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A lesson in business stability, especially when it comes to scaling.
Problem statements often seem different and more straightforward than they really are from the outside looking in. It is only when founders step into the crux of the business challenge, knee-deep in the meat of it all, that the true problem is better understood. Then, once startups pivot their initial ideas to meet the market’s non-obvious but most pressing needs, they are able to solve for product-market fit with scalability in mind.
Such was the case with Ninjacart, a startup that began as a simple but one-dimensional solution to the challenging reality of India’s infamous sabzi mandi. These vegetable markets get cracking even before the first light of dawn; with business beginning at around three in the morning. The markets fill with farmers selling produce from their harvests at extremely low prices, and vendors looking for shortcuts to maintain customer satisfaction. This archaic system lends itself to a convoluted, difficult to navigate supply chain and allows players to extract value from the chain without adding any to it in return. Despite starting as an e-commerce retailer, Ninjacart shifted its focus to target the outdated supply chain and reimagine it from the ground up.
Thiru, (a serial entrepreneur with many successful startups like Eduraft, ShoutApp, and BloodMap) wanted to establish an e-commerce platform to sell groceries. At the time, similar online grocery shopping solutions were hitting app stores despite low business margins. The low margins got the Ninjacart’s team thinking: How did traditional kirana stores find value? How did farmers create value? As the nation’s backbone, the Indian agro-economy supports and contributes to about ~7.7% of the world’s total agricultural output. At home, agriculture is responsible for ~17.9% of India’s GDP. However, it seemed to Ninjacart that if certain key issues were simplified and streamlined, major inefficiencies would be eradicated and these numbers would be much higher.
“You have to be the early bird to catch the finest worms in a vegetable marketplace. Hence, the store owner is always under pressure to reach the market early and get the finest quality supply at a good price. While this was the story on one side, farmers too were unhappy with their selling prices and faced challenges in terms of food storage and wastage. Moreover, the business processes of the vegetable marketplace were not streamlined. With many middlemen involved there were many inefficiencies in handling the produce,” says Thiru.
With that realisation, Ninjacart amended their problem statement to address the longstanding issues faced by India’s oldest business sector and thereby bring it into the modern age. Through the use of tech-incentive processes and more controlled distribution chains, the team helps farmers realize a 15% rise in their income and offers them a straightforward selling process along with saving their time, enabling them to spend more time on farms than in market. The process involves weekly production planning, one-stop sales, and convenient, on-time payments. For retailers, they present the best prices for hygienically handled produce with one-touch method with a 99% fulfilment rate.
Typically, the Ninjacart sales process looks a little bit like this — The sales team start their week by forecasting the customer growth plan for the upcoming seven days, taking into account historical demand data and market conditions to make accurate predictions at the SKU level. Unlike a traditional vegetable market, this helps the company plan their supply chain more efficiently and reduce wastage overall.
Next, farmers are notified of these predictions and kept informed about the expected purchases. The team will then set both purchasing and selling prices using an average of national prices to avoid price risk. Once the fruits and vegetables have been harvested, farmers will complete Ninjacart’s quality control test and visit their conveniently located collection centres to sell their produce (for a fair price, unlike at the sabzi mandi). Then, the merchandise is shipped to a fulfilment centre where it undergoes a second check and is dispatched to a distribution centre. Finally, items are selected and packed in accordance with retailers’ orders and delivered via planned routes at the scheduled time.
While this may seem like a long process, Ninjacart’s use of specially engineered technology helps keep the supply chain efficient, data-driven, transparent, and fair. The merchandise is tracked at every step of the way and all the stakeholders are kept well-informed of their produce and purchases. Similarly, what may look straightforward and obvious now took years of development to strategize and perfect, due in part to the agri-trading mechanism in India being so labyrinthine.
For many a startup founder, the journey does not begin with immediate success. What once appeared to be problems may not actually create that much of an impact on the overall market, but something else completely unexpected could crop up. For example, Thiru initially expected to scale-up to 50 tons of fruits and vegetables from the get-go. It was only when the team first confronted the behemoth of Indian agri-trading that the importance of effectively understanding the real problem and pivoting the startup’s problem statement came into play.
But this is not the only time startups should focus on pivoting, according to Thiru. He states, “Many entrepreneurs struggle to scale once a startup enters the growth stage. When you are a small size company, your needs and the problems you look to solve are completely different. Once you start growing, the business demands changes. For instance, we started with a supply of 1 or 2 tons of farmer produce. But today, we have grown to almost 300 tons of supply — in a day. Of course, we faced many problems related to scaling, like managing the large supply of the produce, keeping away from frauds, and hiring the right people.”
It is overcoming these issues that allow for a better product-market fit. By identifying the critical issue and taking on the challenge to solve a bigger problem rather than confining the team to an easier one, Ninjacart was able to become the fastest growing agri-marketing platform in the country. At present, they process far more crops by weight than the average mom-and-pop grocery store could and have changed the lives of thousands of farmers and small-time store owners, who depend on agriculture for their livelihoods. This kind of business sustainability, especially when it comes to scaling, can only occur when teams have a keen eye for understanding real-life, on-the-ground issues and can confront them with future-ready solutions.
— Abhinav Chaturvedi, Accel