4 Step strategy for building a marketplace.
Before we got started with execution of any sorts, I spent majority of time reading up about the space of agriculture. During this time, I dabbled a lot with frameworks and strategies that may be useful for us from the articles of Stratechery and Bill Gurley's blogs. So, thinking about aggregation theory, marketplaces and product centric building were on my mind.
In early 2020, I got busy with hiring, executing and operating on a day to day basis. The entire team was focused around procuring and selling grade wise (standard). Until we were able to prove it to the ecosystem that farmers are ready to sell grade wise, it was our only goal. In the process we didn't streamline any of our operations.
Once we solved the uncertainty and proved that graded produce could be procured from farmers, issues started cropping up as we were running pillar to post in finding farmers and buyers to sell and buy gradewise respectively.
This is when I had to go back to the drawing board and simplify our approach in a manner where the team could take self initiated decisions in moving forward. This is when we settled on the strategy called 4 Point framework.
https://twitter.com/vsvivek93/status/1451243844100493313?s=21&t=9SJyVgb_D-CFlnBBzYus4Q
4 Points strategy
Prior to any sort of major execution began. I penned down this sketch to communicate the steps involved in building a conversion funnel to sell to our customers. I would be remiss to not mention that this is derived from a concept I heard on a podcast. Yet, i am failing to attribute because I couldn’t find the podcast.
Distribution was about figuring out "how" to offer our service to reach a wider set of probable customers. Value creation served the "why" buy from us among willing customers. Volumes catered to increasing value among the existing customers. Lastly, optimisation was focused on serving our customers much more efficiently.
The circles depicted in the illustration showcases the ratios and the processes which we had to follow for every new initiative we started at Subjimandi.app.
In the consumption region, when we started to reach out to retailers in Hyderabad. We focused on distribution first within a location. This we did first by catergorising and targeting each and everyone from a specific category and then moving to the next one.
We couldn't cater a push cart seller right away without first selling to the store outlet located in the neighbourhood. For each segment, we tailored the value proposition by addressing the problem that our graded produce and door step delivery would solve.
Once we had dense distribution chanel and value proposition fit with new retailer. We shifted our focus on increasing the average order size by either being our retailer's only procurement channel or by increasing their own retail business.
The optimisation aspect was forecasting the demand patterns by mapping the buying cadence of retailers to our delivery route. Optimising the fulfilment cost of the delivery route, we were able to generate more money as margins.
Aligning teams within stages
We were a small team of 12 folks with 5 more at Pipehaul. Within these 17, we had a full functioning product team that innovated simultaneously for both our internal team co-ordination and customers engagement. We were solving hurdles all along in each stage.
Distribution
We focused on increasing our buyers. For this we launched an app which could function as a native app in browser itself. We added friction in the flow for ordering by asking them to be deliberate about their grade choice but removed the barrier to order by providing a support of ground agent app which helped our delivery supervisor's book their next order while collecting money of the previous order.
We focused on bringing in new commodities in the fold which increases our probable customers. So, the product team built the app right from the beginning to allow this customisation to take place. We launched Watermelon during its season to sell to our existing and new customers. Also catered to road side stalls that spring up to sell fruits for the brief duration. Unlocking distribution was our biggest challenge but by the time we moved to Pune(late 2020). We had a pretty good idea on how to go about it. We did it at 10X speed than what it took to execute in Hyderabad.
Value
Our value directly appreciated as we started to procure and sell more types of produce. Our competition was not other produce selling companies but was the local mandi which had all types of produce available. From a logistics perspective we were increasing our reliability and updating customers if there were delays. This was achieved once again through product team developing the functionality in our apps.
Volume and Optimisation
Once the overall orders started increasing, we did tons(pun intended) of innovation on routing, loading and unloading patterns and lastly hand-offs between regions. This increased our efficiency and decreased our fulfillment costs to a large extent.
The batching of orders was possible as we moved all order creation to online and then it provided us an opportunity to optimise them on a daily basis.
Closing thought
The 4 Point framework helped me the most in aligning the folks of different teams to band together. I wouldn’t deny that it was always smooth sailing at all times. Often, we were fighting fires. But, our overall focus was always figuring out new things and building processes to not let fire engulf our daily bandwidth.
In supply chain or marketplace companies the effective co-ordination and overall team productivity becomes the bottleneck that stops many from innovating. Frameworks and strategy help you contextualise the work and then its relevancy to each team member. We give them a tangible outcome for the effort they will be investing into the work. It is also cheaper because bringing diverse teams to solve the problem gets you to an optimum solution at a faster pace. Thus, unlocking you to continue the innovation that you set out to see through in your venture.
Signing off,
Vivek V.S, putting out fires at the momet.