Tech30: From B2C to B2B EZkirana’s journey of finding the right niche in the online grocery segment
EZkirana is a Bengaluru based B2B online grocery startup, which is looking at launching its private label by 2018.
The neighbourhood kirana store has come closer home with a click of a button. In today’s online world getting your veggies and spices for the day has become easier. With BigBasket raising funds from Paytm and Amazon entering the space, the online grocery segment is steadily picking up momentum.
Piyush Priyam a consultant in the FMCG sector for over five years felt that there was a potential in the foods market. And with the aim to bridge the gap between retailers and customers, he started EZkirana in 2015.
However, he quickly realised that for a grocery business to thrive it was important to have volumes. It was then that he along with his co-founder Srinivas Gorur, who he had met through Angel List, decided to pivot a B2C business into a B2B one. The duo chose to focus on the HoReCa (hotels, restaurants and caterers) segment.
The growing B2B e-commerce space
EZkirana now works as a one-stop shop for all procurement activities for most B2B food places.
Currently, the team claims to have over 25 active customers and a monthly revenue of $1 million. “We are net margin positive,” adds Srinivas.
Working like any e-commerce portal, EZkirana drives its services via its website, where the procurement team of various restaurants, caterers, and hotels choose the products, and a delivery time and then pay online.
The team has also built an app for the delivery staff for easy order selection, packaging and even editing of different unavailable items. “We have an integrated SMS system for order-related updates to customers.
There are 4.8 crore SMEs that need to secure bulk supplies; making B2B e-commerce market a much bigger opportunity than B2C. Competing with EZkirana, BigBasket has also entered the market with its B2B section called Horeca.
It also has to deal with other startups like Soukwagon and speculations are rife that Alibaba is setting sights on India.
Alibaba is believed to be the pioneer in the space with a whopping $27.28 billion in gross merchandise value (GMV). Currently, China, the US, and Japan are the biggest drivers of the B2B e-commerce market.
A 2014 Walmart report suggested that B2B e-commerce market in India is likely to touch $700 billion by 2020, making it a huge opportunity for startups to exploit.
Diving deeper into the HoReCa space
HoReCa is a huge market with several segments and each customer has a unique requirement.
Understanding that star hotels have an organised and focussed procurement system EZkirana decided to focus on the smaller players.
“This is an industry that has been operating in the same manner for decades now, also there are several smaller unorganised players, who need platforms like ours to sort their daily procurement needs,” Srinivas adds. He says that the monthly requirements of these players would be between Rs 2-5 lakh.
Srinivas explained that while many small hotels and restaurants would go shopping to different wholesale traders, EZkirana attempts to disrupt this space by becoming a one-stop shop for all procurement needs of the customers.
Challenges of pivoting
The task, however, wasn’t easy for the team. Understanding the different products that HoReCa segments need was a task in itself. Piyush adds that they had an idea from the B2C perspective but B2B is a different ball game.
“The kind of food grains they want, quality and price margins are very different. We needed to talk to several different vendors in the market to understand which particular product is suitable for which client. ,” says Piyush.
While initially, the team would procure the goods from wholesalers, now the team has started procuring directly from manufacturers. “For rice, we have already tied up with a rice miller in Tumkur. The focus is to delay the supply chain to give our customers the best possible rates,” says Srinivas.
The segment works on a credit model and, EZkirana is looking to enrol more players into the same. “We are looking at a lean inventory model, which works on an almost just-in-time delivery system,” explains Srinivas. The team follows a 10 percent gross margin.
Speaking of the delivery process, Piyush adds that initially, they had a transit inventory point. Now, the team has outsourced the delivery to a distributor, who will be responsible for stocking the inventory, maintenance and last mile delivery. “Our responsibility is to bring in the order and procurement,” explains Piyush.
EZkirana plans to expand within in South India and the team is looking to launch their private label in January 2018. “Till January, we are looking to increase our volumes and build enough demand. The private label will help in expanding margins," says Piyush.