How SaaS startup O4S changed its business model to survive COVID-19
Last year, when COVID-19 struck, Gurugram-based SaaS startupsaw a decline of nearly 80 percent in its revenue. This was because lockdown regulations meant that almost 85 percent of its clients were not operational.
However, in September 2020, once the nationwide lockdown started lifting, O4S saw an almost 300 percent growth in transactions, says Divay Kumar, Co-founder and CEO of O4S in a chat with YourStory.
“We commercialised O4S towards end of 2018, and pre-Covid, we saw a year on year growth of 50-80 percent. After the lockdowns were lifted, we’re now witnessing growth of 200-300 percent in revenues year on year.”
This, it achieved by moving towards more trackable systems, with a higher dependency on technology, and reducing labour dependency. The startup also changed its business model — going from a transactional-based pricing to licence-based one, which ensures that O4S has a recurring income even in the face of a similar challenge in the future.
“Automation enables enterprises to bring efficiency and reduce manual dependencies. O4S is enabling enterprises to bring high visibility and automation across their manufacturing facilities, warehouses and secondary sales. We’ve added 30 new and large enterprise customers in the past one year including the likes of AkzoNobel, Modelez, Orient Electric, Polycab India among others,” informs Divay.
From August this year, the startup has witnessed a 200 percent quarter-on-quarter growth in transactions, and 50 percent rise in revenue. By mid 2021, O4S had more than doubled its customers to nearly 50 from the 20 customers it had in its portfolio. It now plans to increase it to 500.
Recently, in October, the startup raised a Series A round of $6 million, led by Think Investments, with participation from existing investor Venture Highway. O4S aims to use this capital to fuel its expansion plans.
A global business
Launched in 2017 by Divay Kumar and Shreyans Sipani, the startup helps FMCG and manufacturing companies like ITC, Coca-Cola, Honeywell, AkzoNobel, and Mondelez, among others, digitise and automate their supply chain across manufacturing, warehouses, and retail networks to increase sales and performance.
It combines new-age technologies like artificial intelligence (AI), machine learning (ML), and Internet of Things (IoT) with a company’s core supply chain operations to build global networks for enterprises.
O4S has a presence in over 15 countries, including the UAE, Vietnam, Indonesia, Singapore, and Malaysia.
Challenges in adapting
One of the key challenges O4S faced was deploying the software in its client plants and warehouse amidst the lockdown. Until 2020, the startup had only a physical deployment service as the software had to be manually integrated with the client's hardware and understand the process.
Once the lockdown ensured zero physical movement, the existing plug-and-play solution was no longer feasible and the founders needed to find another way to continue the business.
“For the manufacturing companies, we’re integrating offline machinery and processes with IoT infrastructure. In the past year, we’ve done several integrations with third party hardware and ERPs, enabling customers to do virtual deployment of O4S in a plug-and-play model. We’ve made O4S live in over eight countries using virtual deployment models in the past year,” says Divay, explaining how they managed to work around the challenge.
According to him, to enable the same, they had to pre-build several integrations with most common hardware available in the sites, and build APIs with popular ERPs/WMSs/CRM solutions. “The platform play benefitted us highly to increase our live revenue.”
The startup plans to foray into the US and Europe markets by 2023, but at least for the next one year, its focus will be to continue expanding its existing customer base in the Southeast Asian market,” he added.
By the end of the first quarter of calendar year 2022, the startup plans to launch a particular module for predictive analytics and forecasting. Apart from this, it would increase its headcount to above 200.
It currently has over 100 members, including 60-65 in technology, six in sales and 20-25 in the operations team.
Market and competition
The supply chain SaaS market is still at a very nascent stage. There are only few players that are a competition to O4S. Rightbot, BRIDGEi2i, aerchain.io and GreyOrange are some companies in the space.
According to Indian SaaS Report 2021 by Bain & Company, Indian SaaS companies are poised to reach $30 billion in revenue by 2025, capturing an 8 to 9 percent share of the global SaaS market.