Not only did Covid-19 turn life upside down for Indians across classes, it also had a similar sea-change impact on many businesses. For the likes of Ninjacart, WayCool Foods and others which were into B2B food supply, the pandemic and the ensuing lockdown meant that going direct to consumers was not just an option but a necessity. From B2B supply to direct delivery to the consumer, food supply chain startups are now increasingly competing with B2C players like Bigbasket, Grofers among others. If earlier, this competition might have deterred B2B players, now it’s about tapping the opportunity and making the most of it.
That’s exactly what farm-to-fork startup Aker Foods has managed to do. From being a B2B supply partner to directly controlling the buying and distribution of fresh produce to consumers. It has latched on to one market — its home base Pune — and is ekeing its way into the consumer space in the long tail that follows heavily funded startups such as Ninjacart, Waycool, Bigbasket, Zomato Hyperpure and others.
The startup, founded by Suraj Saste, Manoj Jadhav, Nihal Surve and Adarsh Kedari in 2019, is moving beyond supplying fresh farm produce and dairy supplies to restaurants and delivery kitchens like Swiggy, Zomato, Farzi Cafe, Subway, Haldirams among others. With restaurants and delivery kitchens being shut during the lockdown period, Aker was inactive for April but managed to figure out the B2C strategy that seemed to be working in the hyperlocal model.
“We pursued this ambitiously, studied the supply chain gap and finalised on a retail model Aker Retail, which is a hyperlocal store format, with omnichannel presence,” Saste told Inc42.
It began by working on its technology platform to support the stores and focussed on one residential neighbourhood or building and store at a time. “In no time we were able to develop this. And the funding raised during this time frame kind of gave us extra gasoline to deploy resources and hire the right talent,” the cofounder said about the March 2020 seed round from Mumbai Angels Network.
Aker’s Omnichannel Fresh Produce Play
On the B2C side of things, Aker earns revenue through walk-in customers in retail and general trade, app-based sales, third-party aggregators and daily-delivery subscriptions for sales of fresh fruits, vegetables and dairy products, with the retail channel contributing the most to revenue. Up to 65% of the company’s revenue comes from walk-in sales, with the ‘Aker Foods app’ contributing 15%-20% of the revenue. The cofounder also claimed that the company has a 45% monthly customer retention rate and 90% weekly retention.
Through its subscription-based deliveries, Aker also competes with bbdaily, Milkbasket, SuprDaily and others to deliver supplies daily on a slot basis. Finally, Aker Foods is also utilising grocery delivery aggregators such as Dunzo, Swiggy and Zomato to list its retail stores and cater to a wider set of audience.
“With this approach, we are aiming to offer fresh, high-quality fruits and vegetables to our customers at their convenience. At the same time, we are enhancing our last-mile delivery option, where we are able to deliver fresh, exotic veggies and dairy products within 90 minutes, but with incremental cost,” the cofounder added.
Aker Foods claimed to serve close to about 4,000-5,000 orders on a monthly basis through its hyperlocal, omnichannel presence in Pune. Saste claimed the company has a repeat order rate of 45%-48% with a monthly revenue rate of INR 20 Lakh.
Solving B2B Problems With B2C Play
Given the minor success from its consumer-facing business, the company is also leveraging its B2C stores (unsold produce) to supply it to the restaurants and delivery kitchens, which have slowly started to operate in full capacity in recent times, besides supplying it from its existing warehouse inventory. This helps the company reutilise the retail space and amortise that investment through multiple sales channels.
“Through our AI-based proprietary algorithm we are able to map the supply and demand of both farmers and our end customers in a much more efficient and transparent manner,” Saste claimed.
Already in talks with a few investors, the company plans to raise funding in the coming months and expand into other metro cities including Mumbai, Hyderabad and Chennai. Besides expanding its footprint, Aker Foods plans to strengthen its backend supply chain and acquire new customers efficiently.
“In the next 10-12 months, we plan to set up at least 10 new stores across locations, generate more than 25K orders MoM and develop private labels in the fresh fruits, vegetables and dairy categories, thereby increasing customer stickiness.”
The Covid-Induced Pivot
“Today, B2C gives us a larger chunk of revenue, where we have been growing at a 30-35% MoM, alongside B2B revenue with 30% growth on a monthly basis,” — Aker Foods’ cofounder Suraj Saste on going from B2B to B2C.
Pre-Covid, the company was completely focussed on the B2B agri supply chain network it has built by directly working with the farmers. In fact, Aker Foods is one of the backend service providers for Zomato’s farm-to-fork platform Hyperpure in Pune and Mumbai.
Aker also claimed to supply 80% of Swiggy’s cloud kitchens and 100% of Subway restaurants in Pune before the pandemic hit the restaurant business and many had to shut shop. The company did face initial hurdles along the way, where the procurement of the supply dropped by 30%. But Saste claims the company was able to establish credibility with farmers because mandis were shut for three months, which opened up the doors for private players to buy directly, which in turn fit into the high demand from the consumers. Even that was not smooth in the initial days.
“When you are procuring from farmers and transporting them, at times, we were being stopped and harassed by the police for 4-5 hours, for no reason, even though we had all the documents and e-passes with us. That was a little painful because we were trying our best to make sure that all the essentials were made available.”