[Startup Bharat] This B2B aggregator helps FMCG brands increase their rural footprint
Entrepreneur Sanjay Kaul was happy with his work at Impact Communication, a marketing and advertising company he had founded in 1999. However, a fated request from a client led him into the last-mile channel enhancement (LMCE) space.
“In 2015, we got a mandate from a client called Reckitt Benckiser to help them expand their distribution footprint. It was a very strange mandate for a communication agency to undertake,” Sanjay tells YourStory.
He adds, “Since we had a good relationship with them, we said, “fine, we'll go ahead.” While we had the bandwidth, distribution was not our forte.”
This request translated into LMCE B2B aggregator startup, which connects retailers, franchises, and companies on a single platform to solve their last-mile challenges in rural India.
Delhi-based Xpand was founded in March 2021 by Sanjay, along with industry veterans Sanjay Panigrahi, Sankalp Potbahre, Pradeep Kaul, and Nidhi Singh. At present, the startup caters to villages in Uttar Pradesh and Bihar.
The platform leverages existing infrastructure with zero investment in stock, warehousing, or logistics to help companies cost-effectively enter the rural market, acquire customers, drive incremental sales, and increase their market share.
“Simultaneously, we would empower and enable traditional kirana stores to leverage technology to streamline their operations and widen their portfolio,” Sanjay says.
What it does
Xpand collects data and analyses it to predict and recommend consumer behaviour in rural and suburban India.
“There is a significant untapped potential in the commercial space in the suburban areas and a great opportunity for brands to establish themselves in one of India’s big market segments,” says Sanjay.
Before trying to increase the footprint of a client, in 2015, the startup realised it is important to assemble and analyse data to understand the affluent rural pockets where growth is truly possible.
“All six lakh villages are not of high potential. We wanted to take them to high growth regions. We used GIS mapping, Nielsen data, and other economic indicators to discover 30,000 - 40,000 villages that could afford the company’s offerings,” explains Sanjay.
In about three years, Xpand could give Reckitt Benckiser an incremental growth of Rs 280 crore.
How it works
On its platform, Xpand allows retailers to place orders for goods based on the demand in the area and companies to have visibility to fulfil the demand. Xpand receives a commission from its clients on the basis of the sales made through the platform.
The startup has several micro distributors for its clients in bigger villages that help increase penetration by ensuring shipments reach the last delivery points on time.
“It is important to us that there is no conflict with the existing supply chain in these areas. Our idea is to complement this supply chain,” says Sanjay.
As retailers in rural regions are not tech-savvy, Xpand’s employees educate and help them place orders on the platform. According to Sanjay, the startup hopes to automate this process in the next three years.
At present, Xpand works with both fast-moving consumer goods (FMCG) and fast-moving consumer durables (FMCD) companies. It appoints micro distributors to assist larger FMCG and FMCD players, who have their own warehousing.
In less than a year, Xpand has onboarded 25 companies on its B2B platform, including Apollo Tyres, Tata Consumer Products, Tesco, Signify, and Godrej Consumer Products, among others.
In November 2021, the LMCE platform raised $1.5 million in a pre-Series A round at a valuation of about $10 million.
The round was led by Akash Prakash (CEO, Amansa Capital), along with other successful professionals and HNIs, including Madhu Jayakumar, Dipinder Sandhu, and Shagun Khandelwal.
By 2023, Xpand aims to enter 16 states, reaching more than 30,000 villages and over three lakh retailers.
It further plans to strengthen its hold in rural India by expanding to at least 18 percent of kirana stores and scaling up to 33 percent of the total potential by 2025.