SUMMARY
At The Product Summit 2020, founders of B2B startups discussed how product building has shifted for SMBs with a bigger focus on pricing and expandability than in other enterprise tech categories
The likes of Deskera's Shashank Dixit, Dukaan's Suumit Shah, POSist cofounder Sakshi Tulsian and BharatPe's Ashneer Grover believe that products for supply chain, payments and affordable digitisation are seeing maximum traction
In the aftermath of lockdown, startups need to create products that have a visible impact on the operational costs for business and those that bring in demand
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Accounting for over 30% of India’s GDP, small and medium businesses are the backbone of the country. SMBs, which helped immensely in rescuing the country from the global economic recession in 2008, have suffered badly due to countrywide lockdown. However, the rot started right with demonetisation as the CIBIL report revealed the consolidated NPAs among MSMEs grew from 7.3% in 2013 to 9% in 2018. The liquidity crunch in NBFCs has not helped matters and the pandemic only worsened things further.
Through this struggle, tech startups have once again come up with the right products and solutions to help SMBs in multiple ways whether it is in managing sales, inventory or payments. But each business category and sector catering to SMBs has to deal with its own set of challenges and there’s no one-size-fits-all solution on offer here.
At Inc42’s The Product Summit 2020 founders of B2B startups catering to MSMEs and SMBs in India shared a peek into how they see the opportunities and challenges and how they are tackling these to align their vision with SMB needs. Shashank Dixit, founder of Deskera; Suumit Shah, founder of the Dukaan app; Sakshi Tulsian, cofounder of enterprise tech startup POSsist and Ashneer Grover, founder of BharatPe discussed the opportunities and challenges in the SMB sector for B2B startups, while also drawing a parallel with how Chinese companies targetted SMBs in the tech revolution in China. The session was moderated by Monica Jasuja, head of product management, Comviva.
Exclusivity Matters For SMBs
Understanding the key issues of SMBs and what they want will get you half the problem solved, believes Suumit Shah, founder and CEO of Dukaan app, which has recently grown rapidly in terms of adoption of the product with over 2 Mn downloads in two months since launch. The startup is enabling retailers and small businesses across the country to build their own digital store. Shah said that with time, the needs and priorities of SMBs have changed and this is best evident in the impact of the lockdown.
He added that survival is the topmost priority for SMBs now. However, the deliverables to SMBs in India are too diverse as every state has its own ways of doing the business and their own languages and everything. So startups cannot build something which is far too generic but still everybody should be able to use the product.
“You can give them two products. One is helping them to organise, like bookkeeping. Second is, to help them get more business.”
In India, the SMBs have not moved beyond payments when it comes to digitisation and this is limited to PoS or online payments through mobile apps. The business model has largely been the same for the last ten years and would have stayed the same for the next ten years were it not for the pandemic. Interestingly, what appeals to them now is exclusivity and differentiation — so the needs have evolved.
Shah elucidated that business owners did not want to have their digital stores similar to other ecommerce marketplaces. They pay for customised products that fit their businesses and are ready to pay for extended features that off-the-shelf SaaS solutions might not offer.
Fixing Supply Chains Boosts Small Businesses
Elaborating on the Shah’s point of view on why SMBs have not been very keen to adopt tech products that help them save costs in the long run, and why SaaS companies are still struggling to earn revenue from Indian SMBs, Deskera’s Dixit said that the success of Zoho and Freshworks in overseas markets has led to more startups focussing outside India. But Indian SMBs first need to be educated on how to use products as well, which is a key challenge for SaaS startups today.
In stark contrast, he said Chinese SaaS startups have progressed faster on this front, in part due to friendlier regulations. SMBs in China have become champions at dropshipping. Indian SMBs simply can’t replicate the same solely because of the lack of an integrated supply chain in India, and only when product adoption reaches a certain threshold, will this change.
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How SMB Products Can Win In Money Matters
One of the key reasons behind India lagging far behind China in terms of supply chain management, which ultimately affects multiple sectors such as food production, commerce, retail and pharma, is the low profitability quotient in the Indian market. Be it manufacturing, retail or agri distribution, SMBs run on small margins, which makes them less attractive for investors too.
Ashneer Grover of BharatPe believes that the entire retail business model runs on low-profit margins, which is why free services and products are preferred when it comes to tech adoption. There is hardly 15% margin, and in the case of distribution, it is merely 4%-5%, so products have to be reasonably priced and need to meet the value for money criteria hard.
“A few years back, it was anticipated that the SMBs would dump distributors and would start selling/buying online. However clearly, it has not happened. They are still very much dealing with the same distributors. What has changed is their mode of payments.”
Grover added that creating a full-stack solution has become a fashionable thing these days, what’s equally important is to launch the products in the market, doubling on the solutions which click and tweaking the others in order to meet the demands in a sustainable manner, which would also work for SMBs.
“For us, startups, the most important question however is to make money out of the solutions that we are trying to offer. Is it going to be through lending? That’s why we launched lending earlier than other payment companies.”
How Covid-19 Lockdown Has Changed Food SMBs
As Shah pointed out, the SMBs like many others are fighting for their survival in the post lockdown era, as the market has shifted towards digital. The SMBs need to adapt and adopt the changes fast to be able to the early market lead. Else, they may have to shut down their shops.
For instance, restaurant owners are one of the most impacted SMBs who had to either shut down their business due to lockdown and Covid 19 or had to change the way they used to do their businesses. Sakshi Tulsian, cofounder of restaurant management software provider POSist, said Covid even forced the fine-dine restaurants to opt delivery first model, so small businesses in food have also had to become aggregator-dependent or enable self-reliant deliveries. Even in the case of fine-dining, customers want to experience contactless deliveires with sanitised packaging. This is where technology helped in building trust. Numerous solutions like QR ordering, WhatsApp ordering and more came into the play, so restaurant SaaS also had to evolve and bring on board features quickly to cater to the new normal.
“In our survey, 80% of the restaurants said that they’re focusing on building trust and communicating more to understand what the end-consumer wants. 40% of the fine dining restaurant has moved to delivery first. They’re also getting their online ordering websites, running loyalty programs.”
In response to the flood of inquires, POSist is also allowing restaurant partners to launch online ordering systems and direct-to-consumer (D2C) channels through its products. The latest offering will be an add-on to the restaurant management system already offered by the company. The company believes that it will help in incremental revenue and give a strong retention factor to customers, which is key for SMBs in this time and space.
This article is part of our coverage around The Product Summit 2020 by Inc42, which took place on October 10 & October 11. TPS 2020 was supported by Amplitude, AWS, Dell Technologies, and DigitalOcean.
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