How Ninjacart built a tech-enabled supply chain for fresh farm produce, delivering 500 tonnes daily
Agritech startup Ninjacart has raised the income level of farmers it works with through fair prices, but the real story is how it built the entire the technology infrastructure in-house to operate a very efficient supply chain to handle a perishable commodity.
Every day, around 500 tonnes of vegetables and fruits are delivered to thousands of shops and retail stores across multiple cities in India in just two and a half hours. And this is done by agritech startup Ninjacart with a delivery accuracy rate of 99.88 percent all year-round, without a single day off.
Behind this accurate and large-scale operation is years of hard work, deep market understanding, and innovative use of technology - all directed towards the single-minded goal of improving efficiency and plugging pilferage.
The four-year-old Bengaluru-headquartered startup began by focussing on the retail-consumer segment (B2C) but realised that this was not viable in the long run from a business point of view. It then pivoted to a B2B model to create a seamless link between farmers’ produce and retail stores. The goal was to ensure a fair price for everyone involved.
Ninjacart Co-founder Vasudevan Chinnathambi says,
“We realised that the supply chain is broken and we could we solve that. The opportunity was certainly bigger though we took almost one year to figure out that this model will work.”
The science and technology of precise delivery for Ninjacart begins with accurate predictions. “The customer orders today for delivery tomorrow so the purchase and selling happens on the same day,” says Thirukumaran Nagarajan, Co-founder and CEO.
The first step was to acquire and understand the ‘farmer harvest calendar’, which would give the team an overview of the fruits and vegetables available in each season. This made Ninjacart aware of the demand and supply, and gives farmers a week’s notice of what is expected of them. Next, it needed a fairly good idea of what to expect. For this, the company gained complete past buying data of customers - what they ordered and the frequency of order to figure out a pattern and to know which items to procure.
Technology to the fore
Ninjacart educates its farmers on the desired quality and once this is sorted, all produce is put into crates at collection centres. In Bengaluru alone, it has 22 collection centres.
The startup has close to 7,000 farmers on its platform but on average, 2,000 transact on a monthly basis. The produce comes in between 4.00 pm and 6.00 pm daily, with some farmers traveling up to 400 km to make the drop.
“Once the produce is weighed and tagged, a message goes out through an app on the supplied quantity and the price so that the amount is credited to the farmers’ bank account the next day,” says Thirukumaran.
Then, Ninjacart moves the crates to fulfilment centres. The startup has brought in certain innovations like dolleys, which help load and unload the crates faster rather than the traditional lift-and-place.
The entire process is monitored through an app that the company built in-house, which also helps in the order the carts need to be placed so that the team can deliver faster. “This is the result of our sophisticated supply chain algorithm,” says Vasudevan.
Supply chain dynamics
Unlike other logistics businesses, Ninjacart’s does not have a typical sorting and segregation system. “The supply chain experts we have hired from other ecommerce companies are stunned that we do not do any sorting or segregation as everything is directed through the app,” says Thirukumaran.
Vasudevan provides an example of how they have improved efficiency. “Tomatoes that enter our warehouse used to typically take one hour to sort, but now it takes just 12 minutes.”
After this, these crates are loaded onto vehicles at the distribution centres for delivery, which starts at 2.00 am daily. There are no names on the crates as everything is enabled through the app. Every crate has a radio frequency identification (RFID) tag so that the company can know exactly which vegetables and fruits have been delivered.
Over the years, Ninjacart has expanded and its operations and scale have also increased. In 2016, it was handling only seven tonnes a day, and a year ago, this was around 100 tonnes. Today, it manages 500 tonnes daily, and this is only going to increase as the startup is now present in Bengaluru, Chennai, Hyderabad, Delhi, and Mumbai. It recently launched operations in Pune and Ahmedabad as well.
Given the increase in tonnage, complexities too have increased in terms of items that need to be picked up, vehicles to be deployed at the right time, and warehouse capacities. For the team, there was plenty of learning done on the way.
For example, the team does not wait for the crate to be emptied after a delivery but collects it on the way back instead. There is a pinpoint precision in vehicles departing from delivery locations with 150 such units leaving in an hour’s time. The key - knowing that the entire delivery process needs to happen between 6.00 and 8:30 am.
Challenges to overcome
Ninjacart had to overcome many challenges to improve its operational efficiency like ensuring they receive their payments from shop owners, finding the best routes, and also putting adequate safeguards against pilferage and financial misappropriation. For example, the crates have tamper-proof tags, which can be cut only after the message is received, and each shop owner gets an OTP (one-time-password) to make payments to the driver.
More importantly, the empty crates do not necessarily go back to the same collection centre and Ninjacart’s technology ensures that the chain remains efficient. “Small, grassroots level innovations are being implemented on a large scale,” says Thirukumaran. This has enabled tighter control so that operations are profitable and they are.
Earlier, Ninjacart used to lose Rs 2 per kg in a place like Bengaluru, but now, they make a profit of Rs 1 per kg all due to the tech-enabled supply chain.
Its customer base has also grown from 150 in 2016 to 8,500 today, with around 5,000 daily deliveries. As the founders wistfully put, “It is very easy to fill a big truck for a large retailer but very challenging when you do it for thousands of small shops. It needs a lot of minute-level of detailing.”
Ninjacart also maps the best routes for drivers to reach their destinations with clearly identified points. This is in the backdrop on the number of vehicles handled, which has grown from 20 to over 500 today.
“Everything is built and visualised as nowhere in the world there is supply chain software available, which transports such quantity of items in such a short period of time,” claims Thirukumaran. For example, in developed markets, fruits and vegetables are in transported in temperature-controlled environment and cold storage trucks but there is no such luxury here. In short, Ninjacart did not have the option to look for any such existing technology.
The startup is gearing up for a future that will be driven by data and predictive models. “We have a database of around 40 different markets in terms of the arrivals, supply, price, etc. In future, we can predict the prices of vegetables and fruits, and production output,” says Thirukumaran. “Right now, data it is not huge, but we are building it for the future.”
Ninjacart also toyed with the idea of storage facilities for the fruits and vegetables to see how it works. As an experiment, it did store some long-lasting vegetables such as potatoes and onion, and sold them at a profit by accurately predicting the price but it discontinued this process.
“This becomes a trading business and it is not our core expertise. We believe in giving a fair price to the farmer not squeezing them out of it,” adds the CEO.
The founders strongly believe that given their technology prowess, Ninjacart is a very defensible business. “It will take around two years for anybody who plans to build something like this. It is very tough,” says Thirukumaran. And all this is being done by a 30-member tech team.
As Vasudevan puts it,
“This is the sweet spot as our technology platform is extremely scalable and flexible where we can implement it for a large city like Bengaluru as well as for a place like Surat or Vadodara.”
From a business point of view, it makes sense as this a $180 billion plus market growing at 9 percent annually. Also, the market is very stable as it an essential commodity.
For Ninjacart, it is a 36-hour cycle from the time it collects produce from the farmers, reaches the shops and the empty crates goes back to the villages. As Thirukumaran puts it, “Our shop never shuts.”
How has the coronavirus outbreak disrupted your life? And how are you dealing with it? Write to us or send us a video with subject line 'Coronavirus Disruption' to firstname.lastname@example.org