Serving SMEs

Serving SMEs

Accel, Kalaari and Inventus-backed Power2SME is an online-enabled platform that buys raw material in bulk from suppliers like BASF and Beyer, and sells to SMEs at a low (comparatively) price, thus directly contributing to enhance profit margins

Madhumita Prabhakar

The problem

Typically, a major chunk (over 70 per cent) of SME spends goes into procuring raw materials from suppliers, hence having a direct impact in profit margins.

The solution

R. Narayan’s BEBB India (short for Business Essentials for Better Business) runs Power2SME, which procures raw material in bulk from suppliers and sells it to SMEs at a discounted price, thus reducing their procurement costs by at least five per cent. Currently, they buy raw materials from companies like LG Chem, Dow, BASF, Beyer, Berger, Arcelor Mittal and Bajaj Eoc-Tec Products. The categories it specializes include steel, chemical additives, engineering polymers, paints and inks.

The impact

Presence: 29 cities across India (to which it plans to add 20 more cities in the coming years)

SMEs: 25,000 +

Target: Transactions worth Rs. 5,000 crore in three years

Future Outlook

Given that 70 per cent of the company’s business comprises of repeat customers, its focus will be on creating mobile penetration in the B2B space. The company has developed a mobile application for its SME customers, and shares regular updates related to pricing and procurement.

On the services front, Power2SME is also looking to offer corporate insurance, financial services and legal services, through partner organizations.

The 3-step operational strategy

The company first approached the SMEs and suppliers in the construction industry simply because the sector is fraught with challenges such as defaults in payments. The belief behind this approach was, cracking this segment would provide sufficient insight into the business and prepare the company to maneuver easily in other segments.

Secondly, it adopted a SME-first strategy and then approached the suppliers. In fact, creating an impact on the supplier side proved to be a bigger challenge. “The suppliers have scant respect for technology in the commodity space. They were not convinced about our model. It wasn’t until we sold the first 200 tonnes that the suppliers became more open to the idea of selling online,” shares Narayan.

Lastly, from day one, Narayan looked beyond landing a great idea and focused on setting up sustainable backend processes. “We give a lot of importance to implementation. We don’t go through the holy grail of learning through mistakes at every turn,”   he explains.

Accel Partners B2B ecommerce Inventus Capital Partners Kalaari Capital Power2SME

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