With Diwali, the Festival of Lights, fast approaching, many firecracker manufacturers and distributors are geared up for the occasion. While most consumers have already checked off many items on their wishlist through various e-commerce sales, one last category of products that may still be pending on many lists would be fireworks.
Going out and purchasing firecrackers is generally not a very good experience for most end consumers. In most cases, there is a lot of rush and limited variety of available products to choose from. Also, most makeshift shops are generally not licensed, so there is no assurance of quality. Standard Fireworks, the brand founded by NRK Rajarathnam in 1942, is currently partnering with Fhatake in taking the hyperlocal route to tackle these pain points.
What is it?
Fhatake is a mobile and web app that provides consumers a platform to discover and place orders for a wider variety of firecrackers not easily available in the market. They are currently sourcing the crackers through an exclusive tie-up with Standard Firework’s network of 40 factories, spread across India. This venture is being run by the father-son duo Shankar and Nikhil Gupta, who also have a 15-year-old family-managed business in the granite mining and manufacturing sector under the brand, ‘Rasiya’. Nikhil is currently 21 years old and is in his final year of BBM at Jain University, Center for Management Studies.
Fhatake currently has a lean team of eight looking after different aspects of the business from packaging to sales and marketing. It has also tied up with Urban Piper and another undisclosed third party to handle its technology and logistics respectively. Founded by Saurabh Gupta, UrbanPiper enables SMEs to go B2C with multiple delivery hubs setup in hyperlocal play. Some of its clients include Chai Point, Kanti Sweets, California Burrito and Big Basket.
Recently launched in Bengaluru, Fhatake promises to provide next-day deliveries for all orders placed by three pm the previous day.
The story so far
The Fhatake team spent about two months in finalising and implementing all aspects of the business. It realised early on that logistics would be a challenge as most logistics providers in India currently do not have the necessary licence to deliver firecrackers at customers’ doorstep. So, after obtaining the necessary permissions, Fhatake will now deliver firecrackers in trucks equipped with fire extinguishers and other safety equipment. It will also be transporting only up to 100kg of goods at a time as per government regulations.
The company claims to offer, through the app and website, a wider variety of fireworks than offline stores at a discount of 80 per cent of MRP rates. Nikhil tells YourStory, “This year, we are selling crackers at low profit margins as our goal is to make the process of buying crackers online mainstream for the coming years.”
Coming to packaging and delivery, Fhatake is utilising route optimisation techniques based on all the pre-orders for the following day to lower its delivery costs. It also utilises vacuum-packed containers to ensure safety and authenticity. Fhatake currently operates in two delivery hubs around south Bengaluru - JP Nagar, Jayanagar, Banerghatta and Central Bangalore -- Koramangla and Indiranagar. It plans to setup more hubs in Bengaluru, based on the response and demand from consumers. It currently accepts only cash on delivery and is focussing both on online and offline channels to drive traffic and transactions to its web and mobile app.
Saurabh from Urban Piper adds that from the technology side they are prepared to handle heavy loads through the AWS servers they have in place. The biggest challenge for Fhatake is currently the restrictions on warehouses. Nikhil adds, “We are not allowed to store firecrackers within the city limits. So we store them in warehouses in the outskirts of the city. This is a big challenge and has prevented e-commerce players from entering this sector, apart from other regulatory challenges.”
Firecrackers are sold throughout the year in India during different occasions but Diwali is the biggest market in terms of volume. Nikhil estimates that almost 90 per cent of sales generally happen in the 15-20 days leading up to Diwali.
With an estimated market size of USD 800 million in India, this sector is highly unorganised but employs close to 25,000 people. Some of the other established brands in this sector are We Two and Ajanta Fireworks. Most of the firecrackers in India are manufactured in Sivakasi, a small town in Tamil Nadu.
While Fhatake is the only mobile app and web platform that we came across that delivers crackers, some other players in this sector are Chennai-based Crackerbasket, Jubilant Crackers which delivers in Tamil Nadu, and Mumbai-based Lawangi. There are also rumours that crackers manufactured in China may enter the Indian market this year. But Nikhil adds that India’s regulations would not allow for it.
Fhatake’s current focus is on Bengaluru and they plan to better understand the consumer market and patterns during this festive season. Their long term goal is to enter other cities and towns and provide a more customised experience of purchasing firecrackers.
Fhatake offers a different fare chart for bulk orders. For regular consumers, they will include more personalised options. Nikhil adds, “In two to three weeks, we plan to launch personalised ‘combo packs’ based on age and gender to make it easier for consumers. Due to the wide variety offered, some consumers may be unsure of what to buy.”
Fhatake has identified a real problem that many consumers face and it looks like they have covered almost all bases in their execution plans. But there is still some room for further improvement and tweaks. Fhatake allows consumers to ‘gift a box’ to their friends or family. But as the only mode of payments is cash (COD), this feature becomes less attractive.
It will also be interesting to see if Fhatake will be able to get the personalisation model right with ‘combo packs’. Categorisations based on age and gender may not work in all cases as there are always ‘outliers’ who have specific preferences. The mobile app and website are well-designed and simple to use. Having worked with other clients in the hyperlocal sector, Urban Piper’s experience will help Fhatake on the technology side.
How is your startup/company preparing for Diwali this year?
Related read from 2014: Startups, Diwali, a server update and perhaps a pack of sweets