Last month, Flipkart rolled out a hyperlocal grocery delivery service to compete with Amazon Fresh, BigBasket and Grofers. Even Swiggy and Dunzo, which were mainly took food orders before the pandemic, have pivoted to last-mile grocery deliveries. What used to be a convenience has become an essential service.
Flipkart Quick, the answer to Amazon Fresh, is enabled by India’s top-funded agritech startup Ninjacart, founded in 2015 to supply fresh produce from farms to retailers, restaurants, food brands and service providers. Flipkart’s owner Walmart committed $50 million to Ninjacart in August last year, following a $90 million Series C round led by Tiger Global in April and a $35 million Series B round in December 2018.
The funding reflects the rapid scaling up of the B2B (business-to-business) fresh produce supply chain. Its website claims it can move 1,400 tonnes of perishables from farms to businesses in 12 hours or less, serving customers in Bengaluru, Hyderabad and Chennai in the south, Mumbai, Pune and Ahmedabad in the west and Delhi in the north.
But Thirukumaran Nagarajan, Ninjacart’s CEO and co-founder, dismisses any suggestion that it has solved the supply chain problems in the convoluted ecosystem of Indian agriculture. “It’s not over. This business needs a lot more innovation. We will continue to invest in technology and infrastructure to reach more customers and farmers.”
Down to the ground
What it takes is to go down to a granular level to solve each problem. For example, customers not returning delivery crates can add up to a significant loss because each crate costs ₹500. RFID technology to track crates solved the problem, but it took three years to bring the loss to zero.
Pilferage is one of the hardest to handle in a business where items can be stolen at multiple points. A tomato swiped from each crate of a delivery truck would make an additional crate that the driver can sell at a discount. This is hard to spot because weighing crates at every point is an extra labour cost.
If drivers are micro-entrepreneurs taking a commission on deliverables, rather than employees with a salary, there’s less incentive to siphon things off, but managing becomes more complex. Leakage takes various forms at different points of the supply chain. A collection centre supervisor may accept sub-standard produce from a farmer for a payoff.
Fraud is a headache for ecommerce as a whole, but in grocery it’s like death by a thousand cuts. Solving this is only one of many issues. That’s also what keeps Ninjacart ahead as competitors, like WayCool, Crofarm and Jumbotail, snap at its heels, apart from bigger B2C (business-to-consumer) players like BigBasket trying to set up farm-to-fork supply chains.
Getting farmers to grade produce, optimizing vehicle routes, streamlining loading and unloading of trucks, processing hacks in warehouses—time-saving comes from attention to detail and this accounts for the delivery time of 12 hours or less which is a vital value proposition in fresh produce. “We have innovated to reduce the time it takes for every step,” says Nagarajan. “We’ve brought efficiency in 10,000 steps.”
This efficiency made Ninjacart a lifeline for many apartment complexes in Bengaluru during the initial weeks of the lockdown when disrupted supply chains cut access to fresh produce. This involved several proactive measures like getting permissions from authorities in time, ensuring availability of drivers and warehouse workers, and engaging with point persons in apartment clusters who would take bulk deliveries.
Nagarajan says these were largely stopgap arrangements, as Ninjacart returned to its B2B focus once the crisis abated.
The long game
Covid-19 has given a push to Ninjacart’s ambition to get closer to farmers and influence the quality of produce. So far, it has focused on disintermediating the supply chain, improving procurement for retailers, and giving farmers market linkages and pricing visibility. Now it is working on putting in place systems to trace farm produce to origin. The pandemic has given the need for traceability more urgency.
It will take time and significant investment for Ninjacart to deepen the farmer connection when its scaling drive comes from serving more retailers.
Nagarajan knows that investing in tools to monitor what the farmer is doing, reduce chemical residues by identifying origins, and improving food safety will create a sustainable differentiator in the long term.
“It’s an impactful change that can build competitive advantage,” says Nagarajan. “The aim is to get residue-free fruit and vegetables at scale without paying a premium for it.”
The article was first published on livemint.com