Pivot and Persist: How B2B ecommerce startup ShakeDeal leveraged its health portfolio to combat coronavirus
Nine out of every ten startups in India are expected to see their revenues slide over at least the next couple of quarters due to the coronavirus pandemic, according to a NASSCOM survey. This is especially the case for early- and mid-stage startups which are in a grim place as external funding and risk appetites have dried up.
However, many startups are navigating the crisis by pivoting to tap into the current needs, and concurrently aligning their manufacturing processes.
ShakeDeal, a B2B ecommerce marketplace for industrial goods and supplies, office and housekeeping supplies, and corporate gifting, is one such success story. Founded in 2016 by brothers Akshay and Akash Hegde, and their friend, Santhosh Reddy, the company, observing new shifts in the B2B marketplace during the pandemic, overhauled its product portfolio to become heavier on its health and safety offerings.
Gearing up to combat COVID-19
ShakeDeal had always considered the health and safety sector (H&S) a big contributor to its topline. It accounted for close to 20 percent of the company’s overall portfolio, pre-COVID-19.
When the demand for non-essential items bottomed out and several clients deferred the purchases of their monthly factory and office supplies, the company decided to turn its attention to its health portfolio, and bolster the country’s efforts in plugging the shortfall of equipment necessary for frontline workers to combat the coronavirus.
These items included PPE coveralls, gloves, face masks, hand sanitisers, and disinfecting equipment, among others.
“During the lockdown, there was a huge surge in demand for safety, hygiene and PPE. The demand spike we saw in this period was almost ten-fold and of unprecedented nature,” Akshay says in an interview with YourStory.
The startup actively started catering to this demand and fulfilled orders of about a million PPEs. It also developed and launched certain types of PPEs and face masks under its private label to have control over the quality of its products.
One of the things ShakeDeal had going for it during this turnaround was its existing manufacturing capabilities. Health had been an important revenue stream for the company even before the crisis hit, so the startup was able to lean on its existing relationships and resources to ramp up production.
“Our vendor partners are OEMs and reputed brands which had the capability to adapt and produce the volume of PPEs in demand during the peak period of lockdown. It was a strategic decision of repurposing some of our resources to double down on these categories to cater to the heightened demand,” he adds.
To source material for the PPEs, the company tied up with garment and medical textiles manufacturers, and to ensure continuous access to raw materials, leveraged its existing relationships to build a dedicated supply chain.
Mitigating challenges under lockdown
What threw a wrench in the breakneck growth of the company’s health vertical were pandemic-related restrictions, which put extreme stress on procurement timelines for some of the company’s orders. A shortage of manpower at third-party logistics companies and their hubs being choked with essential commodities gaining priority further exacerbated ShakeDeal’s problems, but, through some nimble footwork, the company was able to dig its way out.
“The redundancies we’d built into our supplier network enabled us to route orders strategically to circumvent most of these challenges,” Akshay explains.
The startup’s efforts during the lockdown paid off. By stepping up as a preferred procurement partner for the supply of items used to combat coronavirus, ShakeDeal was able to offset the losses it made from reduced demand in other verticals.
Now, even though things are limping back to ‘normal’, the company says it will continue to expand in the COVID-19-specific healthcare space until a vaccine to eradicate the virus becomes available.
ShakeDeal has also resumed pre-COVID-19 level engagements with most of its clients and says it is in a lucrative position to capitalise on the demand for preventative interventions such as hand sanitisers and re-usable masks at workplaces.
“We see a lot of companies taking adequate measures to ensure the safety of premises as their staff trickles back to work. Precautionary measures such as arranging for hand sanitisers in abundance, deploying disinfecting equipment, installing contactless and thermal detection systems, distributing re-usable masks and displaying ‘social distancing’ signages have been seen across companies reporting back to work,” Akshay says.
Vocal for local
ShakeDeal says it has always believed that developing local and regional supply chains is important to keep the disruption arbitrage in check, but with a renewed call by Prime Minister Narendra Modi for businesses and consumers to be more ‘vocal for local’, the endeavour has become a linchpin for the Bengaluru-based company.
“During the COVID-19 period, we saw a major shift in sentiment away from Chinese products and towards their corresponding Indian makes. Consumers have certainly taken to our PM’s call, as is seen in many product categories like safety equipment, electronics, hardware, hygiene, etc,” says Akshay.
Most companies depend on foreign supply chains – specifically those in China – because they are cost-effective. One of the biggest drawbacks of using local supply chains is pricing, and ShakeDeal realised that putting too much focus on that results in exposure to large-scale supply chain disruptions.
“The challenge going forward would be to focus on developing a more local and flexible supply chain while ensuring price competitiveness,” quips Akshay.
To further support the local ecosystem, ShakeDeal’s team is recategorising and highlighting all India-made products in its catalogue to promote them over imported items. In the future, the company plans to shift its private-label production to local companies.
“Though we were already engaged with them for certain SKUs (stock-keeping units), we plan to increase the portfolio of locally sourced products,” Akshay adds.
Eyeing a strong topline
ShakeDeal was founded after Akshay and Akash, while working on their family business, identified several pain points in the procurements industry, such as sub-optimal pricing, delivery service levels, and streamlined supply that posed production challenges. They saw an opportunity to bring down the cost of distribution while driving volumes, realising higher margins and improving cash cycles, and set up ShakeDeal to do exactly that.
The company says its B2B products provide solutions for large and medium enterprises across industrial sectors, as well as for brand-to-reseller markets. Its unique selling proposition is that it provides customised solutions for customers’ woes, and that helps it stand out from the competition when it comes to traditional B2B acquisition strategies.
ShakeDeal was acquired by a US-based private equity firm, Vora Venture, in 2018, which also funded its subsequent funding round. The company did not disclose the investment amount or any funding details, but said it was using those funds to augment its tech offerings, acquire new customers, and grow its existing business.
Over the last two years, the company has grown its revenues almost 9x, Akshay says, adding, he expects the firm to triple its revenue this year as well.
“Profitability is not an immediate focus for the company, but we are aggressively chasing growth and at the same time ensuring the sustainability of the business,” he said.
The company claims it works with more than four thousand MSMEs, and over 200 large firms. Its competitors include Alibaba, IndiaMART, and Trade India, among others.
YourStory’s Pivot and Persist series spotlights Indian startups that are pivoting to seize new business opportunities, transforming their business models and offerings to navigate the current COVID-19 crisis.
Edited by Kanishk Singh