Connect with us

Startup

Catch and Release: Why are online meat startups still small fry in domestic markets?

Published

on


Meat buying has traditionally been a very hands-on process. Meat eaters generally prefer to personally select the cut, inspect the freshness of the catch, and understand its procurement tactics.

The pandemic brought in a new wave of online-first meat and seafood startups looking to make their mark on the sector, riding on the surge in funding into the Indian startup ecosystem between 2020 and 2022. 

Meat distributor Licious turned into a D2C unicorn in 2021, after raising $52 million in its Series G round. It has raised $490 million in funding so far and has a valuation of $1.47 billion as on September 21, 2023, according to Tracxn. Meanwhile, its peer, FreshToHome, also raised $104 million in funding led by Amazon Sambhav Venture Fund in 2023, taking its cumulative funding to $286 million. 

However, the meat startup sector’s fortunes has since taken a turn for the worse: consumer preferences have largely reverted back, and online meat and seafood retailers have either had to wind down their operations or continue with heavy losses with zero to little gains to show for it in the topline. 

Licious clocked a 9.6% growth in its operating income to Rs 747.7 crore during FY23 from Rs 682.5 crore in FY22. It posted a loss of Rs 500 crore during the same period, marginally up from Rs 485 crore a year ago.

Meanwhile, FreshToHome recorded a revenue of Rs 110.3 crore, resulting in a loss of Rs 409.5 crore.

FreshtoHome did not respond to YourStory’s request for comment. 

Expensive cold chain solutions, too much competition in a saturated market, unpredictable pricing, and ultimately, a lack of sufficiently appealing value additions to draw in a larger consumer base are just some of the challenges that dog online-first players, and are compelling them to look at alternative methods to bolster their bottomline.

Muddy waters

One of the biggest problems faced by online-first startups in the domestic seafood and meat market has been their inability to effectively disrupt the traditional supply chain to customers.

While consumers may have moved towards online channels for the convenience of delivery, especially during a lockdown, they now seek physical touchpoints to verify product freshness and that the meat cuts are processed in clean and hygienic conditions.

Mandrita, a Bengaluru-based Product Manager, says, she prefers shopping for her fish specifically from the nearby HAL market as opposed to ordering online. 

“There is a larger variety to pick from and you get the option of choosing from a variety of sizes. While I do have to clean the meat afterwards, I know it is freshly cut and sold, moreover it is easily 20% cheaper than online alternatives,” she adds.

This consumer preference, combined with competition from FMCG brands like Godrej, Venky’s, and Nandus, makes climbing the profit peak a little too difficult for the meat startups.

Neighborhood stores do not invest in high-tech tech stack and cold chain infrastructure solutions, allowing for lower operational costs, which in turn enable them to sell at a lower price—a liberty online meat brands cannot afford.

Most players who try to reach their customers through Foodhalls and grocery marts just do it for the brand positioning, as these placements come with steep margins, explains Mark Alzawahra, MD and Founder of seafood wholesaler Catch Of Norway Seafood. Commission fees for Nature Baskets, Foodhalls, and the likes can go as high as 40% and in very rare cases it will go under 25% after hard negotiations, he adds.

Since branded cuts on grocery store shelves are too expensive, online food startups have had to go back to industry roots and set up brick and mortar shops, which come with high capex requirements and fewer neighborhoods which can absorb expensive meat outlets. 

As a dire example of this, Chennai-based meat startup Fipola was forced to cease its operations in February 2023, when it failed to raise funds after its aggressive offline expansion. 

What’s the catch?

To combat the crunch, meat players are shifting to alternatives to reach customers directly through brick and mortar outlets, including shifting customer bases to supply to businesses (B2B), or looking to export to other international markets.

Typically, in the food industry, clients of a B2B business include restaurants, hotels, caterers, or other marketplaces that place orders.

An increasing number of online meat startups are pivoting to this model to keep revenue up, as is the case for online seafood firm Captain Fresh, which sources directly from farms and fishermen and distributes to other retailers. 

“This industry doesn’t need a B2C channel or a brand, because there is already a lot of real estate that the world has allocated for this product. If you walk into a retail chain across US or Europe, close to 30-35% of the overall floor space is allocated for meat, seafood,” says Utham Gowda, Founder, Captain Fresh. 

Early on, Captain Fresh realised that a B2B channel was the only scope for growth in this industry. It later shifted its focus entirely to a B2B model outside of India. 

Meanwhile, Gurugram-based ZappFresh sees a nearly 50-50 distribution in its B2B and direct-to-consumer (D2C) channels. It plans to clock a revenue of Rs 160 crore in FY24-FY25 with a significant jump in profit after tax, something its peers are yet to manage. 

“While offline may look very promising and lucrative, it is extremely complex to crack that as well. And running and owning a store may not be the right format to build a profitable business in this space,” notes Deepanshu Manchanda, Co-founder and CEO of Zappfresh.

“As a business, you would want to liquidate the stock in time, it is a challenge to hold the inventory for a long period especially when the product is perishable. A B2B channel allows us to liquidate unsold inventory and bring more equilibrium across the board,” he adds.

Moreover, while seafood is a price-sensitive commodity, the industry, however, works on a mostly fixed-price basis. Therefore it is crucial for distributors to have a large enough base to mitigate any fluctuations in the distribution chain on the retail level.

Fluctuating market prices is a concern, especially for premium seafood like salmon, where market prices update every week globally. 

“In India, domestic seafood prices are subject to daily or weekly fluctuations, largely influenced by seasonality, weather conditions, and availability of appropriate sizes to be caught and sold. Since hotels and restaurants update their menus quarterly or semi-annually, they prefer to enter into contracts to maintain price stability and stay competitive,” Alzawahra says.

A large base requires an even larger logistics channel. It is particularly difficult when the commodity is prone to spoilage if not stored properly and has a short shelf life. 

Industry executives believe that a fragmented cold chain is one of the biggest challenges that needs to be addressed, as it allows companies to establish equilibrium with fluctuations in pricing and food inflation. 

Long way from home

With the domestic market fraught with so many challenges, seafood players are looking towards thicker wallets across the sea. 

Seafood is one of the biggest categories of export in the country. India exported 17,81,602 metric tonnes of seafood worth Rs 60,523.89 crore ($7.38 billion) during 2023-24; and exports improved 2.67% in quantity terms during the same period. The USA and China are the major importers of India’s seafood, according to the Indian Ministry of Commerce & Industry.

Online startups are vying to cash in on this significant revenue stream. The Indian market accounts for less than 10% of Captain Fresh’s total revenue. Its peer, FreshToHome, which picked up its latest bag of funds to expand its GCC and international operation, is also relying heavily on its global businesses. 

“The take rates, the margin profile that you have in the international markets is very different compared to what you have in the Indian market. And if you have access to supply, you are better off chasing markets where monetisations are higher compared to markets like India,” adds Captain Fresh’s Gowda. 

Meanwhile, Zappfresh, which recently acquired Mumbai-based Bonsaro and Bengaluru native Dr. Meat to expand its operation across Western and Southern regions, respectively, is now looking to expand to the Middle East in a format similar to its domestic markets. 

Most of the biggest buyers globally in the meat sector are hotels and restaurants, and this provides the bulk of the volume for imported meat and seafood.

“The feasibility of online models in global markets depends on several factors. For one, the ability to adapt to diverse regulatory requirements and establish a reliable cold chain infrastructure is crucial,” says Prateek Toshniwal, Partner–MICS International & Co-founder, IVY Growth, and an investor in Zappfresh. 

“Additionally, leveraging online platforms allows for efficient market entry with lower overhead compared to traditional retail setups,” he notes.





Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Startup

Zoho CEO Sridhar Vembu revives 70-hour work week debate, says no need to work to ‘demographic decline’

Published

on

By


After Infosys co-founder NR Narayana Murthy, Zoho Corporation CEO Sridhar Vembu has rekindled the ongoing debate on whether a 70-hour work week is necessary for rapid economic development.

Pointing to East Asian economies such as Japan, South Korea, Taiwan, and China, Vembu, in a post on X, argued that these countries have developed through an extremely hardworking culture, which has ultimately contributed to their economic growth

“The rationale behind the 70-hour work week is “it is necessary for economic development”. If you look at East Asia – Japan, South Korea, Taiwan, and China have all developed through extreme hard work, often imposing punitive levels of work on their own people,” Vembu noted, adding that these nations now face low birth rates, prompting governments to incentivise citizens to have more children.

Vembu then posed two questions: Is such hard work necessary for economic development, and is such development worth the price of a “lonely old age” for a large mass of people?

In addressing the first question, Vembu believes only a small percentage of the population, perhaps 2-5%, needs to work extremely long hours to drive overall economic progress. 

“My response to the first question is that it is enough if only a small percentage of the population drive themselves hard,” he said. 

“Please note the “drive themselves”—I am in that camp but I am not willing to prescribe this to anyone else. Some percentage of the population will drive themselves hard (may be 2-5%). I believe that is sufficient for broad-based economic development, and the rest of us can have a decent work-life balance. I believe such a balance is needed,” Vembu added. 

As for whether a 70-hour work week is worth a potential demographic decline, Vembu is emphatic that it is not.

“On the second question, no it is not worth it. I don’t want India to replicate China’s economic success if the price is China’s steep demographic decline (which has already started). India is already at replacement level fertility (southern states well below that already) and further declines to East Asian levels won’t be good,” Vembu explained. 

“I do believe we can develop without needing to work ourselves to demographic suicide,” he added. 





Source link

Continue Reading

Startup

How D2C brands can ensure efficient logistics with cost-effective deliveries

Published

on

By


An essential player works round the clock behind the scenes of India’s burgeoning ecommerce market: the logistics provider. In an age of digital commerce, where customers are demanding a greater selection of products at low costs and speedy delivery, the phenomenal rise of direct-to-consumer (D2C) brands is driving logistics companies to expand their networks to serve smaller towns.

Logistics and technology ecosystems have emerged as critical enablers, ensuring seamless and reliable delivery experiences that form the backbone of this flourishing sector. 

To highlight how logistics solutions are revolutionising the ecommerce industry, a panel discussion was held at the Jaipur edition of D2C Carwaan, an event aimed to onboard brands that capture the essence of India and help them establish a network with the right stakeholders, including investors, enablers, and mentors.

The panellists – Shrawan Daga, Founder, Krishna’s Herbal & Ayurveda; Nitin Jain, Founder and CEO, Indigifts; and Raju Kumar Sinha, Chief Business Officer, Fship – shared their views and insights on the topic ‘Logistics and beyond: Building seamless solutions for ecommerce success’.

Race to boost delivery speeds

Daga said one of the biggest hurdles in logistics for D2C brands is fast delivery. Over the past year, ecommerce marketplaces have made significant strides in enhancing delivery speed, introducing same-day and next-day services to cater to customer demands.

“The sooner you deliver your products, the lesser will be your Return to Origin (RTO) rates—the rate at which goods are returned to the seller—and higher your profits,” he said, adding that his company dispatches orders from 11 states. Managing customer returns is an essential component of ecommerce logistics for D2C firms. 

Each D2C brand has its own set of challenges. “Prepaid orders don’t start coming in unless you have a loyal customer base. One of the key reasons for brands with higher RTOs is cash on delivery (COD), which involves a lot of impulse buying,” Sinha said. Suggesting solutions like prepaid shipping and AI-driven address verification, he said it’s best to replicate inventories at multiple warehouses or nearest to customers to ensure speedy delivery and ensure a smooth logistics management process. 

With a focus on personalised solutions, Jain said Indigifts does not work as per customers’ needs as they are never loyal. “We have categorically decided at what price point we want to work and therefore we don’t do COD to maintain profit margins. If you don’t have the right logistics partner, you’ll never be able to build your distribution,” he noted.

On avoiding COD, Jain shared his three-pronged business funnel – customer, consumer, advocate – a design methodology he applies on his website. “The fight is to convert customers to consumers, and to achieve this it is important to create a selection of the product from where you want to sell what,” he said. 

How free shipping shapes online shopping

The era of lightning-fast, free shipping has transformed expectations and affected retailers and brands of all sizes. All panellists agreed that free shipping, which is now part of customer behaviour, has become a mindset. They also addressed the impact of free shipping on profits, suggesting strategies like surface shipping and zone-specific logistics. 

But how can brands improve their profit margin and reduce logistics costs while offering free shipping to customers? “With India now boasting the second-largest road network globally, a COD-driven business where speed matters must opt for surface shipping, which is almost 35-40% cheaper than air shipping,” said Sinha, adding that brands must also be careful in selecting the right courier partner. 

Though many brands offer free shipping or free shipping with an order minimum, to meet current consumer expectations, at the end of the day, these brands still need to pay for these shipping costs and factor them into their business models.

Advising entrepreneurs on how to deal with logistics challenges that they face, the speakers spoke about focusing on regional shipments to reduce shipping costs and RTOs. Firms must work with reliable third-party logistics partners who have experienced staff in ecommerce and wide network coverage, or specialised ecommerce courier aggregators who offer services of all leading couriers on one single platform.





Source link

Continue Reading

Startup

When innovation backfires: What 2024’s marketing fails teach us about sensitivity and strategy

Published

on

By


With firms considering squeezing their marketing budgets, digital channels have become the main mode of advertising and the number one go-to choice for small firms with a low marketing budget.

Social media, search engines, and emails allow firms to reach specific audiences without overspending, offering scalable solutions that fit diverse marketing needs. 

This trend underscores a broader shift in advertising priorities, favouring affordability and efficiency over intricate high-budget campaigns.

This year saw innovative viral campaigns that combined humour, technology, and personalised messaging to captivate audiences. These campaigns not only resonated with viewers but also demonstrated the innovative potential of digital marketing strategies. 

“More than 50% of startups operate on a low budget so they need to ensure their marketing techniques are targeted and serve a clear purpose. Poorly handled campaigns fail when they don’t understand their audience, misjudge cultural values, or make claims that are hard to believe. For example, using sensitive topics in a campaign without care or connection can seem insensitive and lead to criticism,” says Prady Kumaar, CEO and Co-founder, NP Digital India.

However, not all campaigns hit the mark, with many backfiring due to poorly conceived messaging or a lack of cultural sensitivity.

Such missteps led to negative sentiment on social media, with floods of criticism highlighting tone-deaf or offensive content. 

The backlash often forced brands to issue public apologies and address reputational damage, illustrating the thin line between innovation and insensitivity in modern marketing.

The allure of viral campaigns

Digital marketing has revolutionised how brands interact with their audiences. Successful campaigns can catapult brands into the spotlight through a variety of factors, including creating engaging and relatable content that resonates with audiences, deploying a multi-channel approach, and crafting campaigns that reach out to them on a personal level.

Brands like Zomato, YesMadam, and Bombay Shaving Company have all attempted to create impactful campaigns. While some succeeded, others faced severe backlash, illustrating the risks of navigating this space.

When marketing misses the mark

Marketing missteps often stem from poorly thought-out messaging or a lack of cultural sensitivity. Below are key examples of recent campaigns that sparked controversy:

YesMadam’s workplace stress controversy

The home salon services company faced public outrage for a LinkedIn post claiming it fired 100 employees for being stressed. The post, intended as a campaign to highlight workplace mental health, was criticized for its insensitivity. Following the backlash, YesMadam issued a statement clarifying its intent and apologised for the miscommunication.

Mayank Arya, Co-founder and CEO of YesMadam, issued an apology, acknowledging the misaddressed campaign and its unintended impact.

“Our intentions were rooted in addressing workplace stress and fostering a healthier work culture. However, we understand that the approach taken was inappropriate and led to unfavourable feedback. I deeply regret any confusion or discomfort caused by this initiative. There was no panic within the office, as everyone was informed about the campaign in advance. It was never our intention to harm or mislead anyone, and I extend my heartfelt apologies for any miscommunication,” he added.

“At YesMadam, we have always prioritised the well-being of our employees. The campaign was conceptualized with the genuine objective of raising awareness about mental health challenges in corporate and startup environments,” Mayank said.

Zomato’s chief of staff job posting

Zomato’s CEO, Deepinder Goyal, faced criticism for a job posting requiring candidates to pay a Rs 20 lakh fee in their first year. While the fee was intended to be donated to charity, it sparked debates about elitist and exploitative hiring practices. Critics argued that the unconventional approach alienated potential candidates, despite the company’s defence of the initiative as a filter for highly committed applicants.

Bombay Shaving Company’s misstep

In an ad meant to support Uttar Pradesh Class 10 topper Prachi Nigam, who faced online bullying for her facial hair, Bombay Shaving Company included the tagline: “We hope you never get bullied into using our razor.” The ad was criticized for being tone-deaf and exploitative. Despite the company’s defence, it was widely seen as lacking in empathy.

Poonam Pandey’s cervical cancer campaign

A death hoax campaign involving Poonam Pandey to raise awareness about cervical cancer also drew significant backlash. The digital marketing agency responsible later issued an apology, acknowledging the distress caused by their campaign.

marketing

Insights from experts

Marketing experts and influencers emphasise the importance of thoughtful and audience-centric campaigns.

Harish Bijoor, Founder of Bengaluru-based boutique consulting firm Harish Bijoor Consults Inc., warns against letting advertising overshadow brand strategy. 

“My big complaint with startups is the way they handle their marketing strategies today. Startups tend to mistake advertising to be strategy. It is important for the startup to appreciate that if there is a dog, the body of the dog is brand strategy and the tail is advertising. The tail must not wag the dog. The dog must wag the tail. Therefore marketing strategy comes first and advertising comes next. Unfortunately, a fair number of startups get excited by the sexy creative and get excited by moment marketing buzz and in the bargain, make the mistake of letting the tail wag the dog,” Bijoor explains.

In the age of social media, influencers hold a lot of sway over public perceptions, which in turn belies a responsibility that they have to be more discerning about the tone and goal of the marketing campaigns they choose to promote, believes content creator Dr Geetika Rawat, a dentist and content creator.

“As an influencer, I am trusted by many followers and at the same time I hold the ability to create meaningful conversations. If a brand’s campaign feels off, I can suggest changes or refuse to promote it. We should advocate for campaigns that are thoughtful and inclusive. Participating in ads that trivialise sensitive issues like mental health can feel like a betrayal to the audience. It’s better to step back than risk losing trust.” says Rawat.

“Transparency is the cornerstone of my work—I only endorse products I genuinely trust and always disclose partnerships or sponsorship. In addition, I prioritize inclusivity, authenticity, and respect in my content, avoiding stereotypes or exploitative messaging,” agrees Sunaina Rekhi, a yoga teacher and lifestyle influencer with half a million Instagram followers.

Vivek Goel, Founder and CEO of marketing firm Orange Owl, advises startups to focus on clear, data-driven go-to-market strategies that align with their target audience’s needs. Misaligned or misdirected messaging that doesn’t resonate with the audience can only lead to wasted budgets and missed opportunities, he cautions. 

“Startup marketing is about precision: 64% of successful startups target their audience strategically, while 86% of consumers prefer authentic brands. Choosing the right channels boosts engagement by 80%, and treating marketing as a conversation—not a monologue—enhances adaptability and trust, driving growth,” says Runki Goswami, Global Marketing Head at  Newgen Software.

Where to draw the line

Brands must tread carefully to avoid missteps that can harm their reputation. Some key principles to follow include:

Respecting sensitivities: Avoid exploiting personal or emotional topics for shock value or attention.

Transparency and authenticity: Ensure messaging aligns with the brand’s values and resonates genuinely with the audience.

Ethical data use: Avoid overly aggressive targeting or using customer data in invasive ways.

Testing campaigns thoroughly: Pre-test messaging with diverse audiences to identify potential areas of concern.

“Brands should avoid crossing the line into over-promising or being too aggressive in their campaigns. Authenticity is key—while pushing for conversions is important, campaigns should never mislead customers or use manipulative tactics. It’s important to ensure campaigns are consistent with the brand’s values and messaging, while also being respectful of the audience’s time and attention,” adds Goel.

Striking the right balance

Marketing in the digital age offers immense opportunities but comes with significant risks.

Brands must prioritise empathy, authenticity, and respect in their campaigns. By balancing creativity with responsibility, they can foster trust and build lasting relationships with their audiences. 

“Brands should know when to draw the line between a campaign that might be insensitive, misleading, or too intrusive. Campaigns should not take advantage of sensitive topics, make fantastical promises or cross the line in terms of personally invasive tactics, such as being too aggressive with targeting or using customer data in an unethical manner. A campaign’s approach should always be guided by transparency, respect and authenticity,” explains Kumaar.

“Ultimately, the line is drawn when a campaign risks damaging trust, harming the brand’s reputation, or alienating its audience,” he adds.





Source link

Continue Reading

Trending

Copyright © 2017 Zox News Theme. Theme by MVP Themes, powered by WordPress.