When Aniket Deb and his IIT Bombay classmate Sachin Agrawal wanted to turn entrepreneurs, their approach was grounded. “How can so many start-ups be doing the same thing and yet dream of being the next billion dollar company?” they wondered as they filtered out business ideas over cups of coffee at a Starbucks outlet in Powai. This was in 2014, when Deb was working as a business intelligence manager with Locon Solutions while Agrawal was working as a hedge fund manager with Gravitas. During one such session, the duo realised that everyone talks about the potential of India’s huge consumer base, but there is equal opportunity on the business side too.
This realisation was enough to set the wheels in motion. The idea for the start-up was fine-tuned with the help of Ankit Tomar, who was a program manager at Microsoft before joining the duo in their vision. And in 2015, the trio founded Bizongo, a B2B start-up that provides end-to-end solutions for sourcing and packaging needs for big and small enterprises.
“India had 45 million SMEs and we tried to find how far technology has penetrated this sector. We found that it was dismal and that was the bottleneck. If efficiency needs to improve, it needs to improve through tech,” says Deb, CEO, Bizongo.
Today, from a five-member team that worked out of a small office in Powai, Bizongo has a 160-member team operating out of their head office in Mumbai and regional offices in Delhi and Bengaluru. The company has raised about $25 million from Accel Partners, IDG Ventures, B Capital and International Finance Corporation and currently has about 200 vendors and 50 buyers on its platform. By 2019, it is looking to take this number to 600 vendors and 150 buyers. The start-up registered revenue of 1.3 billion in FY18 and is targeting a revenue of 1.6 billion in FY19.
Prayank Swaroop, vice-president, Accel Partners says that he found the team to be extremely energetic right from their first meeting in January 2015. “The best part about them was that they came up with ideas that were new for the industry,” he adds.
Kabir Narang, partner at B Capital Group says that they typically look at three things before they invest in any company — incredible founders, a large market opportunity and ability for a company to transform large industries using technology. “We saw this in Mswipe, we saw this in Icertis and we see this in Bizongo,” says Narang.
Incorporated in March 2015, the company name — Bizongo — sounds similar to ‘business on the go’. “That is essentially what we stand for — speed, efficiency and making life better for businesses,” says Deb. He recalls the time they were still confused about what to do in the B2B space as it already had big players such as IndiaMart, Trade India and Just Dial. “But we observed that most Indian companies were merely functioning as classifieds and were successful because they started out in the early 2000s. We had to find a starting point that was unique,” he says. For this, the team spoke to around 600-700 businesses from Crawford Market and Bombay Exhibition Centre in order to understand their pain points and how technology could be used to solve these. “We restricted ourselves to the Mumbai-Gujarat region because we didn’t want to spread ourselves too thin,” says Deb.
The research helped them divide the entire B2B construct into commodities and non-commodities. Non-commodities were further divided into branded and unbranded. Of this, they decided to focus on packaging amongst unbranded commodities and chemicals and polymers from the commodities space.
The team, then, worked on creating an end-to-end transactional model instead of lead sharing and listicles. Agrawal, COO, Bizongo, says initially they had to face the apprehensions of potential clients as well as the people working with them. “We were able to overcome it because of our unique value proposition and ability to showcase how technology makes things more efficient for them,” he adds. Over the next few months, Bizongo had about 150 sellers and 300 buyers transacting on their platform. Revenue from operations stood at 20 million, of which 95% came in from the chemical and polymer vertical and 5% from the packaging business.
However, the co-founders soon stumbled on an important observation. “On the 5% revenue that I had from packaging, the profit margin was about 15%, whereas the margin for chemicals and polymers was just 0.5-0.6%,” says Deb. Additionally, while trading in commodities, pricing was the only thing that they could do differently and there was no further innovation possible.
“In March 2016, we took a call to discontinue the chemicals and polymers business. Revenue for March was 20 million while the revenue for April dropped to 200,000. But we knew exactly what we were doing,” says Deb nonchalantly.
Swaroop, who was a member of the board of Bizongo at the time says, “The credit goes to the co-founders for going ahead with this change. Ever since, the company has been growing at a rapid pace.”
This practical approach augured well for the start-up. The trio went back to the drawing board and this time they knew that the next big bet would be packaging.
“We did the calculations and figured out that packaging is a $40-billion market in India. Plus, here we could do much more than pricing. When a buyer comes and asks for a carton, he really isn’t talking about a readymade box. Everything is required to be customised, devised and made for him. This was a challenge, for sure, but was also something we were really excited about pursuing,” says Deb.
The business model is fairly simple. When a buyer comes onto Bizongo, the first step is to understand his requirement. Bizongo then suggests the dimensions, strength and thickness of the box required to pack the product. The requirement is then further passed onto the seller side. “We have actually mapped out the capabilities of our SME sellers over the past two years. I can today tell you which of the sellers make a box of a particular thickness, which sellers in Gujarat make good brown paper boxes or who makes good pouches in Bengaluru,” says Deb.
The sellers are then asked to bid for the order; the prices are captured in a quotation and sent to the buyer. Once he gives the go ahead, the production starts. The buyer can then on their proprietary ProcurePlus platform, see a customised catalogue along with updates on whether his order has been made, dispatched or has reached the location.
In the absence of Bizongo, buyers would have to go through multiple manufacturers in the industry with zero reliability, efficiency or quality parameters. “From a packaging perspective, everyone was manufacturing. There was no supermarket. Now Bizongo is filling that gap,” says Swaroop.
A look at the website is enough proof of the wide variety of packaging solutions provided. An enterprise can choose to shop by industry — restaurant and hospitality, retail and wholesale, e-commerce, food processing and logistics (see: Made-to-order). Or, the enterprise can browse through product categories varying from ziplock pouches to jars and jute bags to plastic crates (see: One-stop shop).
Bizongo’s solution made sense from a value as well as volume perspective. They also insist on their sellers using a certificate of analysis (COA) in front of every box shipped, to add reliability. “What stands out when we speak to Bizongo clients is the one-stop solution of design, development and quality procurement. The start-up already has clients across e-commerce, FMCG, retail and manufacturing,” explains Narang.
Bizongo’s clients agree. Himanshu Pandey, head of procurement, Bunge India says, “We were not aware of this kind of e-commerce, end-to-end assisted platform where cross connections are available for packaging. Bizongo provides innovative designs and competitive pricing.” He was introduced to Bizongo through an ex-colleague and initially placed an order for plastic pallets. Bunge earlier sourced pallets from Nilkamal and Supreme, but switched to Bizongo as it provided better pricing.
Currently, Bizongo procures from SMEs which have a turnover ranging from 250 million-300 million. On the buyer side, it started off with small boutique shops and restaurants and now has Flipkart, FirstCry, Amazon, Xiaomi, Bunge and Myntra as its top clients. From a monthly transaction value of 200,000 in August 2016 (when they raised their Series A of $3 million), the transaction value has shot up to 110 million per month.
Pandey adds that the biggest advantage of working with Bizongo is that it takes end-to-end responsibility of design, development, trials, sourcing and continuous supplies. Apart from this, while vendors provide packaging of only one material, Bizongo provides a wide range of solutions as it works with many vendors.
Up the value chain
Deb states that the packaging industry is largely divided into primary, secondary and tertiary based on the material used for packaging, including plastic, paper, glass and biodegradable materials. Of these, plastics and paper are the SKUs that are in most demand for Bizongo. With plastic getting banned, however, Bizongo is looking to expand the sustainable category. “We have been seeing a lot more innovation from the seller side and are working on the mass production of compostable courier bags. We also have sellers who manufacture biodegradable packaging,” says Deb. The company won the most innovative design award at the The Dieline Awards 2018 for creating a biodegradable, spill proof tray.
Tomar, CTO, Bizongo, believes that their unique value proposition of a one-stop platform will drive future growth. “Moreover, our design and development capabilities, which are maturing very fast, will also provide us the levers to push for growth,” he adds.
The company also has an in-house design team, which handles special requests from clients. “Last year, Cadbury contacted us for a Diwali and Rakhi pack, to be sold on Amazon. Our team created the design and prototyped the packaging from one of our sellers. One important addition was adding a layer of gel pads below the grooves holding the chocolates, to ensure it doesn’t melt,” recalls Deb.
Pandey shares another example where Bizongo’s innovation came in handy. “We wanted to launch a margarine table tub of 200 gm for a long time but were unable to because we could not identify the right vendors. So we contacted Bizongo, and they designed the pack,” he says, adding that Bizongo also assisted in streamlining the overall vendor count for the company.
While most enterprises don’t sign long-term contracts with small companies, Bizongo has been able to translate one-month trials to one-year contracts in a very short time and most of their revenue comes through repeat buying. This has largely been possible due to Bizongo’s focus on providing quality, variety and convenience to its customers. To prompt repeat buying, the start-up ensures that it sends out timely alerts to its buyer community. They also provide a set credit period and all payment is made through Bizongo. “We are constantly creating barriers to entry and right now there are too many barriers for anyone to enter the market and say they can do it too”, says Deb with a confident shrug.
Going forward, the founders expect interactive packaging to drive innovation. Agrawal believes that the packaging industry is in a phase where businesses are experimenting and technologies such as printed electronics still need to evolve. Bizongo is also looking at expanding to international markets, about a year from now, to scale the seller side of the business. Their ultimate goal is to become India’s largest packaging destination. And that’s an order that they think is not too difficult to fulfil.