Mumbai: Just Buy Live Enterprise Pvt. Ltd, Mumbai-based e-distributor that connects local retailers with manufacturers, has raised $20 million (Rs.136 crore) from Alpha Capital and others in its first round of funding.
The firm, founded in 2015 by Sahil Sani and Bharat Balachandran, is looking to use the funds to develop technology, expand its network of retailers to one million and add 10,000 brands by the end of 2016.
“We are like an e-commerce company that connects sellers and consumers, but for businesses. Our consumers are local retailers and sellers are brands and manufacturers like HUL (Hindustan Unilever Ltd), Marico and others,” said Sani.
Just Buy has partnered with 1,100 brands and provides retailers with access to 300,000 products across 11 categories including food, beverages and personal care. It plans to reach out to a million retailers by December 2016 and expects to report revenue of Rs.1,000 crore by that time.
The Indian retail sector is estimated to be valued at $676 billion in 2015, representing a 13% growth over the previous year, according to Pinakiranjan Mishra, national leader for retail and consumer products at consulting firm EY.
The sector is highly fragmented with 12-15 million outlets, with 92% of the business coming from the unorganized sector. India’s retail market is expected to reach $1 trillion by 2020, driven by income growth, urbanization and attitudinal shifts, according to a report by Boston Consulting Group and Retailers Association of India.
While the overall retail market is expected to grow at 12% per year, modern trade will expand at a faster 20% pace.
“The average value of the transaction is $200, and the basket of products includes 15-16 items across four to five brands,” said Balachandran. Just Buy supplies goods directly from companies to retailers and every product sold by it is listed and priced by the manufacturer.
Just Buy operates on a 10% margin and retailers can buy the products from the company for about 5-10% cheaper than what they do traditionally. It has also partnered with two banks to provide credit to these retailers.
“There are a lot of challenges that we face. Getting retailers to believe that there is a more efficient way of procuring products through technology is very hard. Timings, quantities and logistics of such deliveries works differently,” said Sani.
To address this problem, Just Buy has rolled out a television advertisement campaign to build the brand and has hired 1,000 people on contract to create awareness among the small retailers.