PriyoShop is digitising supply chain for retailers in Bangladesh
Imagine PriyoShop could impact over 4.5 million people and their families who represent 30% of the gross domestic products of Bangladesh! That’s the promise with retailers who create $18.42 billion sales with $16.72 billion of inventory value, and grow by 42,000 new retailers every year and cater to 170 million customers. PriyoShop, digitalised micro-merchants supply chain, and today operates in emerging economies Bangladesh, where like other Asian markets, traditional retail still accounts for above 97 percent of retail sales in the country. These retail stores reportedly have an 8 to 10 percent cost advantage over modern retailers, and that's where PriyoShop aims to help.
In Bangladesh and Southeast Asia, the MSME sector is moving into the next era, with technology helping increase their efficiency and providing them with tools to conduct their business seamlessly and profitably. We believe that with teams across regions working together to share their experiences and best practices, emerging economies in these countries have the strongest foundations to build the tech unicorns of tomorrow.
OPPORTUNITY
Everything is changing around the retail industry. But among 4.5 million micro-merchants close to 95 percent in emerging markets like Bangladesh are plagued by inefficiencies in the supply chain, inventory, and working capital management. Most MSMEs are a one-man army to collect products; hence they had to shut down shops or deal with lots of brands and lose working hours. On the other hand, micro-merchants might need to source inventory from up to 50 different sources (wholesalers/distributors) every week and sometimes order in bulk to get better rates, even when they don’t need such large quantities. We take a long-term approach to solve the underlying problems of traditional retailers by investing in technology, supply chain, and data-enabled credit offering. With PriyoShop, we are organising this sourcing and supply chain for small retailers so that there appears a one-stop-shop for everybody.
When we talk about small businesses, we primarily focus on neighborhood mom and pop shops, also known as Mudir Dokan. These are the small shops we see around us on our streets. If we talk about the former, 97% of our country’s retail sales take place through them; e-commerce and modern retail play a smaller role. So, the majority of the retail transaction is actually taking place through neighborhood shop retailers. PriyoShop targets the large network of 4.5 million retail shops in Bangladesh that account for 97% of the country’s retail sector. PriyoShop is similar to India’s Udaan, Vietnam's Telio, and Indonesia's Ula, trying to connect small retailers and shop owners to source goods from large manufacturers and distributors through its main platform, PriyoShop Retail.
One area that is ripe for digitalization is the grocery and the fast-moving consumer goods (FMCG) sector, which runs on a fragmented and convoluted supply chain.
WHAT WE DO
PriyoShop is a digital platform empowering retailers to simplify and grow their businesses through our full-stack solution. When we talk about full-stack, we primarily talk about the following services:
- Commerce – Through the PriyoShop app micro-merchants get a digital catalog and sell a wide range of products to their walking customer without having inventory and also can source products that they can sell at their shops.
- Logistics – Currently, we have our own fleet in Dhaka; and the rest of the city is covered by partnering with third-party logistics.
- BNPL – Through this, our retail agents can apply for digital credit services with ease and over a short period of time.
These are the above services, and when combined, we call them full-stacks B2B2C e-commerce platforms.
BUILDING AN ECOSYSTEM
PriyoShop empowers MSMEs by a digital platform to connect wholesalers, retailers, manufacturers, and customers on a single platform which will be the combination of commerce, logistics, and working capital. PriyoShop aims to help small retailers solve inefficiencies that they face in the supply chain, inventory, and working capital.
EMERGING MARKET “BANGLADESH” - AN ECONOMIC MIRACLE
Bangladesh is on the road toward digital transformation and embracing digitalization would help the country reach new levels of economic growth. Bangladesh is one of the fastest-growing countries right now, our economic growth is 7-8% and will drive the size of Bangladesh's gross domestic product up to US$500 billion and per-capita income to $3,000 by FY'26. In Bangladesh, only 20 percent of high income and social cluster accounts for over 45 percent of consumption and over 15 million people reside only in the capital city, and over 20 percent of the population which account for 35 million are part of expanded middle class and every year 2 million Bangladeshi join middle and affluent class (MAC) which is more than the combined population of Finland, Ireland, Denmark, Sweden, and Norway. Hence, its future potential is considerable. ¼ of the country's population will belong to MAC by 2025.
But there’s one thing that we’re lagging behind which is the growth in the job sector – it’s less than 1% where 66% of the population is youth among the 170m population. So, what ends up happening is the creation of a big gap which we need to fill with these small businesses, with people not getting jobs starting their own businesses. That’s why this is an SME first country, very similar to India, Indonesia, and Vietnam, which are all SME first countries too because everyone is facing the same circumstance.
EYE-POPPING NUMBERS
In just 5 months since pivoting, its business has grown 337%. PriyoShop says it has also accumulated US $3.58 million in gross merchandise value (GMV) since its pivot. Its ambition is building a complete eCommerce network that “has the same buying power as Walmart”, attracting 1 million retailers and 100 million customers in three to four years.
BUSINESS MODEL
We don’t buy goods, we don’t carry inventory, and we don’t sell anything. Our only burn is for operations and salary. Our business model ensures high capital efficiency and very manageable expenses. We adopted a marketplace model, going for an asset-light strategy, and offering value-added services (credit offerings, data analytics, advertisements).
A DIFFERENT APPROACH FROM THE COMPETITION
Instead of fighting with other digital commerce in the red ocean market, we decided to partner with the small retailers and make them the hub of digital commerce. The B2B ecommerce space is getting crowded in Bangladesh, with startups and tech giants alike staking their claims in the market. But PriyoShop is betting that its unique marketplace approach would eventually give it the edge.
While the marketplace model is common in consumer ecommerce, the opposite is true in the B2B sphere. Almost all of the other tech players in Bangladesh’s supply chain industry have opted against the marketplace model in favor of an inventory-carrying approach, which involves companies sourcing goods from principals and directly selling them to retailers.
PriyoShop, on the other hand, connects players within the supply chain without holding its own inventory. Instead of acting as a distributor, the company allows wholesalers to list their products and sell directly to retailers on the PriyoShop app for a small transaction fee of 2% to 5%.
WHY NOW?
Covid-19 drew attention to existing problems in the MSMEs supply chains. It has encouraged retailers and wholesalers to adopt digital solutions. The potential for growth exists, given that the government too is backing the push towards digital. The logistics service provided an option to our traders to reduce physical interactions in the operations space. Traders who shop through the PriyoShop Retail app, could use our logistics option for delivery which supported the needs of our partners and reinforced our commitment to safe distancing.
Suppliers will not be honest with SMEs and they will not be able to work with large distributors, they may not have the access to distribution all over Bangladesh, banks will not approve them loans – there are multiple problems that small businesses face. What we want to do is to ensure these problems are solved so that any SME can grow. What they should rather do is focus on their customers and their products. And, if we can do that, we can ensure that this entire group of SMEs can drive the growth of the economy. That’s something that would help us lead the entire development cycle for the country, and that’s why it’s so important.
UN SDGS
- SDG Goal 8: Decent Work and Economic Growth.
- SDG Goal 9: Generate employment and income through technology and infrastructure.
We are supporting small retail partners to grow and are helping improve people's living standards. We are creating income opportunities, providing skills training, and empowering our network of retailers – all while they are helping us reach consumers with leading brands connectivity.
By digitalizing small retailers' businesses, optimizing their processes, and increasing their income, we are trying to reach our SDG target. Helping retailers access the benefits of the digital economy can boost their growth and ours. At the heart of our ambition is the drive to bring more and more retailers onto what is called 'PriyoShop Retail' platforms, so that they can unlock the potential of their businesses and engage better with us, and with brands.
HAVING THE RIGHT PEOPLE
To create a difference in the world of small retailers, PriyoShop challenges conventional e-commerce and retail to transform the way consumers shop online. We are building a great team to think, innovate, and build an e-commerce model for 170 million customers and beyond. Most experienced, multi diversified, and growth mindset leading nearly 80 teammates 35:65 (Women: Men). PriyoShop is a young average age 27, fun team of highly passionate and self-motivated individuals. All are playing their roles in a dynamic, fast-paced workplace.
Founder and CEO Asikul Alam Khan, impacting $18.42 Bn trade market between 4.5mn+ small mom pop stores and brands with the power of technology which is made by people. An Entrepreneur since 2006. Passionate about people, businesses, and highly scalable ideas. Master in Business Administration major in marketing with expertise in growth and strategic marketing in the Retail Industry.
And Co-Founder Dipty Mandal, solving the problem of MSME with the help of technology and supply chain innovation with a very strong team on board working for a vision to empower millions of MSMEs. Expertise in working with diversified customer experience. An Entrepreneur since 2013. Master in Business Administration major in marketing with extensive experience in general management, people management, and eCommerce.
It now has almost 80 employees, with a large tech team. 13 years experienced Microsoft certified programmer Shahidullah All Mahmod was hired to be CTO at PriyoShop. New staffers will include experts from the consulting and e-commerce industry.
CHALLENGES
Currently, we have to deal with a completely non-techy community. Convincing a wholesaler to switch to digital ordering, is one of the biggest challenges. Bangladesh’s traditional trade remains very cash-driven. Wholesalers and retailers are also concerned about the tax implications and the need to declare earnings to the tax authorities — further complicating digital adoption.
THE ROAD AHEAD
PriyoShop secured pre-seed funding from SBK Tech Venture, followed by a seed round from Accelerating Asia, BANSEA, James Ang, and Singapore-based angel investors. It’s now looking to raise pre-series A and series A money to further expand its business, develop its tech infrastructure, and hire more people to manage its supply chain.
After completion, current round funding will be deployed to strengthen the existing ecosystem including integrated logistics, and financing. PriyoShop intends to move past its FMCG antecedents to include gadgets, houseware, electrical goods, lifestyle products, stationery, and more. Our ambition is to be the largest B2B distribution network in Bangladesh. Today, the company generates diverse revenue streams from marketplace commissions to various service fees including principal distribution, logistics, and more.
Our vision is to build a solid B2B e-commerce infrastructure with a full suite of services, including sourcing, selling, buying, warehouse, logistics, and payment. The immediate goal is to expand across Bangladesh, grow the business five-fold, and land a million users by the end-2022.