Playing to a beat

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In December 2017, an otherwise busy warehouse in Delhi NCR was eerily silent. All the stock was sold, and there was no more coming. A few stragglers stayed to pack up the remaining boxes. Most of the employees had been interviewing with other companies for a month; some had new jobs. They were saying their final goodbyes. JBL was shutting down its FMCG (fast-moving consumer goods) division.

Logistics Services

Launched in 2015, JBL spent the better part of the year building a website and an app that would accept orders, coordinate with logistics services and would do live updates of stock-keeping units (SKUs) in warehouses.

“Typically, distributors meet supermarkets and local stores, take orders and deliver these orders in bulk to retailers in that area. It helps them optimize the cost,” says Navneet Rai, founder, and CEO, B2C2, a B2B business that is trying to build a layer between manufacturers, distributors, and retailers.

Rai explains that these distributors target big orders and don’t have a fixed schedule. “They will deliver these orders only when the vehicle is full,” he adds. It means retailers place orders in massive quantities so the truck is full and they don’t have to depend on the distributor too often. These distributors work on credit and ask the retailers to pay back, typically, within a week.

“There is an inefficiency here,” says a former JBL executive. He asked not to be named as his current company does not allow him to talk to the press. “The time of delivery is too long. Often retailers have to turn customers away. This means they lose customers,” he adds.

This is where JBL helped; it offered just-in-time delivery of goods. With this product, the company went to the market to raise funds. It was selling a simple story; the likes of which Amazon and Flipkart sell successfully. People are getting more comfortable buying consumer goods from the internet.

Process of raising funds

“Now that traditional retail is in the internet age, let us get traditional wholesale and distribution into the internet age,” says a founder in the B2B space. He asked not to be identified as he is in the process of raising funds and does not want to call attention to himself.

“JBL was started with the right idea and then it did everything wrong,” says a former JBL employee. He asked not to be named out of respect to his former employers. Ken reached out to JBL with a detailed questionnaire, but the company did not respond.

By January 2016, JBL was a hot property. It had raised $20 million (Rs 140 crore) from Alpha Capital. Investors were happy and the company started to coax retailers on board. But it realized that it was easier said than done. “Retailers had personal relationships with the distributor. This fresh salesperson was new. They could not trust him,” says the founder.

To establish credibility, JBL went on an ad blitz. And it chose IPL to showcase itself.

“It was a little strange that a B2B business was advertising during the IPL. Typically, top-tier companies do that. But this was a new experience for Sani and he had no idea of what to do,” says another entrepreneur in the business. He, too, asked not to be identified as he knows Sani socially. Sani’s friends tried telling him that this was a waste of resources, he says, but by the time he realized his mistake, he had burnt through a lot of capital.

“The trick in the business is repeated meetings. You have to wear the retailer down,” says Rai. JBL managed to do that and soon it started onboarding merchants. Now came the tricky part: retaining these customers.

“Customers in this business have no sense of loyalty,” says Brijesh Agarwal, co-founder, IndiaMart. “They will be ready to change distributors for a cost-saving as low as Rs 50.”

 

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