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BW Businessworld

‘We Intend to Expand to 5,000 Relevant Outlets in Hyd, Chennai by March 2021’

Bangalore based start-up & Fireside Venture funded AnKa SumMor is India's first-and-only plug & play platform with a vision to re-engineer FMCG sales & distribution for Challenger Brands with brands such as Wai Wai, Yoga Bar, McVities, Paper Boat and more which are today part of the company’s portfolio.

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India’s first and only plug and play services platform, AnKa SumMor, has been launched to re-engineer FMCG Sales and Distribution (S&D) for Challenger Brands, Ashok George, Founder & CEO, Anka SumMor tells ASHISH SINHA of BW Businessworld. This inventory-led and technology enabled S&D model involves ownership of stocks by AnKa SumMor. How does it work? George says since most of the operating costs are fixed or semi-variable, revenue scale coupled with productivity enhancing technology will bring down operating cost as a percentage of revenue. Bangalore based start-up & Fireside Venture funded AnKa SumMor is India's first-and-only plug & play platform with a vision to re-engineer FMCG sales & distribution for Challenger Brands with brands such as Wai Wai, Yoga Bar, McVities, Paper Boat and more which are today part of the company’s portfolio.

Excerpts: 

What is Anka SumMor all about? 

Anka SumMor is India’s first and only plug and play services platform with a vision to re-engineer FMCG sales and distribution for challenger brands. AnKa SumMor is an inventory led and technology enabled S&D Model, where ownership of stocks moves to AnKa SumMor. Infrastructure for storage and delivery is hired and fixed, manpower is on company roles. Since most of the operating costs are fixed or semi-variable, revenue scale coupled with productivity enhancing technology will bring down operating cost as a percentage of revenue.  
 
“The SumMor Model”: Single S&D partner for Brands in a city servicing directly all relevant retail channels/outlets. Servicing upcountry sub distributors eliminating the need for CFA; Direct Supply to AnKa SumMor warehouse resulting in lower logistics costs; Frontline sales team on AnKa SumMor shared across brands, eliminates the challenge of deploying, managing and retaining team. Importantly the quality of the team is at par with that a brand hires; Transparent order and sales information at retail outlet level, lighting up secondary sales; Improved order fill rates and lower market expiries in 6 months; Resulting in minimum 50 per cent revenue growth in over 9 to 12 months, no trade scheme leakage and up to 50% reduction of S&D costs. 

What problem does Anka SumMor solve in the FMCG market? 

Anka SumMor’s S&D platform is designed for FMCG challenger brands, to significantly reduce the complexity, inconsistency in servicing the market, non-transparency and high S&D costs of a multilayered & fragmented traditional S&D system. Thereby, delivering lower S&D cost, real time last mile sales MIS, consistent service to outlets resulting in quick revenue growth for challenger FMCG brands. 

How did you come up with the idea of starting this business model? Explain the USP. 

Both Rajiv and I have worked together in developing S&D for FMCG players like Coca-Cola and Mother Dairy. For over 20 years, the problem of finding, managing and retaining distributors has been a constant challenge for both of us coupled with the complexity of deploying and managing a large frontline sales team. In spite of all the effort and investment the FMCG S&D system was always behind fulfilling brand growth goals.  

The existing FMCG S&D system in India is multi-layered and fragmented. Big brands like HUL, Amul, Britannia, Nestle and ITC have multiple distributors in any large city and this works for them as they have managed to create demand for their brands resulting in significant revenue for each distributor. But these same brands struggle with their long tail as this S&D system is geared to sell & distribute what sells. Now, imagine the plight of the No. 3, 4 or 5 (challenger) FMCG brand in the category. One, the large distributors will not be interested due to lower demand and resulting lower revenue, lower working capital rotation and importantly higher damage and expiry in the market vis-à-vis the large brands. Two, the small distributor does not make enough margins to support a salesman, resulting in the brand having to deploy their own frontline sales teams. He does not have enough infrastructure/working capital to support growth, needs smaller inventory loads, adds logistics cost and to top it all, always worried about distributor attrition resulting in disrupted market service which further weakens demand and possible consumer switch to large brands.  

What are the S&D Costs for the Challenger FMCG brands?  

S&D Costs for these challenger FMCG brands is two to three times of the large brand leaving them with very little room to invest in the brand. Further with all this costs the challenger brands did not have any visibility on order & sales from distributor to retail, which results in trade scheme leakages, poor SKU assortment resulting in high damages & expiry. The brand's future was decided by the distributor and frontline salesman, a system that is the creation of large brands. The biggest moat the large brands created along with exporting their management talent to these challenger brands who know only a fragmented S&D system and “increase distribution reach” a mantra of the large brands, thereby putting more strain on the system. Unfortunately, all experiments in the FMCG S&D system were limited to a Master Distributor and Sub Distributor model. It’s just outsourcing the problem but not solving the problem. Can’t blame the management too as there is no platform in India that solves the real S&D problem. 

The answer was to create an S&D platform for multiple challenger brands, thereby solving the S&D challenges of scale, information and intelligence to consistently service demand optimally at a reduced cost. For this the brands have to realise that their conventional distribution margin is not the benchmark but their overall S&D costs. Brands who have been asking these questions and were willing to take a leap of faith, came onboard with AnKa SumMor and have clearly seen the benefit. The proof of their belief is that 4 brands of the 10 associated at Hyderabad have also moved to our operation at Chennai, and are asking us to start operations in Bangalore and other cities. 

What challenges did you face while helping brands transition to this model? 

Transition to our model is an informed decision for the brands, so not too many problems came our way; infact all brands value the data transparency from day 1 which is missing in the traditional structure. What takes time is the alignment of the two teams, which is a given for any new engagement, but we have seen this stabilizing in 2 to 3 months. 

From business operations perspective, the biggest challenge was the high cost of operation, sales projection and creating trust at retail points during the first year where the scale was still low for the infrastructure and resources deployed. 

Where are you operational today?  

We directly service 2100 outlets in Hyderabad and Chennai and service over 20 sub distributors in Telangana and upcountry Tamil Nadu. We intend to expand our reach to 5,000 relevant outlets in Hyderabad and Chennai by Mar’2021. 

Which all brands are you helping with S&D solutions and how have they grown over the last one year? 

Currently, we have about Eight Brands in our portfolio - McVities, Wai Wai, YogaBar, Wingreens, Paper Boat, Bombay Shaving Company to name a few. All brands associated with us for 6 months or more have grown revenue significantly compared to their previous system. 

What is the Capital invested in this business till date?  

We invested over Rs. 20 Lakhs in building this business from scratch and further raised Rs. 6 Cr. as seed round from Fireside Ventures to build the business model.  

Currently, we are in the process of raising Rs. 10 crore for deploying technology, predictive analytics, expanding capacity in Hyderabad & Chennai and launch operations in Bangalore in FY 20-21.The goal is to service 15,000 relevant outlets in these 3 cities exit March 2022, develop a play book for geographic and category expansion and deliver a profitable Rs 100 crore revenue in FY 22-23.  

What are the challenges faced during the pandemic times? 

Dynamic market condition of streets and outlets being closed temporarily or falling under containment zones and stock supply shortages were the major challenges. However our teams and brand partners have stepped up their efforts to bridge the gap. Our revenues for April to June have grown by 201% v/s months of 2019 and 72% vs pre-covid months, a reflection on the strength of our model.  

What has been your revenue turnover during the last financial year? 

We have seen a significant revenue growth in 9 to 12 months of inception, transparent order & sales visibility at outlet level, reduced expiry and zero trade scheme leakage for challenger brands at significantly reduced S&D costs. In FY 18-19, our revenue was Rs. 1 crore which jumped to Rs 10 crore in FY 19-20. Our current annual revenue run rate is Rs. 18 crore while we expect to close FY 20-21 at Rs 24 crore. 

How scalable is your solution and what are your future plans? 

Our Model is technology enable and process driven to deliver on the S&D Metrics. We can scale both within a market by adding more brands and outlets, and expanding to new markets. From 2 brands at the time of inception we currently have 8 active brands in our portfolio at Hyderabad and revenue has grown from Rs. 1 lakh a month to Rs. 120 lakhs/month in 24 months. Further, we launched Chennai in March 2020, just before Covid lockdown. In-spite of being new to market we had 4 of our partner brands from Hyderabad logged in. Chennai quickly reached Rs. 30 lakhs/month sale in its 2nd month itself, a clear demonstration of the model’s ability to be deployed in new markets and importantly have a faster delivery curve. Going forward we intend to be present across all Metro cities and Tier 1 cities over 5 to 7 years and directly service 100,000 + relevant outlets. 


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AnKa SumMor Ashok George