This startup is eliminating FMCG distribution problem and digitising kiranas, smaller brands

Arshad Siddiqui, Tanvi Chopra, and Shahzad Siddiqui, who held multiple senior executive roles at Rasna, realised one thing while working there - companies need people who can take the onus of their marketing distribution and numbers.  

“We realised the distribution space is highly unorganised and unprofessional, and there was a huge gap between the company and the channel partners. That’s how our distribution division came into picture,” says Tanvi. 

This led them to start Creando in 2014 in Delhi-NCR. The startup connects brands with retailers, and empowers them through technology. It provides consulting to kiranas, smaller brands, and FMCG brands in the area of business strategies, sales, and marketing. 

“We at Creando have positioned ourselves as a “distribution aggregator in a FMCG space”. As an aggregator, we bring a one-stop-solution for GT/Kiranas by not only providing the entire basket of products, but also enabling them through sales training and technology. The model not only overcomes the challenges of the traditional distribution, but also helps improve operative inefficiencies,” says Tanvi. 

The platform works as a single solution where Kirana stores can get their inventory and information of products. It gives information and input on sales and management, and also helps in distribution to different channels and consumers. 

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How it started?

For most companies, distribution of products has always been a problem. “For any business or brand strategy, distribution is the key. We identify the sweet spot to provide a ready distribution platform for startups and traditional business houses. Our vision is to become India’s largest aggregator in the distribution space,” says Tanvi. 

Most companies face the challenge with distribution when it comes to quality manpower, quality of channel partner, and consistent service. 

Tanvi explains most of the startups have a single brand, without multiple distribution centres, with no credibility. These kind of companies look for real go-to-market strategies and this is where we come into the picture. Also, big brands always have certain pain areas where their distribution is not as strong. “We take their pain areas and help them with distribution solutions,” says Tanvi. 

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Challenges 

Creando’s biggest initial challenge was selling its concept to potential clients. While the concept was prevalent in the western countries, it was a new concept in India. 

“We were asking companies to outsource their biggest resource -- their sales team -- to us. Most of the companies didn’t understand the concept, and others didn’t buy our idea. The brands we were getting were looking for territorial expansion and not pan India launch. Another aspect was that these companies were either startups or small regional brands, which had no / low brand equity and brand pull,” says Tanvi.

To scale up the business, the team was looking for an anchor brand that could take it to another level. Also, the brands the team worked with were not willing to invest on the brand, and so offtake become an issue. 

“That is when we launched Creando’s own trademark in confectionery, which was primarily done to solve the problem of cost of reach. We then started adding brands, which complemented this channel. Another challenge was to convince the brand owners that we can a create distribution network and can be outsourced,” says Tanvi. 

Before the pandemic in early 2020, Creando signed on Hamdard OTC business (Pan India). Their total team size is 10.

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The core problem 

The FMCG distribution model in India has seen little change over the decades. Other than some basic technology interventions to track primary sales, and in some cases secondary sales, companies have done little to evolve their distribution models. The reason for the lack of change has also been the static retail ecosystem we have - 90 percent of retail today is dominated by mom and pop outlets.

However, as modern commerce evolves, companies are being increasingly forced to question the status quo. Some of the key challenges faced by businesses today include - increased distributor churn. It is also becoming increasingly difficult to replace existing distributors as the distributor community is shrinking. 

Secondly, sales force turnover - the churn rate (across all levels, and especially at the field sales level) is alarmingly high at 25-45 percent, annually, according to several media reports. This is making it challenging for FMCG companies to recruit and retain sales people, putting further pressure on their operative business model and bottom line. 

Thirdly, there is increasing channel conflict on pricing, discounts, and range between general trade, ecommerce, and modern trade. While the end consumer may be benefitting in this conflict through lower prices, the pressure on margins across the value chain continues to grow.

Tanvi explains that a single platform like Creando helps solve all these problems.  This April, the team launched a retailer app. It is an AI-based replenishment app based on sales trends. It auto generates the order for a retailer, which helps them to have better inventory control and saves salesmen interaction time with a retailer. By this, it can capture the real time demand of a brand rather than pushing the inventory at the retail level.  

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Market and revenue

According to an IBEF report, the FMCG segment is India’s fourth largest sector with household and personal care accounting for 50 percent of FMCG sales in India. 

Startups like Peelworks, ShopKirana, Dhukaan, and Udaan are looking at the space closely. However, they are more from a B2B ecommerce segment perspective, and Creando looks at the distribution. 

Creando has three kinds of revenue models – margin; margin + retainer; and distribution management cost + commission + retainer.

“These models depend on the requirement of the clients. Some clients want shared manpower while other may want an exclusive. So, the model differs as per the requirement,” says Tanvi. She adds that they make a margin of anything between 10 - 35 percent depending on the category and the model they are working on. 

Creando raised funding by Silk Bridge Partners (Singapore) and RB Investments (Singapore), last year. The team is now looking to scale the retailer app.