Grocery B2B retail is like who will cry when you will die

I like the book written by Robin Sharma " 

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. 

Business disruption refers to any innovation within an industry that radically and lastingly changes the way all companies in that industry operate. The term “disruptive innovation” can be traced back to the late American academic and business consultant Clayton Christensen. (other definitions:  as per: www.thebalancesmb.com)

According to Christensen, disruptive innovation occurs when a new market entrant intentionally targets those overlooked corners of the market by offering a design or new business model that is more affordable, convenient, or simpler than the existing offerings. Disruptive businesses, or disruptors, successfully challenge industry giants and established businesses with fresh takes on old problems. 

• Disruptive innovation is a radical change in an existing industry or market by any entity offering unique or untapped alternatives. 
• Disruption benefits the disruptors, existing businesses that “ride the wave,” and most importantly, consumers as better options become available for improving their lives.
• Your business model must include the ability to weather market disruption. If your business stays true to its core offerings, prepares for change, and remains adaptive, being “disrupted” won't be an issue. 
• There is no perfect formula for disruptive innovation. Disruption success stories are as unique in origin and methods as the disruptors themselves.
• Visionary, consumer-first innovation always wins. Most innovation may start with a bright idea, but successful disruptive innovation is a complicated journey that requires strategy, values, and adaptation. 

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। 

मुझे रॉबिन शर्मा की लिखी किताब पसंद 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। 

व्यावसायिक व्यवधान एक उद्योग के भीतर किसी भी नवाचार को संदर्भित करता है जो उस उद्योग में सभी कंपनियों के संचालन के तरीके को मौलिक और स्थायी रूप से बदल देता है। शब्द "विघटनकारी नवाचार" का पता दिवंगत अमेरिकी अकादमिक और व्यावसायिक सलाहकार क्लेटन क्रिस्टेंसन से लगाया जा सकता है। ( अन्य परिभाषाएँ:  www.thebalancesmb.com के अनुसार )

क्रिस्टेंसन के अनुसार, विघटनकारी नवाचार तब होता है जब एक नया प्रवेशकर्ता जानबूझकर बाजार के उन अनदेखी चीजों को लक्षित करता है जो एक डिजाइन या नए व्यापार मॉडल की पेशकश करते हैं जो मौजूदा पेशकशों की तुलना में अधिक किफायती, सुविधाजनक या सरल है। विघटनकारी व्यवसाय, या विघटनकारी, उद्योग के दिग्गजों को सफलतापूर्वक चुनौती देते हैं और पुरानी समस्याओं को नए सिरे से स्थापित करते हैं। 

·                     विघटनकारी नवाचार किसी मौजूदा उद्योग या बाजार में अद्वितीय या अप्रयुक्त विकल्पों की पेशकश करने वाली किसी भी इकाई द्वारा एक आमूलचूल परिवर्तन है। 

·                    व्यवधान से व्यवधानों, मौजूदा व्यवसायों को लाभ होता है जो "लहरों पर चलते हैं," और सबसे महत्वपूर्ण बात यह है कि उपभोक्ता अपने जीवन को बेहतर बनाने के लिए बेहतर विकल्प उपलब्ध चुनते है।

·                     आपके व्यवसाय मॉडल में बाजार में व्यवधान का सामना करने की क्षमता शामिल होनी चाहिए। यदि आपका व्यवसाय अपने मूल प्रस्तावों पर खरा उतरता है, परिवर्तन की तैयारी करता है, और अनुकूल बना रहता है, तो "बाधित" होना कोई समस्या नहीं होगी। 

·                     विघटनकारी नवाचार के लिए कोई सही सूत्र नहीं है। व्यवधान की सफलता की कहानियां मूल और विधियों में उतनी ही अनूठी हैं जितनी कि स्वयं विघटनकर्ता।

·                     दूरदर्शी, उपभोक्ता-प्रथम नवाचार हमेशा जीतता है। अधिकांश नवाचार एक उज्ज्वल विचार के साथ शुरू हो सकते हैं, लेकिन सफल विघटनकारी नवाचार एक जटिल यात्रा है जिसके लिए रणनीति, मूल्यों और अनुकूलन की आवश्यकता होती है। 

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। जैसे ज़रोधा और ग्रो ने 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। अमेज़ॅन और फ्लिपकार्ट के साथ भी ऐसा ही है , वे अब स्टार्टअप नहीं हैं। वे अभी कॉर्पोरेट हैं।  Jiomart पर 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।

Stay with me/ 

Why to go with traditional Distribution System in Grocery retail.

India is heading toward a $5 Trillion dollar economy. I am confident that under the leadership of  Hon'ble Prime Minister Mr Narendra Modi  India is going to shine in all respect. Industry plays a big role defining in development which is visible everywhere in the country.  Every sector is growing exponentially but the rate of growth is slow but steady.  It was the bad time during covid19 that slowed down industrial growth but now the pace up is there.  Here I will talk about the development & growth going on in the Retail sector.  Let's have a glimpse of the story. 

The Indian India Brand Equity Foundation (IBEF) is a Trust established by the Department of Commerce, Ministry of Commerce and Industry, Government of India. "Indian retail industry is one of the fastest growing in the world. As per Kearney Research, India’s retail industry is projected to grow at a slower pace of 9% over 2019-2030, from US$ 779 billion in 2019 to US$ 1,407 billion by 2026 and more than US$ 1.8 trillion by 2030. India ranked 63 in the World Bank’s Doing Business 2020 publication. India ranked 73 in the United Nations Conference on Trade and Development's Business-to-Consumer (B2C) E-commerce Index 2019. India’s direct selling industry would be valued at US$ 2.14 billion by the end of 2021. Consumer spending in India increased to US$ 245.16 billion in the third quarter of 2020 from US$ 192.94 billion in the second quarter of 2020".

Since 2016 retail sector is disruptive by promising startups,  more than 100 startups turns Unicorn which is $ 100 bn in the business sphere so far opened. 60% share of the Food & Grocery segment is in the overall retail out of which 90% is still unorganised.  The total retail market is going towards $1.497 Trillion from Its present $800bn market size.  This shows the speed of consumption by the large public of India. 

Retail 4.0 still is in its nascent stage, post covid we can see dramatic changes in consumers' buying habits.  Consumer preferences are changing due to many reasons of which credit goes to organised retail which somehow made a funnel for new brands, brand awareness, and presence up to tier fourth towns.  

Corporates are there in the market who are serious to open their stores in remote cities too but the still big question is how they will meet the operating cost.  The cost of reaching directly to Retail or consumer is huge.  There are many ground-level challenges that we have to understand.  

eB2B startups like Udaan, Jumbotail, Shopkirana, Maxwholesale, Apnaklub, Elasticrun, and many more are reaching directly to Retailers. However, there is nothing wrong or right but the approach should be taken into account after evaluating the fundamental and ground realities of the business. 

Are there any new ideas on which Indian startup is working? I don't think so. They are copied either from Western countries, China or other developing countries. I don't want to criticize that they are not workable in India but before that, we have to evaluable minutely and should take into account the ground realities, percentage of margins, execution hurdles, mindsets, and most important the dynamics of Indian economics. A model of Direct Retailer is successful in Europe and UAE because of the centralization of the Supply Chain & uniformity in distribution channels.  FMCG distributors are selling more than a thousand brands from one centralized system so reaching retailers and making them dependent is easy as supply of such brands is only connected with the said distributors

Al Gurg is Uniliver's sole distributor in UAE so it is a kind of monopoly of the group where Retailers have to depend on them.  Same way here in India HUL has city-wise distributors who directly bill Retailers. P&G is working on state-level distribution and accordingly appoint distributor who takes the supply chain for the entire state like DB Distributors in Rajasthan state and some part of Gujarat State. 

I've been witnessing the growth in eB2B retail since 2014, a kind of disruption being created by eB2B startups since then. They work directly with retailers through their technology intervention (DTR = Direct Retailer). There is no doubt that they have been able to create a stir in the ecosystem and have created a void in the traditional supply chain where retailers are at the centre of all such disruptive ideas. But, why does the retail ecosystem need these horizontal distribution channels? Do they not have confidence in their traditional distribution system or do they want to increase the capacity of these channels? But if it's a matter of increasing the capacity in the funnel then why? Because on the contrary, FMCG companies are creating competition for their old distribution channels.

FMCG companies came to know about such blunders when existing distributors started agitating that their stake is been liquidated by eB2B startups who are selling similar products at a discount, however, those offered by eB2B  provide an advantage to retailers through service level excellence. These players are again putting pressure on these traditional channels. There are always good and bad and there are inherent characteristics of any system but some fundamentals always work when we do business. 

FMCG companies have to evaluate whether traditional distributors are a key component of the entire supply chain, and are the entities that helped them brand their products. I met many high officials of national-level FMCG companies and asked the same question why are they killing their old distributors? Do you have any feelings for them? Or put a blanket over them entirely without evaluating the ill effects on business volume and the stability of their traditional distribution system. 

Later, they realize that they will face huge agitation from the existing channel if they continue to push on the same product line with eB2B players, so they come up with a product-level strategy that differentiates at the SKU level will be done. It is all about product level and ToT level strategy which they are working on since 2012 in the market.  Product SKUs and grammars differ in many respects for modern trade (MT) and are of different sizes for general trade (GT).  Also, this has abused the system by and large by the MT players. Later on, with the emergence of E-commerce, things went in other directions and price discrimination start happening across formats. Flipkart & Amazon started their own pricing,  Modern trade was on its edge with the GT.  Such a Battle is going on in Indian grocery retail since 2015 and now the intensity is increasing.  It is hard to control the price cut basis markdown.   In this kind of battle, FMCG companies are the winner. Despite channel conflicts, they are able to sell their products and grow YoY. Now they are playing a diplomatic role, and don't want to oppose either channel but to deal in a diplomatic way. Is it a good strategy?

But, who are the most affected? Is it an eB2B player, offline supermarket/hypermarket, or e-commerce marketplace under MT channel? The most affected stakeholders are the traditional distributors who are losing their business day by day. Traditional distributors are only associated with retailers, they do not have any other channel where they can sell their products.

On the other hand, eB2B startups are not able to sustain themselves due to low product margins and high operating costs. So burning money is the only way for them to stay in the fight. For e-commerce marketplaces,s they are least bothered as sellers will think about the outcome, however, stability is also a question for e-commerce marketplaces but they will be in the market.

My big question is who is going to survive in the retail ecosystem despite such low margins. Will heavy burning by the startups will help them to create their customer base in the long run?  A value chain of 18% compared to 35% in Western countries is not enough to carry the burden of all such disruptive ideas.

As far as I have a little knowledge and experience of 22 years in this ecosystem, I must say that the cost of disturbing the existing ecosystem is huge but empowering them is economical, scalable and profitable.

At the same time, there is a big question for venture capital firms. On what basis are they investing in this segment especially in grocery eB2B players? The "skill set" in my previous post will only help grow the business temporarily, but will not help make it sustainable and profitable. "Importantly in the business mindset is a vital tool to make a business sustainable and profitable".

Let's brainstorm on this topic and share your valuable feedback.  

Regards/ Balwant singh Rana

Startup Enthusiastic

my read shelf:

Business Mindset taken over by the Skill Set

****

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,
2022.

Sector wise: Broad Level 

1.       Enterprises Tech

2.      
Health
Tech

3.      
Educational
Tech

4.      
Financial Tech including Equity market

5.      
Retail Tech more onto b2b side

6.      
Consumer
Tech – E-commerce

7.      
HR
Tech

8.      
Tour
& Travel

9.      
Real
Estate Tech

10.  
Media
& Entertainment

11.  
Advertisement
& Marketing

12.  
SCM
& Logistics (Transport Tech)

13.  
Other
sectors

14.  
Biotechnology

 Sector wise – Micro Level

 

Just
to refresh the current knowledge   there
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. 

 Let’s
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.

 You
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. 

Facts
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
Business skill.

In
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,

Dailyhunt,
OfBusiness, Meesho, ShareChat, Lenskart.  

Above
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.

 And
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
conditions.

 Why Business mindset is important?

 Entrepreneurs
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”.

 Two
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
that facilitates
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.

 Again,
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.

 I am
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.

 Entrepreneurial
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 

• Believe in Networking   

 ·        
Positive
Thinker |   Goal
Oriented |    Creativity |    Accountability |   Decisiveness |  Passionate  |   Patience |   

 It
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%)

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 

 So never let skillset to hijack your
business mindset, rather develop it, learn it

Small & new Brands – Driver of 80% of Indian FMCG market

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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
still aggressive.

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According to the survey by traders' body CAIT  above statement is validated in the  news article of Economics times.  Link given here : https://economictimes.indiatimes.com/industry/cons-products/fmcg/products-of-30000-small-brands-cater-to-80-pc-of-population-report/articleshow/90894928.cms

“Household
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.

"It's
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)
said.

The
survey said the demand of a vast majority is fulfilled by the products of small
and tiny manufacturers sold in loose quantity.

Big
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
stores.

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.

Things
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,
Jaipur

 

 

India can feed the World - A dilemma of Ban on Wheat Export

"India is ready to feed the
world" PM Narendra Modi said on Tuesday, April 12, 2022.
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We should trust the said words of PM Modi. It really matters a lot when
Modi is saying these words and the world is going through a food crisis. On the
other hand, the food crisis in the eastern part of Europe and Africa is getting
worse day by day. Ukraine's major food supply chain was severely stuck after
Russia's invasion of Ukraine. The impact of the war is huge on wheat and edible
oils, although many other commodities are prominent, but wheat is one of the
major commodities that has caused demand collapse across the world.

Ukraine and Russia together contribute
30% of the world's wheat production.

Therefore, the huge share in the supply chain is now clearly visible
everywhere. At the same time, India being the largest producer of wheat has the
potential to feed the world but there are other internal issues where the
greater responsibility is the issue of India's food security. However, our PM
shared his views with the world that India has the capacity and capability to
feed through our natural agricultural produce and in other words can supply
them to feed on a large scale.

At the same time, it was decided by the Government of India to export wheat
and ensure that the gap in the supply chain of wheat caused by the
Russian/Ukraine War was quickly filled and to take the opportunity to dominate
the international market.

This has given us an opportunity to
show our strength to the developed countries.

Undoubtedly more than 7.85 million
tonnes were exported during the financial year 2021-22, and ~1.1 million tonnes
were exported in April, 2022.

It was stated that India could export 10 million tonnes of wheat by the end
of July 2022. Things were going well, the Kandla port became congested due to
heavy traffic of ships and thousands of trucks outside the port. Kandla has a
strategic advantage due to its proximity to the western port and wheat
producing states.

The direct export of wheat has given a big support to the prices, farmers
are getting better rates above the MSP. Things were in a straight line either
way. Once the Indian government opened up the export of wheat, paving the way
for the world where things were coming from India in the best possible way.
Private companies started signing and selling to foreign buyers. You may be
aware that due to the decision of the Government of India and the priority
loading at the load port, exporters of other commodities such as wheat flour,
rice and other commodities have to wait for a month for the birth of their
vessel. In such a situation, they are facing heavy losses, why only because of
wheat and that GOI made on their priority list.

On can compare the prices with MSP. Base selling ex-warehouse rates were
around Rs.2250/Qntl during April, 2022, which was F.O.R. Kandla Rs.2550~ per
quintal.

More than profit to individual
exporters it was a pride that we are exporting Wheat. India is exporting wheat
where we are going to fulfil the hope of countries where food crises is on the
edge. On the other hand, this will give supports to the ambitious words
of PM Modi which he given to world that India is going to feed the world.

But, in between something happened unexpectedly,

On May 13,
2022 the government banned all private wheat exports with immediate effect. It
was not expected that GOI will take this action without

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consulting with the trade bodies. 

My concern is why Govt. of India took this kind of decision. Is there no
worth or importance of Indian exporters who brought tons of value of wheat at
Port for loading to their buyers as per the policies of DGFT.

Is this a decision that only hurt exporters, transporters and shipping
agents? Is not this hampering image of our country?

Still 1.2 million-ton wheat of 2700~ crores is lying at various port areas
as on date or some are saying 2 million ton stocks, however exact figures are
not available on public portals or even APEDA has nothing to share. Amazing
things. At this age of technology, we don't have the exact stocks which are
moved for export and lying at port areas. Unexpected things are making the
noise and hampering our image. 

I have few ethical questions asking to Concern Ministry of GOI:

• Why Wheat
  export is allowed without evaluating the internal facts?


• What will
  happen to nice words of PM Modi which he delivers to world that India will
  feed the world?


• Without
  consulting or going through the facts why Ban is imposed on Wheat export?


•  Who
  cares about India’s image in WTO?

I understand that first of all we should think about ourselves, our
country, but also we should think about our business houses/our exporters and
the people in this ecosystem who have done this through the circular of the
Director General of Foreign Trade. Money was spent on one word. , For those
people, the wheat export circular was not from DGFT, it was from PM Modi "when
he said that India is going to feed the world"

I request the concerned Ministry to look into the matter and before taking
any further steps, request for exemption to those exporters whose stock is
lying in port warehouses and are ready to ship. Most of the contracts are done
on CAD basis, so they will not be able to produce LC at this time. However,
such hasty decisions by the Government of India will certainly bring disrepute
to our country, our business practice and trust.

Written as a commodity analysist and trader by me,