How ShakeDeal’s Tech Transformed Industrial Procurement For 10K+ MSMEs, 250+ Enterprises

What was the biggest challenge manufacturers of all sizes used to face even before Covid-19 hit the world? A less-than-optimum supply chain plagued by procurement risks and costs – a good many companies would tell you. If procurement was challenging earlier, the global supply chain was really and truly broken during the pandemic. Even now, many businesses are working on future-proofing their sourcing and procurement operations to boost bottom-line growth.

But long before the global debacle, brothers  Akash and Akshay Hegde, who joined their family business to make industrial tools and tackles in 2015, knew the challenges of a small manufacturer. With meagre buying volumes, limited resources, and a lean team of 30, they often ended up negotiating sub-optimally with suppliers. But what hit them most was the lack of price transparency and reliability in fulfilment, resulting in low net profit, inventory challenges, quality issues and production loss. 

Large enterprises did not fare well, either. Most struggled with managing multiple vendors, lack of product standardisation and on-time delivery. 

Consider this. Even in 2022, 60% of small and medium businesses lost up to 15% or more in revenue due to supply chain delays, per a survey commissioned by the supply chain visibility platform Anvyl. Worse still, 56% of the SMBs had reportedly changed their suppliers/vendors due to costs and consistent delays.    

Knowing first hand that an inadequate procurement process could do more harm than good, the Hegde brothers decided to build a technology-enabled platform to transform B2B commerce. Their goal was to create an agile and efficient process for easy transactions and a seamless customer experience. The duo teamed up with Santhosh Reddy, a product development architect, and ShakeDeal was launched in 2016.

The B2B marketplace connects enterprises and MSMEs with OEMs and bulk suppliers of industrial goods and business supplies. It also provides a host of proprietary tools, enabling quick and quality procurement, purchase and payment visibility and extensive savings through price analysis. 

The platform deals in a broad range of industrial products, including safety equipment, hand and power tools, pumps and motors, testing and measuring instruments, IT and electronics, electricals, automotive, agricultural products and many more. Currently, it features more than 40 categories, offers 5 Lakh SKUs and also sells a vast selection of customised corporate gifts.

Procuring via the ShakeDeal website is simple, thanks to the platform’s fully digitalised  workflows and robust customer support. As in Amazon’s B2B marketplace, buyers can find product specifications on the site and manage their inventories easily with ShakeDeal’s procure-to-pay platform and Mozart, a vendor management system (more on that later). 

But ShakeDeal offers more than just operational ease. The platform consolidates bulk orders from buyers to ensure discounted pricing that is 8-10% lower than current market rates.  Further, to reduce fulfilment costs, shipment consolidation is achieved by combining multiple orders from different sellers into a single shipment when a buyer places several orders. 

Also, managing a large number of suppliers can be a challenging task for enterprises, as it takes up a lot of time and effort. To simplify this process, the platform has introduced ShakeDeal Mozart, an all-in-one vendor management system (VMS) that streamlines the downstream supply chain and ensures seamless operations (more on that later). 

ShakeDeal currently serves more than 10K MSMEs and 250 large enterprises and has a network of 4K+ suppliers. Among its notable enterprise customers are industry giants such as Adani and Vedanta groups, Siemens, Nayara Energy and Bharat Heavy Electricals (BHEL). 

The B2B platform has partnered with reputed third-party logistics (3PL) companies and ships to more than 20K pin codes across India, ensuring accessibility for businesses nationwide.

 

How ShakeDeal Mozart, OTIF Deliveries Are Powering E-Procurement

ShakeDeal’s journey started with a vision to create a strong procurement network of B2B buyers and suppliers. Although the Hegde brothers were familiar with industrial goods and supply chains, they were looking for a tech-savvy cofounder who could help them redefine B2B commerce. They met Santhosh Reddy at a networking event and bonded over the challenges and opportunities in the supply chain. Eventually, the three of them set up ShakeDeal in 2016.

In 2018, Mahendra Vora, founder of the PE firm Vora Ventures, joined the board as chairman and entrepreneur Kris Nair joined as president and CEO. Vora and Nair have brought their expertise in SaaS and enterprise domains. Nair has run an AI-focussed technology company, Ascendum, while Vora’s company, Acquiire, a P2P software company was acquired by Coupa, a business spend management company.

A year later, the startup ventured into the corporate gifting, and rewards and recognition space. Its goal was to help companies retain its valued customers, business partners and employees. According to Akash, businesses often face difficulties in managing their corporate gifting programmes, ensuring reliable delivery and handling multiple suppliers transparently. However, it is an essential brand-building exercise that should not be overlooked. Hence, ShakeDeal optimises procurement costs and ensures timely delivery of physical gifts and digital rewards to help maintain crucial relationships.  

The platform faced its biggest challenge during the pandemic. Much like online shopping, procuring industrial supplies and businesses digitally was the need of the hour when physical markets were shut down for months. However, a large number of enterprises and MSMEs still needed to be technologically equipped to initiate that process.

Undaunted by the turn of events, the platform helped businesses of all sizes with easy order-placing and transactions and pushed a robust CRM for constant hand-holding. It also rolled out ShakeDeal Mozart, a comprehensive vendor management system (VMS) powered by a rules engine, which serves as a supply chain control tower for carrying out critical tasks. 

For instance, it syncs with various ERPs to understand enterprise-specific purchase order (PO) formats, interacts with several business software programmes for data exchange, routes orders accurately and provides end-to-end order and shipment tracking. The VMS also features a single dashboard for complete visibility of POs and payments. These vendor management and supply chain optimisation services on ShakeDeal Mozart are available for a subscription fee.

To ensure timely delivery, ShakeDeal has built a network of fulfilment centres (FCs) for specific tasks. Urgent procurement is the priority here and the platform works closely with top suppliers for drop shipping (sellers shipping directly to customers). Just-in-time (aka JIT, where inventory does not need to be stored or managed until a purchase has been made online) model is available for less time-sensitive orders, while sellers’ fulfilment centres serve as inspection/quality control hubs for standard orders before packages are shipped out. 

Additionally, ShakeDeal keeps an inventory of fast-selling items in dedicated FCs, mainly near B2B buyers, especially those who prefer vendor-managed inventories (VMIs). This has helped it achieve on-time and in-full (OTIF) delivery rates consistently exceeding 95%, claims Akash.

The startup works with logistics players handling land and air freight across India to maximise OTIF. When an order is placed, ShakeDeal website automatically selects the most suitable shipping company for the job based on the shipment type and volume. This approach keeps shipping costs low, guarantees safe and timely delivery and allows customers to track their orders from start to finish.

How ShakeDeal Negotiates & Analyses Pricing To Trigger Up To 10% Savings

ShakeDeal stands out among B2B marketplaces due to its unique focus on price negotiations and cost savings for MSME buyers. The startup collates purchase requirements on its website and aggregates the vast demand (given its 10K+ customer base), thus paving the path for negotiations with sellers and securing cost-saving deals. In return, it retains a part of the savings as commission while passing on the rest to its buyers. All transactions are 100% GST-compliant and save 5-18% compared to B2C market rates, claims Akash.

On the other hand, enterprise customers can access a product catalogue with pre-negotiated rates and pay portal charges based on transactions. 

Sellers, too, have to pay a commission on every successful deal. 

This means ShakeDeal has a three-tier revenue model – earning transaction-based commissions from buyers and sellers and a fee for its Mozart services. According to Akash Hegde, ShakeDeal has always focussed on unit economics to drive growth. 

It is worth noting that base prices on the site remain competitive due to ShakeDeal’s Intelligent Engine. This tool rationalises costs by comparing product prices on websites/apps, as well as tracking sales history, supply chain expenses and other relevant market data. As a result, base prices for MSME customers are 8-10% lower than the average market rate, creating a win-win situation for buyers and sellers.

Have these measures enhanced buyer and seller stickiness?

Akash says that the startup initially used outbound marketing to reach out to vendors. But they are now voluntarily signing up to access the fast-growing customer pool. ShakeDeal aims to expand its vendor network further to improve overall engagement.

It will also enter new categories, such as production consumables and raw materials, opt for cross-selling to add value and target a revenue of INR 1,000 Cr in the next few years.

Bringing in new buyers is the most critical task to reach those ambitious goals. So, the startup is using organic and inbound marketing to gain traction in the long term. ShakeDeal hopes to disrupt the market more with content and brand campaigns. It also attends industry events to network with decision-makers and supply chain professionals, sharing insights and successful case studies to attract bigger clients. This approach has paved the path for chaperoning enterprise clients in their digital transformation journeys and deepening relationships with the existing ones. 

Could B2B Marketplaces Reshape The Future Of Procurement?  

The world has gone off its traditional trajectory in a post-Covid world and the procurement/supply chain segment has changed for good. However, not all MSMEs can develop in-house e-procurement systems, and many look forward to seeking help from enablers like ShakeDeal, IndiaMART, TradeIndia and the rest. With the country’s online B2B marketplaces expected to present a $200 Bn opportunity by 2030, compared to $20 Bn in 2022, per a Bessemer Venture Partners report earlier this year, the growth path is wide open. 

Akash of ShakeDeal also believes that B2B ecommerce focussed on industrial goods and business supplies procurement is growing exponentially as the right growth drivers are present at the right time. In fact, the rise of digital marketplaces is a given across B2B and B2C sectors due to maturing digital technologies, their fast adoption since the Covid-19 pandemic and favourable regulatory measures pushed by the government.

Tech enablement in supply chains is further driving user expectations, the founder says. As in the B2C space, B2B buyers are also looking for easy-to-use, customised solutions to meet their specific requirements. Options (read multiple suppliers), value and efficiency are key to unlocking that buyers’ market. Again, sellers can access a humungous customer pool without adding too much to operational costs if enablers help them navigate the initial hurdles of e-procurement.    

With their evolving technologies and business models, the likes of ShakeDeal have the potential to reshape the future of procurement and B2B ecommerce in India. But as Akash said, the outcome will depend on utilising the capability of these marketplaces to enhance operations and reduce costs.

Getting the digital environments, operational models and specialised scenarios for buyers and suppliers right at the first go is crucial in a nascent market like India (B2B ecommerce accounted for just 1% of the total B2B market in 2022, says Bessemer). Otherwise, the early mover advantage and trust in the brand may not work out as expected.