I will not get innovative ideas, and also will not help me to know the developments that were going on in the market. We have to learn what are the market sentiments going on, who are the new players entering the grocery, how big the competitor landscape is, and many more. So, I started visiting people, places, and product manufacturing units. That has given me a very open-minded view of the market, and also help me to learn a lot about the ecosystem of Kirana that was working and came to know who are the stakeholders.
I completed my graduation in 1998 and after that joined a Delhi-based export house as an account clerk. They were into the manufacturing and export of menthol and were one of the largest importers of pulses. Later, I was given the task of selling pulses in 1 kg pouches as an area salesman. I was given the sales beat of South Delhi. Me and my colleague Sweta used to visit the assigned sales beat shops regularly. I came to know about Kirana retailers first time and could know their importance in the retail ecosystem. They are the brand ambassador who is providing retail space for thousands of products and promoting them to their nearby vicinity, their close heart customers. They helped FMCG companies establish their products as brands. Earlier we rarely used the brand because at that time people used to say that we need a such and such product of this and that "Marka". Marka, though an English word, was used in the ecosystem as Hinglish.
From here the role of Retailers starts. Let's see how they play their role and what kind of sacrifices they are giving every day.
Can you imagine the share of Kirana retail in India, Let's say upto 2010?
Market Share of General Trade, Modern Trade & E-comm:
Segmentation started happening in the market after 2006 when Future group and many other hypermarkets started their operations. They created better visibility and helped enrich the consumer experience. FMCG companies started working on the segmentation of trade terms and customizing taking into consideration General Trade, Modern Trade, and E-com Trade.
Contribution of General Trade:
As per the current status, more than 12-14 million retailers are contributing 85% of total Retail, still, they are unorganized. As of date consumption size is more in Urban areas but now unbelievable growth is seen in the rural market. GT market will expand in rural areas with more speed. FMCG companies are working on various supply chain options. Retailers too have various options in terms of managing their sourcing. More focus is required here to make them organized and take them to the mainstream. The general retailer is now changing by way of giving new looks and feel to their shop. and trying to tune with the new development but the speed is slow.
Contribution of Modern Trade:
General Retail was 99% in the hands of stand-alone Kiranawalas but as per the market news, it was 95% till 2010. I still don't know who was among the 5% at that time who were organizing the retail.
Here mentioning Walmart and Metro C&C names because they are deemed to be B2C stores, and mostly end consumer buy from them but their data is misleading in terms of B2B representation. Why I mentioned the names of these Giants because they have started selling groceries from their stores but more or less they are affecting the Kirana Stores by way of selling to deemed consumers. So, we can't say that they are not disturbing the existing Kirana business. But till 2010 there were not such big contributors who can drive the organized market, especially in the Grocery segment, that's why I kept it 95% till that period. A swing start happening in the market right from 2012 and onward.
D-mart started the first store in Powail, Maharastra in 2002, As off date i.e. 2022 Dmart has the strength of 294 stores in 11+ Cities , and penetrating like crazy, going to be one of the leading retail chains in India. Dmart is one of the big retailers that are affecting the business of Kirana retailers and other general stores.
Also, corporates are foraying into modern trade like Sanjay Gohrawat's Localmart in Gujarat. Every city has a few stand-alone supermarkets who are contributing upto 10% of that particular retail market
These modern trade formats contribute 10-15% to the total retail segment. But, if we talk about only grocery then it should be around 5% ( we take an example of the total retail market. it is estimated to have around $800 billion, so with the 15% share of total retail we have $100- $120 billion led by these offline stores i.e. modern trade formats) which is something like a bite from the big pie of which 85% still is with unorganized retailers.
a market survey by https://www.statista.com
Market start teaching new terminology to the FMCG companies and soon they realized that Modern trades in the form of Chain stores are the future of Grocery retail in India, so they start developing different product assortment, pricing, and promotions strategies for modern trade and so on.
Contribution of E-Commerce Trade
B2C E-Commerce -Consumer-centric ( with new catchy names like Social Commerce, Hyperlocal, Omnichannel etc) having $ 84 billion contribution in total retail.
Same time e-commerce taking consumers in their center is spreading like crazy. Amazon and Flipkart are the marketplaces where brands start selling products across categories, even groceries are the target segment. on the other side, B2C grocery platforms like Jio mart, Grofers, Dealshare, Citymall, and Milkbasket are among the startups having a consumer-centric approach. We call them direct to consumers. D2C etc.
Don't get confused by their name as convenience stores, priority,. Hyperfocal, omnichannel commerce, social commerce, and Q-commerce, the purpose is named, how to sell products directly to consumers.
Quick - commerce new terminology of E-commerce
Developments are there in the grocery market in a big way. Now it is time for Q-commerce like Zepto, Blinkit (earlier Frofers), Swiggy's Instamart, and many more to have an area-specific presence. but Zepto, Blinkit, and Instamart are the national players having a presence in major cities. They are providing quick delivery services, i.e. on click. Consumers get the stuff in 10-15 minutes.
Just have a look on the data side, still, e-commerce has not reached up to $100bn size.
In the name of disruptions, we can see these developments.
I am not criticizing their start and existence. It is good that retail is developing and growing day by day. But, one thing that we have to consider is how much magnitude of the thrill is required to disrupt the existing ecosystem. We have to accept that :
India does not need retail, retail is here from centuries but the only thing is how can we modernize it by empowering their existing setup, way of doing business and connecting them with the consumers..
Here we have the above statement for our Kiranawalas but on the contrary, we are trying our best to disturb them by way of modern trade & e-commerce, social commerce & Q-commerce. Hope in the near future there will be some other commerce may be Virtual Commerce based on meta. I call them enemies of Kiranawalas. They are the culprit who wants to swallow them alive and without any pain in the mind.
Still, 85% of retail is driven by the small Retailers, we call them Mom & Pop stores, Kiranawala, etc. etc., and their contribution even to GDP is outstanding. contributing up to 10-11% in GDP and also generating up to 8% employment in the country.
As per the market data soon retail will have $ 1.2 trillion size. There will be opportunities for all stakeholders but the least will be for Kiranawala i.e. Kirana Retailers. As per my survey, I did from the Jaipur market. One D-mart store contributes 30-40% to the downsizing business of nearby Kirana Stores. So whenever news comes in the market that D-mart is opening stores in the such and such locality then you can see the pain in the eyes of retailers and a kind of unrest about losing business. They are afraid of D-mart because it will kill them in business terms. One major player Jio-mart is on the same verge but so far he is wearing the tiger leather and seems friendly with Kiranawala trying to establish himself as a B2B player but the truth is different.
The same is with Q-commerce players who are giving 10-15 minutes deliveries to the end consumers, they are taking the big pie from Kiranawala business. Because end consumers come down to Kirana stores only for their just-in-time requirements i.e. impulsive buying which are now replaced by the Q-commerce players.
This is the fact that these developments in e-commerce or by big offline retail chains are killing Kirana retailers and the magnitude of such activities is increasing day by day. I carried out a soft survey on a few A and B class outlets in Jaipur. I know most of the retailers for a long and doing business with them. Earlier they were generating monthly 10-15 lakh business. Now situated is different, competition from the B2C and big box retailers more stronger than ever, and Retailers has to lose heavily and they are now generating 5-7 Lakh per month. Customer footfall is decreasing day by day. Almost 50% reduction in business has been recorded in last two year. A huge change in the name of disruption is going on.
Courage of retailers
I will congratulate to all store owners that they stood strong against the tough competition.
If they still survive it is because of their personalized relationship with the consumers otherwise they will have to shut down their stores long back. These are the market forces where one individual can't do anything or can't oppose the changes. Changes are unavoidable and everyone has to be part of it..
Remedies to safeguard Retailers
Few questions need to be answered by themselves.
How they can be brought under one Name?
Is centralized supply system will work for them so they will get competitive products.
How about the product activation platform so they can be organized?
What will be their role if they are treated as a hyperlocal partner for products under D2C brands?
Is digitizing will help them
What about if we use their store as a product promotion platform?
So far Indian Retailers are getting confused day by day as lots of trumpets are buzzing in the market by the startups but they have some sort of good things which are helping them to stay in the market.
Existence of Kiranawala or retailers
It means Kiranawalas will remain there forever like they are in the US, UK, and UAE markets. UAE retail market is still dominated by retailers or nearby groceries. It would be earmarked by saying that by 2030 the contribution of modern trade & e-Comm will reach 40%. Due to the increase in consumption market size will also increase exponentially and touch above $1.8 Trillion. It means 60% market still will be in the hands of Kiranawala so panic of that magnitude is not but yes retailers have to adapt to the changes. They have to find the answer themself and with an open mind should establish the best practices. They should take benefit from the competition.
Balwant Singh Rana
Writer is a cofounder of startup working for the empowerment of Kirana retail. Critics will always speak if truth shut the mouth.
Who will Cry when you will Die " and tried to correlate the thing with the existing startup ecosystem. Had we ever thought or tried to analysis on the development which is been done in the retail ecosystem? Perhaps not.
There are a few things that will bring our attention to pain points that are now going to be a reason to cry. In Indian retail since 2014, we have all been used to hearing the word "Startup" and investor. However, there is nothing wrong with it but we have to check which startups have brought real disruption and how it will impact the life of the general public or which problem they are going to solve. It is impressive to say that something illogical is being done there.
First, we have to analyze why we are going to expand on this and what it will bring to us. The startup is a business idea on which the founders are working, and for this they need funds and they are raising it from individuals i.e. angel investors or venture capital firms. In nutshell, someone is investing in their ecosystem. There are more than 50000 startups working in India, thus far the investment round of billions of dollars has been completed. According to open market sources, we will have over 125 startups in the Unicorn Club by the end of 2023.
What about 49875+ startups? Maybe they are struggling or doing good but not got that much valuation that they are expecting to be around, never mind. My stress and stretch are on which idea they are getting funds.
and if the idea is valid why they are not able to sustain it?
If the idea is disruptive then why they are not able to scale or make it profitable?
Being a startup enthusiastic professional I will not criticize them by mentioning their names here in my post but will try to describe how they will react and act on disruption methodology.
I am not comfortable with the word
" Disruption". I don't mind if it has created positive impacts in the market of developed countries when any idea gets converted into actions and those actions take place in the form of a business model and further it solve the problem and so on takes a big shape of a unicorn. But, I have doubts that it will go in that direction in India.
Let's find out the best meaning i.e. positive description of " Disruption". When we talk about this word in terms of business terminology then it should contain a positive attitude where a large problem in a particular segment of the market is identified by some visionary people. They choose that segment as a piece of opportunity and work on it. Accordingly, the business model is created and funds are arranged from Angel and VC funds, they deploy the fund in execution and create a scalable and profitable business. This is called disruption.
As per the Oxford dictionary Disruptions means
disturbance or problems which interrupt an event, activity, or process.
Above definitions and descriptions are given for those business concepts which brought positive changes in the ecosystems and are able to solve the large problem of the ecosystem. Like Zarodha and Groww did in the equity market segment. earlier this segment was dominated by brokers. If the general public wants to open a Demat account they have to wait for a few days with a heavy bunch of signed documents but technology created a positive role here. Now investee can open their Demat account in minutes and can start trading within 24 hours. I place such startups idea in the disruptive category. In Agri commodity and infra segment "Ofbusiness" is created disruption as they are valuable and profitable. For me, if a startup is working on an idea that they explored, executed, and in their short journey converted it profitable they are part of the disruption. I don't take Dmart, Bigbazar, and other offline startups on this journey as they are on a different mindset, I don't count them as startups. The same is with Amazon, and Flipkart, they are not now startups. they are corporate now. Jiomart is on the same go.
In the current scenario, especially when I talk about Indian startups. Still, this word is a heavyweight in terms of understanding the true status.
If a business is not able to sustain itself by making profit from its large and scalable business then how will it help the founders to think about the future of the business or on what basis will investors get multi x returns?
There are many examples of startups that created disruption in their segments. They received millions of dollars in funding from VCs, burning a lot in the name of increasing it through the best use of technology, but again the question remains as they are unable to make it profitable.
I have examples of startups who started an online marketplace in B2B grocery retail by taking technology in the center of business, going straight to the retailer, and removing the middle channel of the supply chain. Their own explanation is that they are creating disruption by eliminating middlemen and bringing scalability to the business and in long run, they will have the best margin in the value chain. No doubt this way they are creating billions of dollars in valuations. Their aim is to reach the unicorn level and bring in more money from big investors like Tiger Global, Sequoia, SoftBank etc, and finally with a big loss-making financial will go for IPO.
Yes, this was the trend and everyone was in the stream for the better thrill but now what all of a sudden happened. VC funds which were very aggressive earlier and always talked about scale, burning and valuations are now calm and quiet. New guidelines have been written for startup founders on how to shape the business model so that they can start making profits in a short period of time. And looking for a possible exit so as to advise on the second part as well i.e. IPO preparation in advance.
But, I am still not convinced by the word " Disruption".
If the way b2b players are making middle man unemployed and burning money for the null is disruption then what about the robust supply chain which has been successfully placed by Indian FMCG distribution. Even the way D2C brands are directly approaching Consumers bypassing the Retailer is something disruptions than what is the significant use of retailers in the ecosystem and how they will be protected.
In the name of disruptions, the Indian retail segment is only abused. All such disruptive ideas are creating such a big nudge in the system which is somewhere creating a gap in the existing systems.
If we take the example of eB2B startups, they are reaching directly to Retailers. Asset heavy at backend infra which has been done, employing thousands at front end & backend, downloading apps to millions of retailers, and reaching retailers digitally.
But, they are bypassing the existing distribution channels like CFAs, Super Stockists and Distributors. This means that they are not creating a positive disruption but disturbing the ecosystem and thus they are guilty of rendering thousands of channel parties jobless.
The downside of this story is black. So far they have done just that. The only positive is that retailers can order from applications but what about mid-channel who contributed their decades of expertise and helped brands establish themselves in the market?
In the same way, I have analyzed that things are not that mature what was going in the ecosystem. A big question will arise, How long they will be in a position to burn money? Businesses should make money and achieve stability in the long run. As per my experience, if we are going to appoint a manager to run the business by making owners jobless, then it will be a costly affair for the startups.
Working with owners in India i.e. middlemen they all own their business so when we take them out of the ecosystem and start keeping our managers we will never be able to make our startup profitable. If the scale without profit is a business sense then fine. Business with profit is the essence of sustainability and if we do this we will be called emerging corporate in the short run and corporate in the long run. Don't do it.
Tune with mid-channel, they are cost-effective for your operation. Take them with your journey, empower them and make them sustainable. Empowering them by creating competencies. Trust me, they will be your backbone for a long time.
Do not use it in a negative sense. The real disruption is overpowering the existing system. India has a strong supply chain and retail space. The only thing is to create efficiency by using strong technology and accompanying the existing ecosystem. Things will take a new shape. It will be on the side of growth and disruption. Otherwise, investors who had invested heavily in such startups would remember the phrase "Who'll cry when you'll die".
उपरोक्त ब्लॉग का हिन्दी मे अनुवाद गूगल ट्रैन्स्लैशन ने किया है अतः अर्थ मे थोड़ा बहुत भिन्नता हो सकती है।
कौन रोएगा जब तुम मरोगे ” और इसी को मैंने मौजूदा स्टार्टअप इकोसिस्टम के साथ सहसंबंधित करने की कोशिश की। क्या हमने कभी सोचा था इस बारे मे या काभी विकास पर विश्लेषण करने की कोशिश की थी जो कि खुदरा पारिस्थितिकी तंत्र में किया गया है? शायद नहीं।
कुछ चीजें हैं जो हमारा ध्यान उन पीड़ाओ पर लाएँगी जो अब रोने का कारण बनने जा रही हैं। 2014 से भारतीय खुदरा क्षेत्र में, हम सभी "स्टार्टअप" और निवेशक शब्द सुनने के आदी हैं।हालाँकि, इसमें कुछ भी गलत नहीं है, लेकिन हमें यह देखना होगा कि कौन से स्टार्टअप वास्तविक व्यवधान लाए हैं और यह आम जनता के जीवन को कैसे प्रभावित करेगा या वे किस समस्या को हल करने जा रहे हैं।यह कहना प्रभावशाली है कि वहां कुछ अतार्किक किया जा रहा है।
सबसे पहले, हमें यह विश्लेषण करना होगा कि हम इस का विस्तार क्यों करने जा रहे हैं और यह हमारे लिए क्या लाएगा।स्टार्टअप एक व्यावसायिक विचार है जिस पर संस्थापक काम कर रहे हैं, और इसके लिए उन्हें धन की आवश्यकता होती है और वे इसे व्यक्तियों यानि एंजेल निवेशकों या उद्यम पूंजी फर्मों से जुटा रहे हैं।संक्षेप में, कोई अपने पारिस्थितिकी तंत्र में निवेश कर रहा है।भारत में 50000 से अधिक स्टार्टअप काम कर रहे हैं, इस प्रकार अब तक अरबों डॉलर के निवेश का दौर पूरा हो चुका है।बाजार के सूत्रों के अनुसार, 2023 के अंत तक हमारे पास यूनिकॉर्न क्लब में 125 से अधिक स्टार्टअप होंगे।
49875+ स्टार्टअप के बारे में क्या? हो सकता है कि वे संघर्ष कर रहे हों या अच्छा कर रहे हों, लेकिन उन्हें उतना मूल्यांकन नहीं मिला, जिसकी वे उम्मीद कर रहे हैं, कोई बात नहीं।मेरा तनाव और खिंचाव इस बात पर है कि उन्हें किस विचार से धन मिल रहा है।और अगर यह विचार वैध है तो वे इसे कायम क्यों नहीं रख पा रहे हैं?
यदि विचार विघटनकारी है तो वे इसे बड़ा या लाभदायक क्यों नहीं बना पा रहे हैं?
एक स्टार्टअप पेशेवर होने के नाते मैं अपनी पोस्ट में यहां उनके नाम का उल्लेख करके उनकी आलोचना नहीं करूंगा, लेकिन यह वर्णन करने का प्रयास करूंगा कि वे कैसे प्रतिक्रिया देंगे और व्यवधान पद्धति पर कार्य करेंगे।
मैं शब्द के साथ सहज नहीं हूं " व्यवधान"।मुझे इस बात से कोई फर्क नहीं पड़ता कि विकसित देशों के बाजार में इसका सकारात्मक प्रभाव पड़ा है या नहीं, जब कोई विचार क्रिया में परिवर्तित हो जाता है और वे कार्य एक व्यवसाय मॉडल के रूप में होते हैं और आगे यह समस्या का समाधान करता है और इसी तरह एक बड़ा आकार लेता है।लेकिन, मुझे संदेह है कि यह भारत में उस दिशा में जाएगा।
आइए जानें "व्यवधान" का सर्वोत्तम अर्थ अर्थात सकारात्मक विवरण।जब हम इस शब्द के बारे में व्यापार शब्दावली के संदर्भ में बात करते हैं तो इसमें एक सकारात्मक दृष्टिकोण होना चाहिए जहां बाजार के एक विशेष खंड में एक बड़ी समस्या कुछ दूरदर्शी लोगों द्वारा पहचानी जाती है।वे उस सेगमेंट को अवसर के रूप में चुनते हैं और उस पर काम करते हैं।तदनुसार, व्यवसाय मॉडल बनाया जाता है और एंजेल और वीसी फंड से फंड की व्यवस्था की जाती है, वे फंड को निष्पादन में तैनात करते हैं और एक स्केलेबल और लाभदायक व्यवसाय बनाते हैं।इसे व्यवधान कहा जाता है।
ऑक्सफोर्ड डिक्शनरी के अनुसार व्यवधान का अर्थ है:
अशांति या समस्याएं जो किसी घटना, गतिविधि या प्रक्रिया को बाधित करती हैं।
उपरोक्त परिभाषाएँ और विवरण उन व्यावसायिक अवधारणाओं के लिए दिए गए हैं जो पारिस्थितिक तंत्र में सकारात्मक परिवर्तन लाए और पारिस्थितिकी तंत्र की बड़ी समस्या को हल करने में सक्षम हैं।जैसेज़रोधा और ग्रोने इक्विटी मार्केट सेगमेंट में किया था।पहले इस सेगमेंट में ब्रोकरों का दबदबा था।यदि आम जनता डीमैट खाता खोलना चाहती है तो उन्हें हस्ताक्षरित दस्तावेजों के भारी झुंड के साथ कुछ दिनों तक इंतजार करना पड़ता है, लेकिन प्रौद्योगिकी ने यहां एक सकारात्मक भूमिका निभाई है।अब निवेशक मिनटों में अपना डीमैट खाता खोल सकते हैं और 24 घंटे के भीतर ट्रेडिंग शुरू कर सकते हैं।मैं ऐसे स्टार्टअप आइडिया को विघटनकारी श्रेणी में रखता हूं।एग्री कमोडिटी और इंफ्रा सेगमेंट में "ऑफबिजनेस "" व्यवधान पैदा किया जाता है क्योंकि वे मूल्यवान और लाभदायक हैं। मेरे लिए, यदि कोई स्टार्टअप एक ऐसे विचार पर काम कर रहा है जिसे उन्होंने खोजा, क्रियान्वित किया, और अपनी छोटी यात्रा में इसे लाभदायक बना दिया तो वे व्यवधान का हिस्सा हैं। मैं Dmart नहीं लेता, इस यात्रा पर बिगबाजार, और अन्य ऑफ़लाइन स्टार्टअप, क्योंकि वे एक अलग मानसिकता पर हैं, मैं उन्हें स्टार्टअप के रूप में नहीं गिनता।अमेज़ॅनऔरफ्लिपकार्टके साथ भी ऐसा ही है , वे अब स्टार्टअप नहीं हैं। वे अभी कॉर्पोरेट हैं।Jiomartपर है वही जाना।
वर्तमान परिदृश्य में, खासकर जब मैं भारतीय स्टार्टअप के बारे में बात करता हूं।फिर भी सही स्थिति को समझने की दृष्टि से यह शब्द भारी है।
यदि कोई व्यवसाय अपने बड़े और स्केलेबल व्यवसाय से लाभ कमाकर खुद को बनाए रखने में सक्षम नहीं है तो यह संस्थापकों को व्यवसाय के भविष्य के बारे में सोचने में कैसे मदद करेगा या निवेशकों को किस आधार पर मल्टी x रिटर्न मिलेगा?
स्टार्टअप्स के कई उदाहरण हैं जिन्होंने अपने सेगमेंट में व्यवधान पैदा किया।उन्होंने कुलपतियों से लाखों डॉलर की फंडिंग प्राप्त की, प्रौद्योगिकी के सर्वोत्तम उपयोग के माध्यम से इसे बढ़ाने के नाम पर बहुत कुछ जला दिया, लेकिन फिर से सवाल यह है कि वे इसे लाभदायक बनाने में असमर्थ हैं।
मेरे पास ऐसे स्टार्टअप्स के उदाहरण हैं जिन्होंने प्रौद्योगिकी को व्यवसाय के केंद्र में ले जाकर, सीधे रिटेलर के पास जाकर, और आपूर्ति श्रृंखला के मध्य चैनल को हटाकर बी2बी किराना रिटेल में एक ऑनलाइन मार्केटप्लेस शुरू किया।उनकी अपनी व्याख्या यह है कि वे बिचौलियों को खत्म करके और व्यापार में मापनीयता लाकर व्यवधान पैदा कर रहे हैं और लंबे समय में, उनके पास मूल्य श्रृंखला में सबसे अच्छा मार्जिन होगा।इसमें कोई शक नहीं कि इस तरह वे वैल्यूएशन में अरबों डॉलर बना रहे हैं।उनका उद्देश्य यूनिकॉर्न स्तर तक पहुंचना और टाइगर ग्लोबल, सिकोइया, सॉफ्टबैंक आदि जैसे बड़े निवेशकों से अधिक पैसा लाना है, और अंत में बड़े घाटे में चल रहे वित्तीय आईपीओ के लिए जाएंगे।
हां, यही चलन था और हर कोई बेहतर रोमांच के लिए धारा में था लेकिन अब अचानक क्या हो गया।वीसी फंड जो पहले बहुत आक्रामक थे और हमेशा स्केल, बर्निंग और वैल्यूएशन के बारे में बात करते थे, अब शांत और शांत हैं।स्टार्टअप संस्थापकों के लिए नए दिशा-निर्देश लिखे गए हैं कि बिजनेस मॉडल को कैसे आकार दिया जाए ताकि वे कम समय में मुनाफा कमाना शुरू कर सकें।और एक संभावित निकास की तलाश में ताकि दूसरे भाग के साथ-साथ आईपीओ की तैयारी के बारे में पहले से सलाह दी जा सके।
लेकिन, मैं अभी भी "व्यवधान" शब्द से आश्वस्त नहीं हूं।
जिस तरह से बी2बी खिलाड़ी बिचौलियों को बेरोजगार कर रहे हैं और शून्य के लिए पैसा जला रहे हैं, वह व्यवधान है तो उस मजबूत आपूर्ति श्रृंखला का क्या जो भारतीय एफएमसीजी वितरण द्वारा सफलतापूर्वक रखी गई है।यहां तक कि जिस तरह से डी2सी ब्रांड खुदरा विक्रेता को दरकिनार कर सीधे उपभोक्ताओं से संपर्क कर रहे हैं, वह पारिस्थितिकी तंत्र में खुदरा विक्रेताओं के महत्वपूर्ण उपयोग की तुलना में कुछ व्यवधान है और उन्हें कैसे संरक्षित किया जाएगा।
व्यवधानों के नाम पर, भारतीय खुदरा खंड का केवल दुरुपयोग किया जाता है।ऐसे तमाम विघटनकारी विचार व्यवस्था में इतनी बड़ी कुहनी पैदा कर रहे हैं जो कहीं न कहीं मौजूदा व्यवस्थाओं में खाई पैदा कर रहा है।
अगर हम eB2B स्टार्टअप्स का उदाहरण लें, तो वे सीधे रिटेलर्स तक पहुंच रहे हैं।बैकएंड इंफ्रा पर भारी संपत्ति जो कि की गई है, हजारों को फ्रंट एंड और बैकएंड पर रोजगार, लाखों खुदरा विक्रेताओं के लिए ऐप डाउनलोड करना और खुदरा विक्रेताओं तक डिजिटल रूप से पहुंचना।
लेकिन, वे मौजूदा वितरण चैनलों जैसे सीएफए, सुपर स्टॉकिस्ट और वितरकों को दरकिनार कर रहे हैं।इसका मतलब यह है कि वे एक सकारात्मक व्यवधान पैदा नहीं कर रहे हैं बल्कि पारिस्थितिकी तंत्र को परेशान कर रहे हैं और इस तरह वे हजारों चैनल पार्टियों को बेरोजगार करने के दोषी हैं।
इस कहानी का नकारात्मक पक्ष काला है।अब तक उन्होंने यही किया है।केवल सकारात्मक यह है कि खुदरा विक्रेता अनुप्रयोगों से ऑर्डर कर सकते हैं लेकिन मध्य-चैनल के बारे में क्या जिन्होंने अपनी दशकों की विशेषज्ञता का योगदान दिया और ब्रांडों को बाजार में खुद को स्थापित करने में मदद की?
उसी तरह, अगर हम गहराई में जाते हैं तो मैंने विश्लेषण किया है कि चीजें वैसी नहीं हैं जैसी पारिस्थितिकी तंत्र को बताई गई हैं।वे कब तक पैसे जलाने की स्थिति में रहेंगे? व्यवसायों को पैसा बनाना चाहिए और लंबे समय में स्थिरता हासिल करनी चाहिए।मेरे अनुभव के अनुसार, यदि हम मालिकों को बेरोजगार करके व्यवसाय चलाने के लिए एक प्रबंधक नियुक्त करने जा रहे हैं, तो यह स्टार्टअप्स के लिए एक महंगा मामला होगा।
भारत में मालिकों यानी बिचौलियों के साथ काम करते हुए वे सभी अपने व्यवसाय के मालिक हैं, इसलिए जब हम उन्हें पारिस्थितिकी तंत्र से बाहर निकालते हैं और अपने प्रबंधकों को रखना शुरू करते हैं तो हम कभी भी अपने स्टार्टअप को लाभदायक नहीं बना पाएंगे।यदि लाभ के बिना पैमाना एक व्यावसायिक समझ है तो ठीक है।लाभ के साथ व्यापार स्थिरता का सार है और यदि हम ऐसा करते हैं तो हम अल्पावधि में उभरते हुए कॉर्पोरेट और लंबे समय में कॉर्पोरेट कहलाएंगे।मत करो।
मध्य-चैनल के साथ ट्यून करें, वे आपके संचालन के लिए किफ़ायती हैं।उन्हें अपनी यात्रा के साथ ले जाएं, उन्हें सशक्त बनाएं और उन्हें टिकाऊ बनाएं।दक्षताओं का निर्माण करके उन्हें सशक्त बनाना।मेरा विश्वास करो, वे लंबे समय तक आपकी रीढ़ रहेंगे।
इसे नकारात्मक अर्थों में प्रयोग न करें।वास्तविक व्यवधान मौजूदा व्यवस्था पर हावी हो रहा है।भारत में एक मजबूत आपूर्ति श्रृंखला और खुदरा स्थान है।केवल एक चीज मजबूत तकनीक का उपयोग करके और मौजूदा पारिस्थितिकी तंत्र के साथ दक्षता पैदा करना है।चीजें एक नया आकार लेंगी।यह वृद्धि और व्यवधान के पक्ष में होगा।अन्यथा, जिन निवेशकों ने ऐसे स्टार्टअप्स में भारी निवेश किया था, उन्हें "कौन रोएगा जब तुम मरोगे" वाक्यांश याद रहेगा।