How retail tech startup SnapBizz scaled its business and clocked Rs 7 Cr revenue amidst COVID-19 pandemic
In the six years since Prem Kumar started his retail tech startup, he interacted with many neighbourhood kiranas. During one such interaction, a store boy walked up to him and thanked him as he had got Rs 1,000 increment in his salary from the owner.
“This allowed him to send his sister to an English medium school. The reason for this increment was that he was able to increase the sales of the store by using SnapBizz solutions. This was an emotional and a proud moment for me," SnapBizz Founder Prem Kumar tells YourStory.
SnapBizz took the Indian retail ecosystem by surprise when it was launched. Its novel solution of connecting mom-and-pop stores and FMCG companies was a big hit, and it signed up over 10,000 small stores.
It also ensured that the margins of these stores rose by targeting the sale of the right products, and helped increase the visibility of FMCG products in stores.
Prem Kumar, Founder of SnapBizz
The art of winning kiranas
Working with small stores is a multi-billion dollar opportunity, but it is also a nightmare because technology adoption is the lowest, Prem says. Mom-and-pop store owners only look at increasing their daily margins and often view technology as a cost.
"If you work with kiranas, you need to understand that the owners want to educate or marry off their children. They want to provide and are very conservative on spending, especially on things they don't understand. SnapBizz understands that, and this made us speak the language of the small stores, which is to increase margins," Prem explains.
By deploying its retail technology solution at the kirana stores,the startup connects the stores with the stakeholders of the FMCG ecosystem (brands, distributors, wholesalers, research agencies, etc.).
“Some of the challenges we faced were getting the correct product-market fit, acquiring the first set of retailers in each town, and creating a network effect. Demonetisation and GST rollout took away a couple of years from us, although they eventually turned out to be good tailwinds for us," Prem says.
According to details available with the Registrar of Companies (RoC), SnapBizz revenue went from Rs 3.57 crore in FY17 to Rs 5 crore in FY18, and slightly dipped in FY19 to Rs 4.54 crore. In 2019, SnapBizz pivoted its business model of supplying POS machines and digital displays to the books of its suppliers, which caused the dip in its revenue number.
However, amidst the COVID-19 pandemic, SnapBizz has managed to clock Rs 7 crore in revenue on the back of increased adoption of its software stack. The startup, poised to grow its revenue 3x by 2021, has signed up 100 FMCG brands so far.
"We monetise our platform with FMCG stakeholders with our range of services, targeted consumer engagement, data and analytics, and optimisation of supply chain operations, and make money on the software licence fees," Prem shares.
A brief history
In the early 2000s, while working in eastern Europe, Prem noticed the challenges that FMCG retail there faced —a lack of integrated ecosystem and data. To overcome these challenges, he started a company called CisLink, which is still a market player in Russia and eastern Europe.
The journey of SnapBizz began when Qualcomm started a pilot project in India to take wireless technology into fragmented retail and was looking for entrepreneurs who had worked in the same space. Having understood Prem’s work with CisLink, the company got in touch with him to build an idea around mom-and-pop stores.
SnapBizz was officially launched in 2014, with Qualcomm as its first investor.
The pain points
According to the Boston Consulting Group, India has over 12 million kirana stores, contributing 90 percent of the Indian FMCG business.The industry is worth $300 billion and equally split between packaged goods and loose items.
"What makes it more interesting is that the product goes through three transactions before it reaches the consumer, thereby making the transactional space of $900 billion," Prem says.
Kiranas have an underlying competitive edge by virtue of their, familiarity, personal connection with consumers, freshly stocked products, and providing monthly credit to consumers.
However, Prem says they lack shopper experience and are unable to match offers provided by ecommerce and big-box players. They are also not connected with players within the FMCG ecosystem.
For FMCG stakeholders, the lack of visibility into the kirana's business leads to several inefficiencies. Prem explains that the Indian FMCG industry is a disconnected ecosystem, with all players working in silos and existing in a data-dark space.
"These players have a common pain point to traditional retail, which is consumer and store engagement. Besides, there is also a lack of last-mile connect with consumers and stores, a lack of data, and inefficiency in the supply of goods and financial solutions," the founder says.
The SnapBizz solution
SnapBizz offers a set of solutions for retailers and FMCG stakeholders to turn the traditional kirana into a smart one. Key features include:
1. SnapBilling, an easy-to-use solution to manage and optimise store operations.
2. SnapOrder app, which helps in taking the kirana online. It serves close to 10,000 merchants at present.
3. SnapVision, which helps in creating a virtual merchandising space
4. SnapConnectCloud, which connects retailers to all stakeholders of the FMCG ecosystem, enabling them to get promotions/discounts from brands and suppliers
5. SnapData, which provides simple actionable insights into the retail industry
The startup also offers solutions for retailers, depending on the type of store and size of the business. It helps small stores overcome challenges such as management of peak hour traffic and billing — both barcoded and non-barcoded products, making it easy for a store boy to operate independently.
Using its cloud-connected real-time solutions, SnapBizz provides last-mile connect to consumers and stores, which allows FMCG brands to engage consumers visually and contextually, run targeted promotions, overcome supply chain and assortment challenges, and avoid stock-outs.
To help ecommerce players scale up operations, the startup offers an opportunity to leverage hyper-local assortment, inventory, and delivery capabilities of the kirana. SnapBizz also enables wholesalers and distributors to increase their share of wallet, and get insights on what they are missing out on selling to the stores.
It gives fintech players access to reach out, engage kiranas with financial service products, and continually track the store's financial health. It also helps build the store owner’s credit history, and creates an opportunity to raise working capital finance and expand stores.
SnapBizz has raised in excess of $12 million in the seed and Series A rounds from VCs such as Jungle Ventures, Taurus Venture, and , as well as strategic investors like Nielsen, Qualcomm, AUO, and Tata Group Chairman Ratan Tata.
The startup is currently in advanced talks with major financial and strategic investors in the ecommerce and B2B space, and other select VCs to raise funds in its Series B round.
While the business is yet to break even, SnapBizz has served over a million customers with its retailers. It currently reports a GMV of $1 billion through its 10,000 stores.
In the next 18 months, SnapBizz aims to build a network of 500,000 retailers across 42 cities, for which it has signed up with fintech startups (under non-disclosure agreement) to scale up its solution. Post the expansion, the startup expects to register a GMV of $21 billion.
This year, SnapBizz also plans to work closely with over 200 brands, distributors, wholesalers, ecommerce, and financial services players.
The COVID-19 effect
As a prominent player in the grocery tech and FMCG ecosystem, Prem says SnapBizz’s relevance has exponentially gone up, and he expects this to be the turning point in its journey.
"The new norm of doing business in the new economic environment will be digital. Our challenge now would be to keep pace with the expectations of our retailers and partners," he says.
Small stores are creating a buzz in India these days with companies like Reliance Jio and Facebook wanting to enter the kirana space by offering similar solutions. However, SnapBizz is not only competing against these giants, but also with Mobisy, GoFrugal, , and .
The startup is working on improving some of its product features for SnapOrder (retailers’ B2C ordering app), SnapSupply (distributors’ B2B ordering app), and SnapPulse (retail analytics solution).
Prem believes that these solutions will enable the ecosystem players to meet the current challenges of supply and demand with the help of technology.