B2B aggregators are bringing in disruption

A majority of the B2B aggregators witnessed that the FMCG distribution space is highly unorganised and a wide gap exists between the company and the channel partners. Aggregator platforms like Udaan, Xpand, and Creando are disrupting the FMCG distribution and changing how Kiranas operated in the past. These new-age ventures are a one-stop solution for providing an entire basket of products within a click and are empowering them through sales training and technology.  

Below are how they are disrupting the conventional FMCG distribution: 

• Direct connectivity: These platforms help connect brands with retailers, and empower them through technology. It provides consulting to kiranas, smaller brands, and FMCG brands in the area of business strategies, sales, and marketing.

• Better inventory control: The platforms act as replenishment apps based on sales trends that auto-generate the order for a retailer, and reduce salesmen’s interaction with a retailer. It also provides information on inventory, products, and input on sales and management.

• Providing credit: Aware of the fact that small retailers are cash strapped, the platforms can provide credit for buyers and sellers and also offer the facility for doing hassle-free transactions online. They have partnerships with other financial institutions to extend credit facilities on its platform.

• Predicting perishables: Perishable items like vegetables or fruits, have a short shelf life but using predictive analytics these platforms can accurately predict the demand for various categories of food and non-food items and source the right supplier.

• Fair price: The emergence of e-commerce and most FMCG brands going D2C are attracting consumers with deep-cut discounts and slashed prices, thereby creating channel conflict. The buyers in an offline wholesale market are unsure if the products are sold at the right price. B2B aggregators ensure fair prices, reliability, predictability, and quality. The price is fair for everybody since the retailers are not under the clutches of middlemen making the entire transaction reliable.

Marketing strategies for mattress brands

• An easy buying experience: Purchasing a mattress online will not be welcomed by Indian consumers, since buying one requires a measurement of the bed that is to be matched with the mattress size. But, mattress company Casper solved this hassle by easing the process of buying a mattress online without worrying about the quality and measurements. It developed several unboxing videos and made easy guides, manuals, and graphics that helped buyers easily place orders on the website. An easy buying experience becomes the topic of positive word of mouth for the customers. It also offered a 100-night free return policy — no questions asked.

• Sell comfort and sound sleep: Few people are aware or unconcerned that insufficient sleep deteriorates health. Most people are unaware of the number of hours required for a sound sleep. Therefore, the marketing campaign should contain educative content that strikes the correct pain points of their consumers by educating people about a night of sound sleep. It should look like your business has the solution to the problem of sleep. 

• Expanding the product line: For a mattress brand, the lifetime customer value is low since the mattress is a product that people will buy once in several years. There are no repeat and multiple orders from the same customer. To increase the order value, the company must develop products other than mattresses that will help sleep better. Products such as flight cushion pillows, aroma candles for sleep, sleep oils, and sleep yoga should be added to the product range directing people to people to sleep better. 

• Social media: Mattress brands can effectively leverage the social media user base to promote their offerings by engaging the audience in a two- way communication through quizzes, contests, and memes. Advertising on social media platforms will widen its reach as the outbreak of the pandemic has increased the screen time of Indians on social media. 

B2B Market- a territory untapped for mattress brands

Apart from going B2C, the new age mattress brands should consider targeting the B2B customers as the demand for construction in both residential and institutions is on a steep growth curve in India. It should target more hotels, strike deals with builders, educational institute hostels, dormitories, etc.

How does UPI 123 Pay work? 

UPI 123 Pay differs from standard UPI which allows users to integrate their feature phones with bank accounts to pay digitally without internet connectivity. This payment system does not require any QR scan code to pay. 

Digital payments through UPI 123 Pay is a three-step process of the call, choose and pay. Through its voice-based system or IVR, users need to call 080 4516 3666 a number provided by NPCI, select their preferred language, tap the ‘1’ key on the phone to transfer money, confirm the bank name through voice-based command, again tap the ‘1’ key to transfer the amount, enter recipient’s mobile number and the amount followed by the UPI PIN to authorise the transfer. The UPI PIN can be set up on the call through debit card details before transferring the amount. 

There are three more ways to transfer payment: 

• The second mode of payment is through an app-based channel where app functionality is offered in a feature phone.

• The third mode of payment is through sound proximity where the technology is based on sound waves to enable contact and networking to make contactless payments.

• The fourth mode of payment can happen through a missed call where users can send a missed call and will get back a call to authenticate by inputting a UPI pin and carrying out the payments.

The central bank has also launched a 24*7 helpline for digital payments – DigiSaathi

How will UPI 123 Pay benefit small businesses? 

For small merchants in India, the launch of UPI 123 Pay is poised to become a gamechanger, since the payment settlement time through cheques takes up to 48 hours, and if there are bank holidays, festival holidays, or weekends the settlement period might extend up to 6 days. Hence, managing cash becomes cumbersome. 

Also, this feature in non-smartphones will allow the SME business to flourish, explore more new markets, channels that took a backseat for not using digital payments. The UPI 123 Pay makes the facilities under UPI now accessible to the lower rungs of the society which were so far excluded from the digital payment landscape.

Digital transformation: Challenges that every business owner faces

• Peer pressure: Adapting to technology is sometimes a social challenge that leads several businesses to digitalisation without even knowing if it is needed. The competition around them is so fierce that it forces them to go for it. Before a business decides to digitally transform, they should ask questions such as what and how can your offerings be delivered digitally? Is the target audience tech-savvy enough to buy products through the digital medium? For instance, say a small handmade pickle business uses organically grown spices, condiments, and ingredients to make a bottle of pickle, with its target audience mainly the Indian housewives. Do you think that the business should invest heavily in an omnichannel customer experience platform to understand how a single range of products such as pickle will engage conversations among people?

• Invest in big: What makes the MSMEs shy about investing in technologies that bring in digital transformation is that one should invest big. This makes the MSME owners afraid because of the magnitude of work and investment. Few businesses invest too much but fail to reap any benefits. Digitally transforming the business is a trial and error process where one needs to try out several small things before adopting a specific strategy. Experimentation with several digital ideas, collection of data, and then charting out the best plans to keep and invest.

• How to begin: Most MSMEs are not aware of where to begin the transformation. Though the business owners are convinced about adopting, there is no such framework to guide them about where to begin the digital transformation and how to start. A digital strategy involves three stages, where the first stage is to digitalise the sales team, the second stage is about increasing efficiency and reducing wastage and the third stage is about using digital tools to create new business models or new products/services. e.g., a subscription service or an e-commerce platform. Therefore the SMEs must assess the stage in which their business is at and find out the appropriate digital transformation needed.

Digital transformation in MSMEs is filled with hurdles such as lack of skills, tech apprehension, and lack of knowledge of business-specific solutions. This creates the demand for technologies that are simple to understand, manage and scale. To aid in harnessing the potential of digital transformation in MSMEs, several startup and technology companies are mushrooming focused on providing new-age technology solutions such as providing, data insights, artificial intelligence (AI), augmented reality (AR), Machine learning (ML), and Internet of Things (IoT).

PropTech: Technologies transforming the real estate

Here are some PropTech currently being implemented in the real estate industry.

• Use of Big Data: Big data in real estate can help in cost savings and increased margins. Its predictive analysis algorithm can determine the rates of the property. In this way, the buyers can also predict the value of properties in case they want to sell in the future, compare property risks and evaluate future risks.

• Virtual Reality and Augmented Reality: VR and AR technologies are enabling real estate players to boost revenues and gain more clients by providing an immersive customer experience. Integrating these technologies with the company’s website or app can send notifications to the prospective buyers to offer a customised 3D walkthrough to view a property online, resembling the real space. Such solutions also save the time of prospective homebuyers in visiting properties not present in their consideration list. Also, not just homebuyers but it saves time for people who want to rent a flat but due to lack of time are not able to visit the property locations.

• Managing paperwork with blockchain: Real estate has a cumbersome paperwork trail where the agents would require all documentation between both buyer and seller or landlord and tenant. But, through blockchain, most of the documents can be digitally signed by all the stakeholders, and the records can be kept in a decentralised manner enabling transparency and efficiency.

• Use of iCRM in real estate: iCRM is software that is heavily used by the real estate industry to keep track of prospective buyers. It is a good tool for the sales representatives in the real estate industry where the employee can trace back customer records in a short period and understand previous interactions with customers instantly. Keeping track of your client’s needs will develop strong relationships between them, and your company will develop strong relationships between them and your company. A better service to your customers would mean higher closing rates and improved profitability for your business.

What lies ahead for the real estate players in adopting PropTech?

According to EY, the real estate firms are realising that they need to shift to the changing technology landscape to stay relevant and gain an edge on their competitiveness. In addition to this, most millennials are now potential homebuyers who are firm believers in technology and need instant gratification, therefore adoption of technology in real estate will disrupt it to become more user-friendly, convenient, and reliable and the market more competitive in the coming years.

How to become a cockroach startup? 

Here are ways for new entrepreneurs to become a cockroach startup : 

• Reduce spends on fixed assets: Building a startup requires money which one needs to avoid. For example – initially, a startup can rent a co-working space instead of owning an office and instead of purchasing laptops for each employee, they can ask employees to bring their laptop to the office. 

• Understanding business economics: Most startups that begin well tend to fail at the cost of launching and manufacturing a product, customer acquisition costs, delivery costs, etc. The business needs to get its unit economics right since there is no point in starting a venture without knowing the novelty of the service, product, or availability of funds. Well-funded grocery delivery startup PepperTap operated on a negative margin per delivery, where the profits looked dismal. 

• Focus on profits: A cockroach startup does not hurry to become popular in the market by spending money but focuses on increasing revenues and profits.

• Better products will help to survive: Cockroach startups are adaptive as they can survive in tough conditions by having a real product or service. Usually, when a business starts picking up the right direction, founders forget about the product or service and start focusing on getting funding. Whereas in a cockroach startup, the energies and money are always spent on improving the product or service.

Lastly, if you have adequate money, backed by big funds, one can afford a high burn rate and still survive. But if one has no or little money in the pocket but a sound value proposition is all that you need to survive. Initially, the start-ups in the initial days should focus first on surviving, next on profit, and only after both are achieved reasonably should go for growth. 

Technology to bring in operational productivity 

• Balancing inventory: Becoming omnichannel is the current strategy of most retailers. Stores are trying to balance the e-commerce and in-store inventory to ensure they have the right amount of inventory to fulfill customers’ preferences. At the same, managing returns from the various channels is a daunting task. This signals the retailer’s investment in predictive and prescriptive analytics to gather data from internal operations and supply chains to have inventory visibility and prepare better for surges in consumer demand, avoid empty shelves and bring in more agility. 

• Use of RFID technology: Technology that was once restricted to the warehouse is now being put to use in front of the store. Radiofrequency identification (RFID) technology is gaining popularity for providing solutions in apparel, sporting goods, and electronics retailers. It enables faster and less labour-intensive inventory management where several items can be tagged at the source. It helps facilitate quicker returns processing and inventory reshelving.

• 5G technology: Leveraging 5G in the retail industry can aid in rapid digital transformation by addressing problems such as connectivity and bandwidth issues in brick and mortar stores/warehouses. Smart stores that will leverage technologies like smart apps, video analytics, robotics, drone delivery, etc will require adequate network capability and bandwidth.

The retail space is filled with fierce competition and those with unique business models combined with high operational productivity will ace this. To emerge stronger and connect well with evolving consumer behaviour, the processes should be digitalised and well connected for which agility, personalisation, innovation, and viable business model will be crucial for any retailer. 

What Indian MSMEs are expected to lose from this war?

Hit on the pharma sector: According to the r Pharmaceuticals Export Promotion Council (Pharmexcil) under the commerce department, India had exported pharmaceuticals worth $591 million to Russia and worth $182 million to Ukraine in 2020-21, which is 12 percent of India’s overall pharma exports to the world. A prolonged war and sanctions imposed on Russian central banks may impact the remittances of outstanding trade receivables. Indian pharma exporters ship consignments every quarter, and if the war continues beyond March the exports will largely be hampered.

Seafood exports are stuck: Seafood exports from India in the past few years have recently gained ground in the global markets. Russia is India’s biggest customer of shrimp as well as cephalopods such as squid, cuttlefish, and octopus. Ukraine currently imports $10 million of seafood from India. Exporters are now staring at losing a market that is developed over the past few years. In 2022, the projection of seafood exports is to be worth $180 million against $150 million from last year. The recent war has caused worth Rs 500 crore of seafood stuck in transit.

The apparel business is hurt: The pandemic laid a rough patch for India’s textile and apparel industry since the weavers went to their hometown for preventing themselves from getting infected by the virus. With the ongoing war, the textile owners are unlikely to get paid on time since the dollar rouble has plummeted to historical lows. In addition to this, the air space restrictions have blocked the trade routes and the EU members have asked Indian exports to put the shipment on hold. This is resulting in a stock pile-up with trade routes getting expensive.

What might be the possible gains from Russia and Ukraine?

Russia and Ukraine together account for almost a quarter of the global wheat supply. Their wheat crop will mature in August and September this year. However, the ongoing war and imposition of sanctions, present an opportunity for Indian wheat exports to fill in the supply void. The total shipment from the country has touched a record of 6.6 million tonnes during the current fiscal. India’s new wheat crop will be available from 15th March as compared to global wheat producers. According to Agriculture Ministry’s second advance estimate, India’s wheat production is projected to touch a new record of 111.32 million tonnes in 2021-22 against 109.59 million tonnes in 2020-21.

New initiatives and policies introduced by the union budget 2022

• Drone Shakti: The union budget has welcomed the usage of drones particularly in agriculture where the drones will play a role in crop assessment, digitisation of land records, spraying of insecticides, and nutrients. The startups will be promoted to facilitate drone-as-a-service through varied applications. In ITIs across India, the required courses for drone skilling will be undertaken. The government recognises geospatial systems and drones as the sunshine sector as they have immense potential to assist sustainable development at scale and modernise the industry and will simultaneously create employment opportunities for youth.

• A boost to gaming and animation: A pause on outdoor activities in the pandemic has made individuals especially the GenZ inclination towards gaming. According to a KPMG report, the gaming sector in India will become $ 3.9 billion by 2025. The union budget this year has realised the potential in animation, visual effects, gaming, and comic sector to an open task force to build domestic capacity for serving both national and global markets. 

• Prioritising mental health: Recognising mental health a priority, the Finance Minister has announced a National Tele Mental Health programme to give better access to quality mental health counselling and care services. This initiative will include a network of 23 tele-mental health centres of excellence, with NIMHANS being the nodal centre and the International Institute of Information Technology-Bangalore (IIITB) providing technical support. The platform will provide counselling and care using standard, evidence-based, culturally appropriate tools and will enhance access to quality, standardised and free 24 X 7 mental health services to people. It will help to connect various mental health care services, the health, and wellness centres under Ayushman Bharat as well as with the e-Sanjeevani system.

• The battery swapping policy for EV: Finance Minister has announced to roll out a new EV policy on battery swapping with interoperability standards. With this new battery swapping policy owners of electric vehicles will be able to exchange their drained batteries with charged ones at designated stations easing the use of such vehicles and reducing the time to charge. Due to the space constraints in urban areas for setting up charging stations, a battery swapping policy is introduced that will encourage several businesses and startups in the private sector to come up with innovative business models for ‘ battery or energy as a service. This policy will help in managing the space for the expansion of EV charging infrastructure.

This year the union budget has focused on sunrise sectors and has introduced supportive policies for AI, Geospatial Systems and Drones, Genomics and Pharmaceuticals, etc. which will aid in sustainable development at a larger scale. Also, a tax holiday for a year will be helpful for upcoming startups and will provide a much-needed boost.

Expectation of young entrepreneurs from the union budget 2022

Here are some of them

• Alternative MDR or Reintroduce MDR: To democratise digital payment for the masses, the government has abolished MDR which is a fee for fintech and banks for using their platforms for the transaction. But, this is seeming a hard pill to swallow for entrepreneurs, since the abolishment is said to hurt the revenues of homegrown payment service providers. It either expects the union budget to reintroduce MDR or bring an alternative to it. 

• Easy and fast processes: Startup founders are expecting hassle-free loan disbursements, automation of tax and compliance, paperless approvals, and incentives to adopt digital banking practices. 

• Alleviate taxes: For startups and businesses in the manufacturing space, many businesses face weekly power shutdowns. With the price of diesel shooting cost of energy consumption is becoming expensive thereby, increasing the cost of manufacturing. The entrepreneurs are expecting the government to relook at the state level and central taxes.

• Simplifying GST compliance: Startups want GST compliance to be hassle-free and more simplified which will enable more online sellers and small businesses to leverage the potential of e-commerce and contribute to India’s digital economy. 

• EV startups want tax reduction: As the government is increasingly emphasising electric vehicles and building green energy solutions. The EV startup founders are optimistic that the government will announce new initiatives to encourage local EV manufacturing, facilitate easy finance, and develop an innovative EV ecosystem. For consumers to smoothly adapt to EV, the startups want the GST of 5 percent applied on EV to be reduced to 2 percent.

The above are the expectations that India’s startup ecosystem is expecting from the union budget 2022. Simplifying the compliances and relaxation of taxes and reducing the tax slab etc, will create a conducive environment for doing business for startups.