How is India consuming and brands realigning their distribution in COVID-19 times?

by Mischelle Rebello

April 13, 2020 | 10 min read


Catch the InstaLive of the discussion between Vishal Krishna and Lalit Bhise below.

Vishal Krishna (VK): Hi, Lalit. How are you doing?

Lalit Bhise (LB): Hey, I’m good, man. How are you?

VK: Very good, man. Thank you very much to your company for being on the frontlines, delivering food to us, and getting your brands to the retailers.

LB: It is not exactly the brands that we work with, those are the ones who are doing the good.

VK: Obviously. And you know, a lot of people have joined us today for the last week. I’ve been talking to a lot of brands. We spoke about their problems and why the government should define essentials and non-essentials. We are off that now. Apparently, the government’s coming out and saying, OK, we’ll allow a few more brands to actually go distribute. But what I want to hear from you today is how is the retail ecosystem shaping up. What are the brands thinking? Obviously, large manufacturers that you work with. How is the supply chain? And what can we expect from the spike in consumption or a downward trend in consumption? We should talk about all that. And obviously, a lot of people will want to know how have you built your company. You know, working with 300 brands and lots of kiranas across India. Right. And wholesalers, So Lalit what’s happening on the ground then?

LB: Right. Interestingly enough, this week, from Monday onwards, we started seeing a definite uptick both in terms of activity on the supply. So last week Thursday, Friday at sorry on Wednesday, Thursday, Friday. There was a little bit of a downturn of activity on the ground and mainly because the sales guy is not present distributors are not delivering and so on, so forth. I think from Monday we started definitely started seeing a shift towards people having figured out all this.

E pass and multiple passes system we started to deliver it delivered to stock. So, a definite uptick in terms of activities in terms of the whole retail ecosystem coming up pushing more orders. More retailers getting open all of that. It’s not obviously backed up by pre-COVID levels yet, but I think it’s almost 50 percent there, which is actually a phenomenon, to be honest.

VK: OK, Sowmya asked me. Can you tell us a little about the guest? By the way, Lalit is the founder of Mobisy Technologies better known as Bizom. Bizom helps a lot of brands distribute to wholesalers and retailers. Is that a good introduction or Lalit can you tell them?

LB: OK. I’m happy to give an additional introduction as well, but I think you are pretty much on the track. So Bizom essentially is the Retail intelligence platform, as we call ourselves, meant for brands who supply to consumers through mom-and-pop as a channel. Which is essentially your friendly neighborhood Kirana stores in general. So, we are basically friends with brands, small, mid-market, and large brands, all of them together. And we help them connect to consumers through mom-and-pop as an ecosystem. We handle the digitalization of that entire ecosystem and then provide actionable insights on top of it.

VK: Okay, fantastic. It gives us some insights into consumption. You know, obviously, I’ve written a couple of stories to you, but from the data that you sent us on what happened between March 1st and 15th, we saw a lot of snacking items that went up. You know, a lot of people started stocking up on soaps and shampoos, but how’s the consumption been in the last fifteen days?

LB: So, for the last fifteen days, the consumption is primarily moved towards packaged foods. So, there are certain kinds of categories of products that we see a good uptake. Even now, even before I come to the last ten, fifteen days, let me tell you a story about 15 days before that. Interestingly enough, this is actually a story for Subbu, our friendly neighborhood Kirana guy right? So interestingly enough, between 9th of March to 15th of March, India’s consumption across categories actually its retailer’s consumption across categories went up by almost two and a half times compared to the corresponding period in a month before.

VK: That tells me he sold out everything right?

LB: No, no. They actually put it in everything. They’ve stocked everything from the brands. So, when I’m talking about retail consumption since the retailer buying from the brands in general right. Retailer stocked up between 9th to 15th of March, even before the lockdown was announced. When all of… I mean to put it mildly, our kirana guy, Subbu, the friendly Subbu downstairs is very sharp guy and actually kind of predicted that there is going to be a lockdown and stocked up on all the essentials which you can actually see in the market today as well. When modern trade goes stockout, when online trade – Big Baskets and Groffers and the likes goes stock out, the friendly neighborhood kirana shop is the one who has the essentials that you need for your life. So that was that was a phenomenal finding for us in general. So they actually were overstocked and today we see the same kind of trend happening, which is essentially the standalone stores or standalone modern trade, as we call it. The independent modern trade in Bangalore, we call it like Aishwaryas and, you know, Happyland and other guys. These are the guys who will still keep on pulling stuff, which is essentially up.

VB: Actually I have had people coming out and telling me that this is the first time that a new generation is discussing the kirana beyond digital. It’s fabulous that these guys are still on the ground and have about 90 percent of the market share even today right?

LB: Absolutely they do. I mean, in these tough times, these other guys who are standing with us, to be brutally honest. But our daily milk, egg, bread and vegetables and all of that stuff, all you are able to get it is from the friendly neighbour kirana store. Another interesting trend that we saw is that these mid-market brands, these Indian brands right, are essentially done phenomenally well during that whole pre-COVID and COVID period. Essentially reacted to the stockouts through MNCs very quickly and fill that gap. 

VK: Do you have names for it? 

LB: I would give it to you personally. I don’t want to discuss specific things. 

VK: Of course. But again, these are local brands right? 

LB: Local Indian brands. So, for example, somebody has a product as a noodles, for example, and Maggie has run out of stock. And this guy is able to sell both. They have 300 percent growth in noodles in that category. It has over sold. Also local spices brands. I mean, you all have your own local spices brands right. In South, you have Eastern. In north, you have DS Spices. There is Rambandu, there is Ramdev. All of these guys have done phenomenally well by just by backing on the stock out by the Whole MNCs overall in general. So the Indian entrepreneur I think interestingly enough one of my takeaway from this whole situation was that just looking at the data was seeing how Indian entrepreneurs are ingenious. And even in the worst of  scenarios, they’re finding ways to essentially succeed or essentially make, you know, make most of those situation. 

VK: OK there are a lot of questions. If this lockdown continues for four months or five months, how will the FMCG companies react to this? The large ones and the small ones and obviously how is Mobisy going to help them?

LB: Look, one of the things that… Another trend that I saw is that lot of the brands i talked you  about the only reason they could react that fast, the ones which were successful, was because they had a understanding of how the supply chain is working, what the retailers are demanding and how to serve to that particular demand. So the digitalization or digital transformation, as you call it, and the real time access to insight is something now every brand understands very well right. So not only 

This thing that built 10 years back, which was giving them month minus one data, which was a differentiator for them 10 years back. But today if they don’t have real time insight and real time data interms of what is happening in market, how to adjust their pricing, how to adjust their supply, how to adjust their product portfolio to changing real ground realities, they won’t be able to move as fast as local brands.

VK: Basically, what you’re saying is those who add feet on street right for the distribution are not going to survive this. They have to move digital. That’s what you mean.

LB: So not just… You can’t just depend on feet on street. It’s a clear message in general right? It is essentially, how do you make that supply chains work digitally along with your sales guy also. Again, use the feet on street on a more targeted efforts rather than just going and visiting stores and taking orders and stuff like that. Essentially use them to make more must-win battles and stuff like that. The daily ordering and replenishment, all of that has to happen digitally and that’s a movement across small, medium, large. Pretty much every brand that I look at. Today if I am an FMCG entrepreneur, I would like to start by being digital rather than, you know, wait for the business to become 100 Crore.

VK: And tell me what will happen if the economy, if the supply chain is not fixed by the government, at least by opening it up for the next two months. What is going to happen to a lot of young entrepreneurs? Please answer that.

LB: I actually had to be honest with you. Look. Look, I mean, I don’t know which young entrepreneurs you are talking about, but the entrepreneurs that we work with, actually have found very innovative ways of solving this whole supply chain problem. I mean, one of the very young, a 40 Crore brand that I know essentially got the first permissions in Mumbai and Delhi to supply in the market. And their sales zoomed up. Obviously, admittedly so. So, what we did was essentially to help all these small brands to sort out their supply chain issues we created a small telegram group where all of these FMCG entrepreneurs can come and talk about how they’re individually finding innovative ways to solve this supply chain issue. I mean, if you can connect any of these guys to me at, I’ll be happy to invite them.

VK: If you have brands out here, it’s Thank you for sharing this email openly and I know that you work at a lot of brands. I also want you to tell us what kind of items sold very well. You know, I’ve asked you that briefly. You know, people said that people stocked up on condoms a lot more. You know, that’s something that I clearly noticed. I’ve seen those graphs. Guys, I’m going to put out a graph next week. You know, if you see the trend of buying rubber, they’ve just gone up like this. You know, you have to give us some insight into what products did well for the last 30 days. And somebody like Sanzo asked me, what commodity prices went up.

LB: OK, so actually, to be honest with you, commodity prices did not go up that much up to be honest with you. But what happened, interestingly, was dairy for example, was going fairly stagnant or even dropping you know in overall consumption. This particular thing has seen a definite uptick in dairy as a segment. I mean dairy has done phenomenally well over the last few weeks. You talked about Condoms. So, the interesting trend about condoms was like the weekend before lockdown essentially the condom sales went up at least 3x in our ecosystem. And you have that data, insight and stuff like that. So, we saw definite drop in the overall personal care as a segment because it seems that people are no more going to pubs and parties and stuff like that. They don’t spend as much.

VK: So, deodorants, lipsticks, all that dropped.

LB: Yes. Yes, absolutely. But something that went up in personal care was stuff like shampoo, for example. So, it looks like people are having more bath at home.

VK: Vanity metrics dropped; the cleanliness metrics picked up.

LB: Yeah. So, homecare went up phenomenally well, obviously for obvious reason, but personal hygiene obviously went up phenomenally well again for obvious reasons, but those are obvious ones. These are some of the non-so obvious ones.

VK: You mentioned noodles as a category that went up. What other categories, unknown categories went up.

LB: Biscuits. All sorts of biscuits, cookies, phenomenally did well. I mean, again, it depended on the supply. I mean, not all the brands that went up because a lot of the brands especially MNCs and other guys. Essentially locked down fairly quickly. There are some of Indian entrepreneurs figured out a way to supply to that market and whoever figured out a way to supply to that market, those categories went up. Any kind of packaged foods, even chips went up, for example.

VK: Okay, you keep saying that they figured out a way to supply to the market. I’d like to know how they figured out the way to the market, through Mobisy of course. Did you get any e-passes for everybody number one?

LB: OK. No, not honestly speaking. We did not. We call our company as algorithmic jugaad company, right? It’s all about jugaad – that’s the Indian way of doing innovations. Super innovations at periphery and we are putting algorithmics into it and bringing structures into it. We identified some of our brands for example are able to get those e-passes and they’re able to get the distributors to work. There are two problems to it. Not only just the e-pass – the government permission, it’s also about the distributor himself working. We identified one or two of those innovations and then helped brands to even join their distributions together. If a distributor for one brand is working, we are helping another brand to pile onto the same distributor to reach out to the market instead of their normal distributer. For example. If there is a certain methodology that we find out of getting a e-pass let’s say in Mumbai, then we are passing it on to the rest of the brands to say look – this is a way you are getting the e-pass in Mumbai and helping them out. And the telegram group that I talked to you about, it’s fairly useful because then the brands can help themselves without us needing essentially to mediate say to say.

VK: Absolutely. Here Sowmya asked me a question. What are your thoughts on the liquidity crunch for distributor and manpower issues? Will ways of working change post COVID? Like an alternate to labour sourcing?

LB: The last mile part of it. I don’t see at least immediately the distributor, the delivery logistics, the last-mile delivery. I don’t see it being non-labor intensive in near future. I think we are far away from this bot or robot-based deliveries as an ecosystem in general.

On the liquidity crunch side, I think again, the algorithmic jugaad to it. A lot of people… See again liquidity crunch something that is universal today. Now brands need to get stuff in the market. So previously lot of distributors were cash and carry, which is essentially saying that brands wouldn’t sell to distributor unless paid in advance where distributors would give credit to retailers. But lot of this pull thing has happened is that a lot of retailers… Brands are also using cash and carry now with the retailers.

I think I mentioned to you. The collections have… the credit part has come down fairly well, which means that brands are essentially… the distributors are essentially asking retailers for money in advance to supply because retailers need…

VK: I understand. Because they’re buying immediately right? Because the product’s moving out the next day. So, they might as well buy it on cash and carry.

LB: Exactly. Actually, the liquidity crunch is not only local brands. I talked to you about the standalone modern trades. The reason why standalone modern trades are able to stock is because they able to change their suppliers quickly. Whereas the large trade, modern trade or online trades, they take such a long time to on-board a new vendor. Let’s say you run out of a category. I talked about noodles, for example, you’re run out of your usual noodles and you want to on-board up another player today. The Standalone MT can do it at a click off of finger. Whereas the large brand takes too long to do that. It’s the same story with the brand side as well. The medium brands are able to make their decisions dynamically. I know three brands who are able to move… who have moved their entire sales team on call as… even before the retailer’s self-ordering thingie they had deployed, they essentially put the entire sales team on call to call the retailers and that happened in the matter of a day. Large brands take like 2-3 weeks to figure out. These small brands are able to jump on those. It’s about being nimble, about being agile.

VK: I’ll give you an example today. I went to buy-out milk, right. But milk packets are not there but Good Life of Nandini was available compared to Amul. As a premium segment Amul could not supply but Nandini was able to.

LB: Absolutely. You can see Milky Mist as another brand. Right? I mean, I see availability of Milky Mist fairly high right now, which was not as pull brand as let’s say somebody like Amul or Nandini for that matter. But they’re able to supply to. So, whoever is able to supply find ways to supply are generally doing well.

VK: And they’re finding a way to supply, obviously by working with government right. And finding out that their distributors are digital.

LB: Absolutely. So that 2-3 ways right. One is about implementing some contactless technologies like, you know, the applications like digitalizing your retailers to make sure your salesmen were talking on phone. The second part of it is about working with Government to find a smooth way. And ensuring the safety of your supply chain. Which means your distributors, the vehicles all of them are able to move in a safe environment without getting caught by police and stuff like that. And if you work on those two angles, I think definitely the brands which have done that quickly enough not only survive but also thrive.

VK: OK. How do you be a lean partner with brands in this industry? How do you optimize your efforts?

LB: How do I optimize your feet on street? Oh, look. Feet on street. Again, it’s about aggregating demand right. You want to… A lot of times what people end up doing is to push. And what we talk about it quite a lot, in the whole FMCG sector that brands tend to… traditionally India has been a push economy where people sell based on availability. They say that, look, if I dump this in retail, maybe consumers will buy it.

Not creating demand, using supply. Essentially, you’re not doing over supply then waiting for demand to come in, essentially creating up supply for demand. So, yeah. If we want to reduce the effort the only way to do that is essentially create a consumer recollectable brand and digitally connect your supply chain to make sure you don’t need so many FoS to do that. Your FoS can only be new business development executives not the order taking guys.

VK: OK, good. And the Sowmya continues to ask. Will there be a permanent change in consumer habits five months down the line?

LB: Very early to say it to be honest with you there have been lot of online petitions and saying look how your friendly neighborhood shopkeeper has stood with you in these tough times and how we need to continue to work with friendly neighborhood shopkeeper, not with the online or the modern trade that we switched our loyalties to. That’s the current sentiment. But I don’t know whether it will last for five months and all.

VK: OK, lots more questions. Mithilesh asks to give some insights that would help brands boost up the sales in this pandemic.

LB: How do you want to boost to the sales? First of all, we can help you figure out which outlets in the areas that you saw are currently open and are doing business. So first identify the right outlets to serve to. Then build… Either you have your own distribution or pile on somebody else who already has a distribution from those partners, it means well, if people are very happy to partner with each other in different cities so you can do a barter trading partner, we can help you to do that. Implement some sort of digital at the retailer side and make sure that the guy has an easy way to order whatever he wants and make sure your distributor is able to supply that particular thing. I think government and other which are actually quite flexible, to be honest with you last week I’ve seen the supply chains open up fairly well across India.

VK: Good to know. And you know, Nishi asked me how retailers are managing their cash flows at this point of time. Because it’s all cash and carry also with the brands. So how are they managing the cash flow?

LB: Actually, retailers cash flow is also not that bad because they turn. See if you know the trading business both the retail and distribution as a business, it doesn’t work on the margins, absolute margins. It works on the number of turns that you make. Not volumes. The number of turns. Look how fast can you turn over your inventory right. Today the situation is that. For example, let’s say me give me a small example to make this understand. Let’s say you are getting 5 percent of margin on certain product and you’re getting 50 percent margin on certain product. But this 5 percent in product you are able to sell every day Vs. 50 percent margin product you’re able to sell only once in a month. You will at the end of the month, you would have made it 100 percent margin using the 5 percent margin product in 20 days rather than you would immediately get 50 percent margin in the 50 percent product. The terms is what keeps the industry running. And currently the retailer terms are so high. I don’t think there is a digital it. When you talk about cash crunch, if you are talking about physical cash, I think lot of us learn to move from physical cash to UPI and online, and other ways of doing.

VK: Interesting take today. I want to throw at you. I just have the UPI numbers with me. It fell…the transaction volume fell by 7 percent and the amount…the volume also fell by about 6 percent. It’s also the 1 billion transactions mark in October last year, but it went to one point three billion last month in February to about 1.25 in March. That’s probably because of the pandemic itself right.

LB: Absolutely. I mean, I’m fairly sure. But it’s also because of the consumer consumption patterns. I think. So, for example, I like you said so online. If you look at online right now, the online transactions have come to standstill, both Amazon and Flipkart are currently not selling anything. You can’t buy things on Big Basket or Groffers. The whole online having come to standstill. And also, all these products which are aspirational, let’s say, today’s day nobody is buying a TV, or nobody is buying the next iPhone. Whatever 12. People are not buying the high value stuff anyway which ways. That industry today gone down. I wouldn’t be surprised if it reflects in the whole UPI numbers as well. But if you look at if you kind of try to break down those numbers, you will see that the transactions would have increased at a kirana level kind of transactions.

VK: That’s a great point that you make. And that’s you’re leading to that next question. It’s from Vaibhav. He says, let’s say now, groceries are in demand and if your distributors are out-of-stock and how will you manage such a situation? This is from Vaibhav.

LB: I’m sorry, I did. I didn’t get the question. The distributors have stock and how do I manage the situation? No, I don’t see that.

VK: Say groceries are in demand at this point of time and if your distributors have run out of stock to supply to the retail. How did you manage such as situation?

LB: Again, it’s a backend supply chain right. What at least the brands which are on digital today get alerts every time a distributor goes down below a certain holding stock. Distributor supposed to hold certain holding stock. Let’s say 2 days stock, 10 days stock. Every brand has a norm with respect to which product a distributor can keep for how long. And if you have a digital supply chain your brand would get that alert well ahead in time. Look, this is going to run out of this particular stock on this particular day. You better send your stuff right now.

If the brands are not able to supply to the distributors, then obviously the problem is valid. The distributor will go stockout and hence won’t be able to supply. But again, at least this brand-to-distributor supply chain was never affected during this whole stuff.

I mean, there are some brands which are affected but those were not FMCG brands. Like truck drivers won’t turn up. I mean, a lot of the problem in this pandemic has been because people won’t turn. It’s actually lot of it is just people issue. But one thing kind sorted out with people turning up. Brand to distributor supply chain was not as big a problem.

VK: A lot of questions saying our SMEs are affected because these people are not turning up because, you know, it’s daily income in end of the day, if you’re not supplying product to the market. Do you see that changing in the field?

LB: Absolutely. I mean, that’s why I’m saying. If I compare last Wednesday to Saturday data to this Monday to Thursday data, I definitely see at least 20-30 percent uptick in the whole activity in general. Which essentially tells me that lot more people are coming back to work especially in the supply chain workers, the logistics guys, the truck drivers and other guys who are essentially able to supply retailers. On the ground, as you would say anecdotally, I can say that I go to my down store Subbu, he still has stock. For most of the stuff, which means he may not have my favorite brand, but he surely has an alternate brand which can, you know, cater to my need.

VK: And are they charging a lot more for certain products? Beyond whatever the stipulated prices. Do you see that happening?

LB: Fortunately, at least in our ecosystem, it hasn’t happened that way. Our brands have generally acted responsibly. A lot of them have actually cut prices for personal hygiene and other products. At least in our ecosystem I don’t see the prices going up. As a consumer also I have come across a situation where prices have gone up. I think some of the fresh items like eggs and vegetables have some cases gone slightly up, but some other cases they have gone down as well.

VK: Why have meat supplies been hit? Licious, for example, is not delivering. Meatigo is not delivering. Although they have passes. They have got passes but they’re not able to deliver.

LB: Okay. I don’t work so much in the fresh meat industry. I work in a packaged meat industry. I would say buy Sumeru in today’s day and world. Go buy Real Good chicken, go buy the Godrej products for frozen foods.

VK: Are they available?

LB: And yes, they’re very much. I mean, in my friendly neighborhood kirana store. So, go with brands on Bizom that’s what I say. All my entire home groceries come from Bizom brands. I’ll give you a list of Bizom brands go buy them.

VK: Yeah nicely marketing yourself also. Well done. And listen Lalit bhai somebody asked us you know… ventilators are a problem. Obviously, you distribute food. But if tomorrow if they want to ride on your distribution power to get to hospitals or whatever to give ventilators is that something you can do and is a ventilator problem, a real problem today, in our country?

LB: Again, I’m not medically qualified. I’m not right person to answer whether ventilators truly are a problem or not today. I haven’t got a request from anybody to say can I use your distribution, or your help, your brands. If somebody comes to me saying, look, can I use distribution or with your brands I’m sure my brands and our distributors will be more than happy to lend them their logistics service to be able to distribute.

VK: Good to know. Okay. Mithilesh asks to tell us something about your apps. You have Distiman and Bizom right. Tell them quickly because there lots of questions. We have to cover all these. Tell us about your apps quickly.

LB: Sure. It’s actually…it’s the same technical platform. We call ourselves as the Retail intelligence Platform. There are two brands that we use to market to same retail platform. The brand facing to retailer is called Distiman. It’s like Shaktiman. It’s like superhero of distribution. Retailers identify it with a little bit more. Our brand name facing to the primary brand – FMCG or CPG brands is called Bizom and the app is Bizom on the Play store as well which is used primarily by distributors as well as their field sales guys. And their strategy guys.

VK: Check it out – its Distiman and Bizom, guys. You could check it out on that website. Gaurav Navani asked me a question. He says in the era of brands wanting to become direct to consumer to save their margins what are your views are the same? It’s a good question.

LB: It’s a great question. I’m fully supportive of the whole direct to consumer. As I said this works very well with the pull economy that I talked to you about sometime back. I think this is definitely happening. I mean, I saw one brand from our ecosystem, a water brand called Bailey, who essentially gave a 24/7 number for people to call to order Bailey’s 20 Liter water bottle. So today, one of the necessities is also a water bottle. And they deliver you to home. But interestingly, you know how the deliver home. They deliver it to home from your friendly neighborhood kirana store. So essentially the B2B2C or B2C of a brand in an emerging market is evolving as using the neighbourhood kirana store as a last mile. Yeah, exactly. You connect with directly with consumer as a brand, but essentially final delivery will happen through the same supply chain. This is eventually going digitally connected consumer and that’s how I see that evolving. We ourselves also doing a lot of things in that particular aspect on call or WhatsApp bots and whatever it may be.

VK: What are brands following now? This is a question from Mayank. Is it a push and pull strategy? How has it affected their marketing in this crisis?

LB: So today to be brutally honest with you, 90 percent, maybe more than that of the brands, still work on the push strategy. And I think the whole, you know, whole digital transformation converging to the pool has only happened with some earlier adopter. Not so much with everybody. And I hope all this digital I’m not only I hope I see that happening. This whole digital migration pull migration I see that happening speeding up because of this pandemic. One of the things about this is essentially seeing that everybody wants to stay contactless to address future pandemics. This I see that happening.

VK: Ok then the next question is directly about this? Can outlets directly order without a salesman today they came on Bizom?

LB: Yes, absolutely they can. Absolutely. Bizom has a direct retailer app which is essentially allows retailers to order any brand that they want, which is on the Bizom platform, which allows them. Interestingly interesting titbit about it – in last one week, more than 20 brands listed on that particular retailer app and started encouraging the retailer to do direct ordering through that retailer app. 20 brands in one week went live guys. This speed is phenomenal. The world is changing.

VK: How do I sign up if I am a small store with you? Or if I’m a standalone modern trade I belong to a family that owns. I mean, not me. Hypothetically, if there’s a retailer who wants to sign up with you, how do they do it.

LB: Go to Play store, search for Distiman, download Distiman. It’s a self-registration process like you register for your Uber app or Amazon app. It’s fairly simple. Use your mobile number and start using it.

VK: OK, great. And there’s the next question. Vaibhav says you know apparently, I just said that I brought Nandini milk when Amul was not available You know, these small brands are never the first choice. How do you deal with brands accordingly? You know when you don’t get the first choice how does the consumer go to these second-choice brands?

LB: There are commodity categories and not so commodity categories. I’ll give you an example of one of our brands. For example, Epigamia. A lot of you would have heard about Epigamia Yogurt. It’s a phenomenon. It’s a category setting kind of a product. If you are a small brand, you’re essentially looking at creating or differentiating in a certain category. In general. If you are trying to do the same thing as a larger brand is doing, it’s going to be very hard. Then you’re always going to be second or third choice in the whole store. But if you’re let’s say trying to compete with Amul, come with a differentiated broader differentiated packaging. I mean you would have heard about another brand of ours called iD Fresh. They have a phenomenally different packaging. Phenomenally different consumer connects and stuff like that. As I said, if you are a small brand trying to compete with larger brands in the same category, try to differentiate your product or the packaging to create the consumer recall.

VK: We have an investor watching this show. Karan Tanna who is the founder of Ghost Kitchen is here. Hi Karan. OK, now Sakshi asked me a very important question. She says in times such as these, Louis Vuitton has entered personal hygiene and launched sanitizers. Such a product post COVID, they actually introduced that post COVID and become a larger brand. You think that is a good step?

LB: I don’t think it’s even their own strategy. I would be very surprised if it’s Louis Vuitton’s own strategy. I think lot of these brands and nicely so are essentially getting into these things like personal hygiene like your hand sanitizers or soaps or ventilators. And it’s good. I think we need that supply today. But as and when the demand falls off, it’s again going to be back to your standard SQLs and Reckitt Benckisers of the world who will continue to be the leaders. Because they know this market fairly well. When things settle down and when the demand dies off, I don’t think there’ll be a. I don’t think you’ll pay premium to get a Louis Vuitton hand sanitizer.

VK: I would never touch that by the way. I rather go use sterilium or something. OK. Somebody asked me, is this. Do you have did you ever think of doing B2C at all? Because you know the data. Did you do your own white labeled kind of distribution?

LB: Not really. I mean, look. We understand our DNA fairly well. As a company, we ourselves are a very techie company. I mean, you can see it in me. And we find it lot of fun in creating a beautiful insight and beautiful…give a brand a certain way to grow in a certain geography and stuff. That’s what gives us kicks. Our DNA has always been about creating good tech and getting somebody to pay for that particular tech enablement. We call ourselves our technology route to market right. A digital route to market solution. We will provide the entire route to market for brands and brands pay us for that particular service and we are happy for it. I don’t think we will ever be a consumer company, at least not. We will serve consumers obviously, but through brands. Not directly as our own brand.

VK: OK. How do you get a daily neighborhood stores go UPI at this point of time? How many of you kiranas or wholesalers are completely on UPI?

LB: Again. It’s a little bit loaded question Vishal. That data has to be a little bit split down in a sense that in a top 15-20 towns, a significant portion, more than 70 percent of retailers would be digitally connected. Have some level of UPI and stuff like that. But the numbers start dwindling when you go further and further away from populous areas. If you go to rural areas it will be lesser and lesser till it will be. So that that’s essentially there’s a curve going downwards to a tier 5 town where you may not even have a single store which is UPI enabled.

VK: OK, interesting. But, you know, it’s interesting right. If you cover the Indian highways and you know most of the cities, towns have UPI and you have to go down to the villages right.

LB: Exactly tier 5. If you go to tier 5 which is basically, you’ll have to walk for five kilometers to reach for that particular village is the place where you actually see there is no digital payment capability.

VK: OK, next question from Sowmya again. What about last mile delivery from retailers to home? How can a kirana store maximize that without a delivery infrastructure? Will walk-ins be enough for kiranas once Amazon’s back on track? I’m talking to them at 10, by the way, right after this.

LB: OK. I don’t know how much. Sowmya from whatever I know the friendly neighbourhood kiranas already have a delivery logistics in place. OK. They already do. I mean, that’s their stuff. And they actually know how to optimize it. By the way better than Amazon.  They have essentially got the maximum out of that infrastructure already by doing their own innovations, own jugaads. Figuring out the cheapest labour, figuring out the cheapest mode of transport. Figuring out the relationship with the consumer. To say that, you know, if something is one hour delayed, then how do I cover up for it? They even have their WhatsApp groups with consumers and stuff like that. I think they already have an infrastructure in place. The question is, how do you create a trust layer around it. Or how do you create digital trust around it? Which is what we have been trying to create? You think is there a digital trust layer where a consumer feels comfortable to interact with kirana digitally and have some level of answerability from that guy? To be able to deliver certain products and certain prices at certain time and certain quality so to say.

VK: OK. I mean, if retailers are not able to sell certain brands, then if you are and if those brands are not able to sell, obviously your inventory stuff, you’re not because you’re not keeping any inventory

LB: Yeah. We don’t keep any inventory. We are a data, we are a technology company. We don’t keep the inventory. The inventory is kept by the distributors, the retailers, the brand themselves.

VK: OK, Rishikesh has asked is automobile industry affected. Obviously, it is affected. But I’ll give you a tidbit Rishikesh. KIA put out a press release today saying they sold 81 thousand cars for the last 10 months in a slowing market. They’re doing it for, you know, obviously PR purposes. But, yeah, they did sell that many cars. There is a slowdown. Maruti, in fact, made its entire factory available for manufacturing ventilators by the way. That’s another titbit for you.  I don’t know that industry is going to pan out, though.

LB: In our ecosystem, we don’t work with the auto industry. We work with auto parts industry. And obviously there is a large part of its currently shutdown entirely. So that is significant. I would I would be surprised even if it is 10 percent of it is run.

VK: I like the next question. It’s about inflation OK. I mean, obviously, the government’s going to announce a lot of packages to bring back SMEs. To make sure that the lending comes out. Mayank asked the question I mean, will inflation set in now with essentially goods?

LB: Again, I don’t see that happening. I mean, if you look at the supply side, the problem that happened is now currently you have lot of especially in essential goods now we are piling up on the supply side. As and when people piling up on the supply side, the prices will remain stable. I mean, even if you look at somebody like fresh goods, for example, a lot of currently there are farmer distress and stuff like that, because the fresh goods don’t have enough supply chains to get into market. I don’t see that inflation hitting essential goods. Unless, of course, you know, you have a lockdown, which is extended for a prolonged lockdown. At least from a supply chain side I don’t see that happening. 

VK: Since you have all the data tell us till when will this last? Will it last till May?

LB: I don’t think so. OK, this is my guess. And don’t hit me for it. I know rumour mongering is not allowed. But this would be my guess. I would imagine that the supply chains and retail and everything else will open fairly promptly on the beat April. Whereas some of the industry is where you can work from home would be advised to work from home. Also, they might create clusters of hot zones where they might want to keep people indoors and let other people do their daily work as usual. So that’s my hope seriously. Personally, I have had enough of working from home. I’m longing to go back to office.

VK: How are you spending time? Reading or what? Reading or working all the time.

LB: So that’s a joke where we see all these Instagram posts and WhatsApp posts of people saying how am I enjoying the work, the lockdown. We get pissed. We, founders, get pissed because we have been working doubly hard during the lockdown period and our industry is such we have to keep on lines open and we have to work around all this coordination to do over phone instead of in-person and other stuff.

VK: You would have got a pass right because you are distribution tech. You can go out.

LB: So we can go out but it’s necessity. Also, our own employees health reasons. Being a digital company, a tech company, that is a useful thought that you don’t need to physically interact with people. You can do it a lot of video call and stuff like that. So we’re currently all of us working from home.

VK: OK, Anand asked a nice question. Firstly, are you a SaaS type of business and what is your opinion on the SaaS business situation in India?

LB: We are not a SaaS type of business, but we are very much a SaaS business. We charge brands monthly per user, per transaction kind of fees. On top of that. And how is the impact on SaaS business. SaaS business. I think liquidity is a challenge for every business, whether it’s a SaaS business, whether it is Reliance, whether it is an SME. But apart from that, I think otherwise the SaaS businesses are doing phenomenally well. As I said it depends on which industry you are on. Obviously if you are on a travel tech or if you are on a hospitality tech, you would see a more tough time.

But assuming it is in our kind where we’re working with essentials and retail and FMCG, we see actually a huge growth. Lot of large enterprises have started saying that Lalit, we thought about you, but we were not ready to digitally transform. Can we do that now? A lot of guys are actually coming on board and saying, look, let us speed this up. Let us use this lockdown time to build our digital infrastructure. So that once the lockdown is over, we are able to hit the market currently. Over a period of time I think it is a phenomenal opportunity. Short term liquidity crunch. I think every one of us will work through that.

VK: Okay. And, you know, is Mobisy going to see a spike in its business thanks to the pandemic. That’s one question from Oberoi and Sowmya goes on to ask what cities you are operational in?

LB: So I don’t want to sound like a schmuck, but yes, our business is already going up because of the pandemic. As I said movement towards digital of brands is speeded up. As I said, 20 brands already started using in a week’s time. Just signed up for retailer app deployment. What was the second question? I missed it.

VK: The second question was about… even I forget because I moved on. There are so many questions popping up. There is a very interesting question on Udaan and I’m going to ask you that question. Basically, the other question is what markets do you serve in?

LB: So again, as I said we don’t have a physical distribution. We don’t keep physical inventory. Our brands distribute pan India from Kashmir to Kanyakumari to Mizoram to Gujarat Kutch. We essentially have, you know, I don’t know about 100,000 odd distributors on our platform. So, across India.

VK: Yeah. You know, the next question is really interesting, and I like it. It says why don’t you create an interface like Udaan and delve into categories other than FMCG. I knew that was coming.

LB: OK. So first to put at question correct for you, we actually serve a business called CPG. I did not want to use that name here because it would be very technical. It stands for consumer goods, which includes FMCG plus fashion plus consumer durables, auto parts are one I have mentioned. We have customers who serve in Agri verticals like seeds, fertilizers and so on. So, we work across verticals in the consumer space. There is a key difference between Udaan and us. I think for Udaan, first customer is retailer and the secondary customer is a brand. For us, the primary customer is brand and secondary customer is the retailer. If I could put it that way. If I could make it simple enough.

VK: You’ve made it very difficult for them to hear, you know. But Lalit, you have to tell us what do you think of the Indian market? Is it value conscious or price conscious? That’s a question from Saurav.

LB: Value conscious, just for sure. I mean, I have seen, I’ve been an entrepreneur for last 13 years and building products for India and I can tell you this by working with every kind of business in India, we are extremely value conscious. I have rarely seen people pay the top money or rather I’ve really not seen people pay the top money if they are sure they are getting the ROI for it.

VK: Then the question saying are 20 million jobs lost now. 30 million would be a lot of jobs. I mean, a lot of blue collar workers have gone home.

LB: Yes, absolutely. Again I’ll stick to the industry that I know. I will not go beyond my purview. Two industries I know – tech because this is what I do and CPG because this is what I serve. In CPG, a lot of feet on street jobs would be affected post this pandemic. And in tech the saying goes like this. Good people will always find the job. If if you are not the best guys, then maybe it’ll be tough. But at least in our business, we have kind of openly said that we will not let anybody go  due to pandemic. In our business, the jobs are secure.

VK: I’m gonna go to the last question. But first share your email with the group so that they can write to you.

LB: Yeah. Of course. Send me an e-mail.

VK: What does your e-mail?


VK:  OK, guys, if you’re a brand, if you’re a retailer, wholesaler, get in touch with them and sort it out. Do you have a helpline or or some kind of a blog post on how to go to Mobisy on the website?

LB: Sure. Absolutely. If you just type on, whichever way you do. You will reach the website. There is a helpline number, there is a chat box on top of it. You can chat with our executives, you can talk to our executives. We will help you out in terms of how to sign up.

VK: You know, Mayank has a question. While, a lot of information or lot of support has gone to supporting blue collar workers, not even blue-collar workers, rural workers. That’s what Finance Minister announced. Is there a package for small businesses? There are 50 million small businesses in India of which 10 million are kiranas.

LB: I sincerely hope so. I sincerely hope so, because as I said, not all kiranas were open today. And what about the ones who are not open. They are literally living on a monthly turnover kind of a business. I sincerely hope there is a package coming in. Though we haven’t seen any right now? I sincerely hope. Tomorrow I think our prime minister is going to speak. I’m looking at looking forward.

VK: What are you reading? Are you reading any books at this point of time?

LB: In front of me is Yes, Minister. I don’t really read business books, to be brutally honest with you. I generally go with fiction. There is another book that I am reading. I mean, all sorts of fiction. There’s one book I’m reading, for example, right now is called Save the Cat, which is about how to write novels. I hope at some point I might write a novel. I like reading that. I’m reading Yes, Minister, which is a really fun book to read. So, yeah, I mean, I generally read book. Yeah Save the Cat is a book

VK: So you mean the show or you’re reading the book.

LB: The book, the book. I’m reading the book.

VK: And you know, you’ve been lovely. Thank you for supporting the audience. There are lots of people who have joined us today. And stay clean, guys. And if you want to save your business, if you’re in the business of brands, F&B and you want to understand distribution, tie up with Bizom. I have known them for a while. They have a lot of data. Go check them out. Thank you, Lalit  being on the show. You’ve been wonderful.

LB: Thanks Vishal for inviting me. It was lovely. Everyone, please stay safe. It’s an interesting time. And yeah, reach out to me if you need any help.

VK: And guys check out the articles that I’ve written on the Indian distribution on YourStory. Lalit is featured there, a lot of other brands. You’ll understand how they really work. It’s like a primer before you talk to Lalit. So check it out. So thank you, guys. Have a great night. And I’ll see you tomorrow with a guest from the U.K. who’s been stuck there because of COVID. And he’s a Indian brand. It’s it’s doing massively well. But he’ll talk to you about how distribution has been affected in the U.K. and in India. So check it out. And on Saturday, we are talking to Marico. So that’s another big thing. So watch out for that. Thank you Lalit, once again. I’ll see you in a bit. Bye, good night. Stay safe. 

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