As per a NASSCOM survey, due to the Covid-19 pandemic, especially in the case of early and mid-stage startups in India, nine out of every ten startups will be seeing their revenues drift over at least the next couple of quarters. Moreover, the reason for this drift in revenue is the drying up of external funds and risk appetites.
Many of the startups are changing lanes by diverting into the current needs as well as are making alignments in their manufacturing process.
One such success story is of ShakeDeal. It was founded in 2016 by brothers Akshay and Akash Hegde as well as their friend Santosh Reddy. ShakeDeal is a B2B e-commerce marketplace for industrial goods and supplies, office, and housekeeping supplies including corporate gifting. During the coronavirus outbreak, ShakeDeal is noticing new shifts in the B2B marketplace and shifted its product portfolio towards health and safety offerings.
Preparing to fight back COVID-19
The overall pre-COVID-19 portfolio of the company was accounted for close to 20%. In ShakeDeal, the health and safety sector (H&S) is considered to be a big contributor.
When their clients deferred their monthly purchases of office and factory supplies, as well as the non-essential items, went down in the line of demand, the company decided to pay more attention to the health portfolio and strengthen the country’s effort to add-on to the shortfall of the necessary equipment for frontline workers to fight the battle against COVID-19. PPE coveralls, gloves, face mask, disinfecting equipment, and hand sanitizers among others are included.
Akshay said in an interview, “During the lockdown, there was a huge surge in demand for safety hygiene and PPE. The demand spike we saw in this period was almost ten-fold and of unprecedented nature.”
To have complete control over the quality of its products, the company has developed and launched certain types of PPEs as well as facemasks under its private label. The startup has fulfilled a million PPEs with enthusiasm to meet the increasing demands.
Even before the crisis hit, health has been an important stream of revenue for the company. The existing manufacturing capabilities are one of the many things that ShakeDeal had to worry about during the sudden unexpected Covid-19 outbreak. All the existing relationships and resources have been a pillar of strength for the startup to lean on and work on the production.
“Our vendor partners are OEM and reputed brands which had the capability to adapt and produce the volume of PPEs in demand during the peak period of lockdown. It was a strategic decision of repurposing some of our resources to double down on these categories to cater to the heightened demand,” he adds.
The company made contacts with garments and medical textiles manufacturers to source the material for PPEs. It supports its existing relationships in order to build a dedicated supply chain and to ensure continuous access to raw materials.
Under lockdown, the challenges diminish
The company’s health vertical wise growth was down for some time due to the pandemic related restrictions. They were extremely stressful on procurement timelines for some orders of the company. There was a shortage of manpower at the third-party logistics companies as well as their hubs that were filled with essential commodities gained priority and this furthermore intensified problems for ShakeDeal.
However, with some light-footed movements, the company was able to pave ways. “The redundancies we’d built into our supplier network enabled us to route order strategically to circumvent most of these challenges,” Akshay explains.
The efforts the company took during the lockdown, did pay them well. ShakeDeal was able to get off the losses that were recorded due to the reduced amount in other verticals. It has put equal efforts in supplying items that are used to fight the Coronavirus. Even though things are turning back to normalcy, until and unless a vaccine is found and available to eradicate the virus, the company will expand the COVID-19-specific healthcare space.
ShakeDeal doesn’t seem to capitalize on the demand for preventative interventions such as reusable masks at workplaces as well as hand sanitizers. With most of its clients, ShakeDeal has started pre-COVID-19 level engagements.
“We see a lot of companies taking adequate measures to ensure the safety of premises as the staff goes back to work. Precautionary measures such as arranging for hand sanitizers in abundance, deploying disinfecting equipment, installing contactless and thermal detection systems, distributing reusable masks, and displaying ‘social distancing’ signages have been seen across the company is reporting back to work,” Akshay says.
Voice for the local
According to ShakeDeal, it has always believed in developing local and regional supply chains is important to keep the disruption arbitrage in check. For the Bangalore based company, the aim is to be the ‘vocal for local’ for businesses and consumers as per Prime Minister Narendra Modi’s renewed call.
“During the COVID-19 period, we saw a major shift in sentiment away from Chinese products and covered their corresponding Indian makes. Consumers have certainly taken our PM’s call, as is seen in many product categories like safety equipment electronics, hardware, hygiene, etc,” says Akshay.
Many companies tend to depend on the foreign supply chains particularly those in China as they are cost-effective. Pricing comes to be one of the biggest limitations of using the local supply chain. According to ShakeDeal, focusing too much on that will result in exposure to large-scale supply chain disruptions.
“The challenge going forward would be to focus on developing a more local and flexible supply chain wale ensuring price competitiveness.” quips Akshay.
To promote the India-made products over the imported ones, ShakeDeal’s team is recategorizing and highlighting all the India-made products in its catalog. ShakeDeal plans on shifting its private label production to local companies in the near future.
“Though we were already engaged to with them for certain SKU (stock-keeping units) we plan to increase the portfolio of locally sourced products,” Akshay adds.
Aiming for the highest rank
ShakeDeal was founded by Akshay and Akash when they were working on their family business. The duo identified several pain points in the procurement industry for example sub-optimal price, delivery service levels, and streamlined supply that posed production challenges. ShakeDeal is set up to bring down the cost of distribution while driving volumes, realising higher margins, and improving cash cycles.
According to the company, B2B products provide solutions for large and medium enterprises across industrial sectors including the brand reseller markets. When it comes to the traditional B2B acquisition strategies, ShakeDeal stands out from the competition as it provides a customised solution for customers woes.
Vora Venture, a US-based private equity firm had acquired ShakeDeal in 2018 which also funded the subsequent funding round. Disclosure regarding the investment amount or any funding details was not done but said the funds were being used to supplement its tech offerings, acquire new customers, and grow their existing business.
“Over the last two years, the company has grown its revenue almost 9x,” Akshay says. This year as well he expects to triple the revenue of the firm. “Profitability is not immediate focus for the company but we are aggressively chasing growth and at the same time ensuring the sustainability of the business,” he said.
As per the company, more than four thousand MSMEs, and over 200 large firms it works with. Among others, its competitors include Alibaba, IndiaMART, and Trade India.