Masterclass in Produce Marketplace - Part 1
I had the opportunity to give a masterclass with the folks at Network Capital. It was about the topic that occupied majority of my mind space, social capital and lifestyle. Produce marketplaces.
Special mention to my good friend Himali Saini for pushing me to do it in the first place.
📺 Marketplaces in Agriculture - The challenges behind the glamorous sector
This is a typed up version of the talk with additional commentary. I was nervous and spoke too soft. Forgive my first such rodeo. Specifically, the reason why I decided to write this post. This is a concise and annotated post comprising of the same deck presented in the video.
This is part 1 of a two part series.
Context of Talk
The context of the talk revolved around agri-output marketplaces within the realm of agriculture.
I have written about the origin story in this post. My background allowed me the opportunity to think about this space beyond sustenance as a business.
Setting up the relevance of the message and its messenger revolves around the objectives we achieved by running Subjimandi.app and Pipehaul.com.
Being thesis driven can be construed to being rigid but because of our thesis, we could innovate and change our operating model multiple model to find the right fit. We started with the traders at both production and consumption regions and solve logistics of their trade but ended solving the logistics of entire post harvest commodity supply chain.
This newsletter or any of my public writing stems from this failure to build a narrative around the work we did. We were so busy executing the work and proving to ourselves that this is possible. We never shared it with the wider community about the progress and learnings we learnt along the way.
Every writing about agriculture should come with a disclaimer. Everything that is true in one place may not be the case in an another location. It contains multitudes. It’s a complex domain.
Approach to Produce Markets
I have written at length about solving the uncertainty of produce markets and how logistics bent was a reason for being able to iterate multiple times before we could settle on the model that worked for us.
But before we started, the slide below was my understanding of aggregating and moving commodity to retailers. It looked so simple. I retain this info-graph because it reminds me of the journey we have had since then. If you would like to unpack the novel uncertainty we solved, you can read it here.
We catered ourselves in the essential businesses during the Covid-19 lockdown times. But in the end. All we did was sell produce, essential in nature. I use to introduce myself to people that I am the character of Nana Patekar in “Welcome” movie. You can watch the clip over here.
Supply Chain of Subjimandi.app
The significant innovation came from the work we did advocating and marketing the grade of the commodity. We did it to turn the commodity into a standard packet.
Classification of produce against a benchmark basing on the physiological traits is called grading. We started doing it at the farm and procuring grade wise from the farmers. This enabled us to sell grade-wise to our buyers, retailers in the cities. Both transacted at the same price of produce.
Below attached slide illustrates an examples of how grading is significantly increasing the experience of the buyer and producer, farmer. The shape and form of ridge-gourds are different but they all are from the same farm. Each grade had its own set of buyers. In terms of quality they are the same. It’s the grade that differed. We were able to move the packed cargo directly to a buyer from the farm itself.
This allowed us to innovate on moving the cargo as a packet and also how we stored it. We moved multiple commodities together without any sophisticated batching systems. It was just a simple tag id that allowed us to know the grade of the produce in the package.
Another innovation we did was in storage. Because it is already standardised. We need not have huge warehouse or multiple warehouse. The cost of logistics makes produce supply chain unsustainable.But, it is where we made money. So, we used containers as warehouses and we placed them close to cohort of buyers. This allowed us to reduce our cost of logistics significantly by reducing the number of hops the packed produce takes before reaching the buyer.
We designed a simple ordering system that powered the demand generation and the fulfilment was done at a T+1 or 2 depending on the produce. Buyers would get a promise of grade accuracy in a bag/crate/box. If it doesn’t match. Return the whole thing, no questions asked.
Pausing it Mid-way
In the second half of the talk which I will be covering in Part 2, I delve into the lessons learnt and trade-offs to be considered in designing your business for agri-supply chains.
I would end this post with mentioning the irony of agri-supply chain businesses. They are in the business of moving essential commodities but their business is inessential in nature. We have these supply chains running for generations.
Signing off till next time,
Vivek V.S, learning to be louder in my next video.