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INTERVIEW

“B2B and New Retail gaining significant traction”
Saturday, 01 July, 2023, 08 : 00 AM [IST]
B2B marketplace and New Retail Platforms indicate promising growth prospects. There is venture capital and private equity interest for funding. Given the increasing digital technology adoption and changing business landscape for the demanding and discerning new-age consumers of food and beverage groceries who look for more convenient and personalised experiences, such a business model is transforming the way businesses operate, noted  S Karthik Venkateswaran, co-founder, Jumbotail, India's leading B2B marketplace and New Retail Platform for food and grocery in an interaction with Nandita Vijay. Excerpts:
 
How is the concept of B2B marketplace and New Retail Platform faring in India?   
The concept of B2B marketplace and New Retail Platform in India is gaining significant traction. It has witnessed positive growth in recent years. Both these concepts are transforming the way businesses operate and are providing new opportunities for the kirana stores and consumers in the Indian market.
 
Now Jumbotail founded by S Karthik Venkateswaran, and Ashish Jhina,is serving around 2,50,000 kirana stores across 50 cities, covering about 3,600 pin codes. We started operations in 2016. it is a platform that connects kirana stores, small and medium retailers to the products that they want to sell. The kirana stores find the products through our Jumbotail app available in multiple languages. We also have a  logistics arm that ships the product to the kirana stores in 24-48 hours. On delivery we also have a Fintec platform enabling multiple modes of payment and access to working capital enabled for the kirana stores. Besides, we provide the  entire retail operating system. This is a proprietary system known as the ‘ Golden Eye’, a first-of-its-kind in the world that is built for small retailers. This is the core of the B2B marketplace.
 
Under the New Retail Platform, we  handhold the new entrant food-beverage trade entrepreneurs to engage them on to our J-24 stores which are modern omni-channel convenience grocery outlets with an  integrated online and offline presence. It provides a convenient shopping experience to customers while maximising the outlet’s sales potential. These could also be the existing traditional unorganised kirana stores that have been transformed into a J-24 branded modern convenience grocery stores, owned and operated by kirana entrepreneurs. Today’s Gen Z consumer wants a digital and phygital experience with a keen interest to build relationships with brands and J-24 serves this purpose.
 
Tell us about the competitive landscape of B2B market players. How do you position yourself here?
There  is room for all. In such an extremely large market, we need to build a sustainable business and add value to domestic consumption and HoRECA sector that dominate this space. Here we need to generate the demand for the kirana stores and in turn for the consumers. Our differentiating factor is that we focus on the small and medium retailers.
 
What are the visible trends in this space?
Technological advancements, changing consumer behaviours and evolving business needs are shaping the B2B marketplace and New Retail Platform. There is a significant shift towards digital technology to create convenience, enhance consumer engagement experiences and ensure loyalty. Technologies like blockchain are being used to improve supply chain transparency, traceability, and security. Distributed computing platform with artificial intelligence and machine learning helps to streamline inventory management, order fulfillment and logistics which are critical areas in business management.
 
What are the company’s three strengths in this space?
To begin with, Jumbotail clocked a 100% YoY increase in Gross Merchandise Value (GMV) which was driven with an access to the retailer along with a national expansion strategy. Our first strength is value creation through technology-driven scale which has led to significant efficiencies, with the platform achieving in-stock availability of 95% and Jumbotail Logistics delivering an order fill rate of over 97%. Second is that our cost structures continued to remain efficient as higher sales were generated from customers frequency of purchase. Third is the in-house technology-driven warehousing and last-mile delivery supply chain network that provides next-day storefront deliveries to kirana stores with the fintech platform for payment, credit solutions and financial services to kirana store owners.
 
How receptive have the private equity players and venture capitalists been towards the B2B marketplace?
Jumbotail raised a total of $125 million in equity from investors: Invus, Heron Rock, VII Ventures, Nutresa, Veronorte, Nexus Ventures, Kalaari Capital, Jumbo Fund, Arkam Ventures. In addition, $23 million in Venture Debt was raised from Alteria Capital and Innoven Capital. For PEs and VCs have been upbeat to invest in this business model at all times going by our good performance.
 
Jumbotail continues to refer itself as a start-up despite its solid growth and success. What is the reason for this?
Yes we do not want to lose the hustle of a start-up. Because it is the hustle which is going to get us to the next level of growth. We do not want to lose the naivety of a start-up. As we grow and create a lot of more impact on the ecosystem, we need the maturity, processes in place and the governance all of which needs to improve. We placed our bet on the kirana stores at a time when 2G connectivity was in its early phase, B2C model was yet to be figured out and the grocery kirana stores had no exposure to digital technology. Today, we are a large platform with scores of kirana stores’ livelihood being dependent on us.
 
How easy have the retailers been able to accept Jumbotail?
India has got the B2B sector clarity. It is a competitive landscape competing on reliability transparency. Jumbotail is now India’s leading online B2B marketplace and New Retail Platform. We are witnessing a  positive response going by the huge interest from the kirana or the small and medium retail grocery stores to take our support.
 
An estimated 12 million kirana stores in India control more than 95% of the country’s $450 billion food and grocery market. According to RedSeer Consulting, India’s retail B2B market will grow at a CAGR of 10% to reach $1.3 trillion by FY25. Around 72.2% of the B2B retail market is driven by unorganised B2B retail, where numerous smaller sellers such as wholesalers, stockists and sub-stockists operate, and supply branded as well as unbranded goods to retailers. eB2B specifically is expected to grow the fastest, at a CAGR of 80%, driven by its capability to connect everyone in the whole retail supply chain.
 
What are the likely future efforts of the company?
For us, organic growth path is our way forward. We are also quite clear on the kind of workforce to be hired and therefore, we have been able to identify the right talent who want to work with us. Our outlook for FY24 will be double the net operating revenues, grow the customer base by 65% to reach 400,000 kirana stores, and increasing the number of J24 stores to 300 stores, serving 1 million consumers for their daily grocery needs.
 
What are the challenges encountered by companies like yours in this business model?
India is a supply constrained market despite the abundant demand. This sees the need for the support structure of suppliers and distributors to grow along with the demand. Therefore manufacturing needs to grow to fulfil the demand. There is also a huge need to maintain quality of products. Further, India faces  considerable challenge to identify skilled labour as attrition is a big problem. We are working with an ecosystem that supports our operations.
 
What are the positive aspects of the B2B marketplace that will provide the much-needed growth  momentum to the sector?
Jumbotail is extremely bullish of the B2B marketplace. Regulations in this space are favourable for us. The RBI digital lending guidelines are a step in the right direction and so is GST (Goods and Services Tax). It has been potential transformation for the Indian economy. The UPI (Unified Payment Interface ) facilitates transactions in a seamless manner.
 
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