Our Challenge Now Is To Build A Robust Distribution Network To Cater Over 200 Cities: Prem Kumar, Founder & CEO, Snapbizz.

October 27, 2020 BW ONLINE BUREAU: In an interview with BW Disrupt, Mr. Prem Kumar, Founder & CEO, Snapbizz , talks about business model, competition, marketing plans, expansion and more.

Q1. Brief us about your business model like how did the idea come to start and how does it work (step by step procedure)?

In early 2000s while working in Eastern Europe, I noticed the challenges that the FMCG retail there faced which was:-

(a) the lack of an integrated eco-system for FMCG

b) lack of visibility to store/consumer data; this drove me to build a company – CisLink in order to overcome these challenges.

This company, even today, continues to remain a market leader in Russia and Eastern Europe. The journey of SnapBizz started off with Qualcomm doing a pilot in India to take wireless technology into fragmented retail. Given the success of the pilot, they did a global search for an entrepreneur who had the experience of building a company in the same space. Having understood my work with CisLink, they reached out to me. And that’s how SnapBizz was born with Qualcomm being our first investor.

We are a vertical platform for the FMCG eco-system. The Indian FMCG industry is $540 billion GMV however its transaction GMV is worth $1600 billion where 90% of consumer off-take is in traditional (offline) trade i.e. 10 million kirana stores. The soul of SnapBizz is the transformation of kirana stores into smart stores.

We have developed a unique technology solution for Kirana stores that transforms it into a smart store with the help of a few plug and play options.  Our solutions enable the store owners to leverage their strengths (proximity/ convenience, personal touch, assortment) to gain a competitive edge and improve profitability. Our “money-making machine” enables them to (a) manage and optimise store operations (b) take the store online instantly (c) create virtual merchandising space inside the store (d) engage with their consumers outside the store (e) get promotions/discounts from brands/suppliers and (f) cloud-connect them to all the FMCG eco-system stakeholders such as brands, wholesalers, distributors, research agencies, e-commerce players and financial service players

As SnapBizz Solution connects the smart kirana store to these various FMCG stakeholders, we are able to provide these stakeholders with (a) last mile- connect with consumer and store (b) never-before data and opportunity to holistically understand the store and to optimise the relationships with the store and its consumers and

(c) facilitating and optimising supply of goods and money.

Our platform enables:

• FMCG brands to engage consumers contextually, overcome supply chain & assortment challenges and avoid stock outs.
• Wholesalers/ distributors to increase share of wallet and get insights on what they are missing out on selling to the stores.
• Finserve players to get access to reach out/ engage the kirana stores with financial service products and continually track the financial health of the store.
• E-commerce players to leverage the hyper-local assortment and delivery capabilities of the kirana store to service their consumers and scale-up operations.

Q2. What are the unique key points of your company? How are you different from the existing competitors?

• We are a company with a purpose to transform the lives of the small retailers who need a white knight as this point of time to support them. We are passionately obsessed about protecting their best interest and transforming their lives in the holistic manner to enable them establish a strong foothold in their business.
• We like to be perceived as the brother of kirana store owner who is sitting inside the store and helping in acquire new customers, sell more to the current customers and optimise the supply-side relationship for the supply of goods and services
• We are the only vertical platform – exclusively for the FMCG Industry where we enable last mile connect with kirana stores and consumers to all the stakeholders of the FMCG ecosystem.
• We are a specialised player with focus only one vertical – kirana stores. Hence, we have been able to achieve excellence in product-market fit (successfully and specifically delivering what kirana store owner needs)
• Unlike the other B2C/B2B kirana-focused players, we do not have a conflict-of-interest with the retailers both on the demand-side and the supply-side (as we do not supply goods to them nor we are in the business of selling to end-consumers). We are a neutral player for the FMCG eco-system
• We are a pure technology player with a focus on deploying cutting-edge technology solutions to connect kirana stores/consumers with the FMCG ecosystem players. We deploying cutting-edge technology solutions such as AI-based data platforms, high breed modular architectures which are highly scalable and adaptable with great agility, native/progressive web apps for best UX, optimised APIs for each FMCG player and much more. We pride in democratising the power of high-end technology solutions and data in an exceptional consumable manner for SMEs who are currently not integrated in the FMCG ecosystem. The Covid-19 situation has been an acid test on our design and architecture to address changing needs in a very agile manner.

Q3. What is the funding status and monetization model?
By deploying our retail technology solution at the kirana store, we connect the kirana store with all the stakeholders of the FMCG ecosystem (FMCG brands, distributors, wholesalers, research agencies etc.).  The core of our monetisation strategy is solving major challenges of the FMCG eco-system players by capturing value from the FMCG ecosystem and delivering the same to the retailers and end-consumers. Our unique model results in a win-win situation for all the FMCG ecosystem players without anyone having to compromise on the value they deliver.

We monetise our platform with the FMCG stakeholders with our range of services:   (a) targeted consumer engagement- visual and contextual  (b) Data & Analytics (c) optimisation of supply chain operations (d) software license fees.

We have raised in excess of USD 14 million over Seed and Series A round. Our investors include marquee VCs such as Jungle Ventures, Taurus, Blume Ventures and strategic investors such as Nielsen, Qualcomm, AUO and Mr. Ratan Tata.

Q4. What challenges are you facing in running your business?
Some of the difficulties that we faced when we started the business was to acquire the first set of retailers in each town (after which the scale-up in that town happens very fast due to network effect). Few years back, we faced setback/disruptions in the market due to the demonization and also the GST national rollout which slowed us down. Fortunately, this ended up being good tailwinds for us thereafter which enabled us to strengthen our store network.

In the past few months, since the March lockdown, we have had significant traction for our solutions from the kirana store owners who have now realised the need for a technology solution for their stores to tackle Covid-19 era challenges (change in consumer behaviour, need for social digitisation, supply-side optimisation etc.).

The last 120 days has been an extremely rewarding for us as we have seen our technology solutions enable retailers overcome some of the Covid-19 related challenges. The current situation has also significantly mitigated the inertia to adopt tech solutions and has transformed our solutions into a “must-to-have” solution rather than a “good-to-have” solution for the store. What has been most rewarding is that we could earn the trust of the retailers, helped them to address their business challenges and improve store profitability.

Having achieved excellence in product-market fit, we have two major challenges – (a) building brand awareness for the solutions and (b) building a strong distribution network. While we have been operating in 7 major cities in the past few years where our current distribution network caters to just these cities, we are getting interest from smaller towns from all over India. Therefore our challenge now is to build a robust distribution network so that can cater to over 200 cities/towns all over India.

Q5. How has been the people’s response so far?
Over the past few years, we became the preferred technology solution for the kirana stores across the major cities we were present in. This was due to the fact that we were able to earn the trust of the kirana stores who found our solution extremely easy-to-use and were able to fully utilise all the features right from day 1. The retailers viewed our products as a “money-making machine” which enabled him to increase his business by 20%.

What really keeps us going is when we see a 70 year old grandmother of a family-run kirana store using our solution with ease or a 21-year old seventh-standard pass store boy taking charge of his boss’s store with total control using our solution. The love we have been getting from our stores has been overwhelming.

On the FMCG eco-system side, we have worked with over 100 FMCG brands in the areas of data analytics and consumer engagement. We also worked closely with major FMCG B2B players, Banks and fintech players, and research agencies to help them engage with the retailers and add value to both – theirs and the retailers business.

We are also creating a social impact by (a) reversing the marginalisation of the SMEs (b) digital/financial inclusion of the SMEs and (c) up skilling people at the bottom of the pyramid.  We have been working closely with various partners to drive (a) adoption of healthy food products among slum dwellers (b) nationwide hygiene practices in kirana stores and (c) women to play a bigger role in kirana/FMCG business

Q6. What are the traction details (like users, app downloads & other achievements of the company)?
In the past few months, we have seen an unprecedented interest in our solutions among the kirana store owners who want to digitise their stores in order to address the challenges associated with Covid-19 era. We are now a network of 10,000 stores with over 1500 stores adopting our solutions since the lockdown in March ’20.

The usage of our B2C mobile ordering app – SnapOrder has gone up multi-fold in the past few months where we have reported 5X growth in the number of users ordering from the app.

Q7. How do you look at expansion?
Being the experts in grocery tech and FMCG ecosystem play, our relevance has exponentially gone up and we expect this to be the turning point in our journey. We are strengthening our organisation on technology and data science to rise up to the new expectations of the market. We have enriched some of our product features such as SnapOrder (retailers’ B2C ordering app), SnapSupply (distributors’ B2B ordering app) and SnapPulse (retail analytics solution) which will enable the eco-system players to meet the current challenges.

We are a platform of 10,000 stores that collectively do a business of $1 Billion/year GMV. We aim to build a network of 2,00,000 stores in the next couple of years and become a $15 billion platform. We plan to work closely with over 200 brands, a large number of distributors/wholesalers, major e-commerce and financial services players.

Q8. What are your marketing plans?
We plan to scale up our presence from 7 major cities to 42 cities and then scale up to 200 cities/towns in the next few years. Therefore, in the process of partnering with various players who would create brand awareness among 1.5 million stores in India and drive consideration for our products. We are also building a network of 350 distributors across India for the distribution of our products to the kirana stores.

Q9.What has been the biggest learning so far?
We have been pleasantly surprised with the resiliency with which kirana store owners have stood up to the challenges over the years – with a smile! Just when the naysayers have been sounding death knell for them – be it the onslaught of big box players/big supermarkets more than a decade back, be it the aggressive marketing play by e-commerce players in grocery sector in the past few years or be it the current Covid-19 situation; they have constantly adapted to the changes, re-invented themselves with new practices/processes and have come out from these situations stronger. We are also seeing the crucial role that they have been playing in the Indian economy and servicing the needs of 1.3 Billion people. This was something which was understated over the years but they are now finally being given the credit where it’s due.

The most enriching part of my journey was the social impact that a simple technology solution can have on the lives of the store employees. Few years back, a boy in a kirana store in Pune thanked me as he got a Rs 1200 increment in salary from the kirana store owner (his boss) which allowed him to send his sister to an English medium school. The reason for getting this increment was that he was able to increase the sales of the store by using SnapBizz Solution.

Q.10 What is the market size and opportunity?
There are over ten million Kirana stores in India and they contribute to 90% of the Indian FMCG business. The Indian FMCG Industry is a $540 Bn industry – equally split between packaged goods and loose items. What makes it more interesting is that the product goes through 3 transactions before it reaches the consumer; thereby making it the transactional space of $ 1600Bn

There are over 3 million kirana stores (Class A, B & C stores that contribute to 80% of GMV) across India that are waiting to digitised in the next few years. The current situation has merely sped up the speed of digitisation of these stores.