Disrupting the Food Supply Chain the ‘Ninja Way’
Regardless of which part of India one lives in or the cuisine, fresh fruits and vegetables are an integral part of the Indian diet — even for those who can’t live without meat. It’s something every Indian household keeps a track of and no matter the frequency, each home will replenish its stock of fresh produce, whether that is a modern supermarket, the weekly farmer’s market, kirana stores, or in the case of many Indians, the ‘sabzi-wale bhaiya’. In cities and larger towns, veggies and fruits can easily be delivered to the doorstep these days using one of many online grocery platforms. But how often do customers wonder about the food supply chain that brings this fresh agricultural produce to the market?
The ease with which consumers can source the produce often makes them forget the meticulous planning, preparation, and hard work that goes into the production, distribution and food supply chain — from the farm to the fridge.
It’s particularly tough on farmers, who not only have to overcome natural calamities and climate to produce grains, fruits and vegetables, but also have to see their margins wither away at each stage of the supply chain thanks to payments to middlemen and agents.
In the end, farmers end up getting less than cost and have to rely on land-linked loans to survive. Factors such as limited connectivity, inadequate storage infrastructure and supply-demand mismatch also lead to post-harvest losses, thereby gravely impacting farmland income as well as morale. This cycle has pushed many Indian farmers to the brink of bankruptcy and some to suicide.
Bengaluru-based Agritech startup Ninjacart discovered a lucrative business opportunity in fixing this flawed supply chain. It leveraged technology to build a reliable and cost-effective supply chain to deliver quality produce directly from the farm to store, on a daily basis. This business model worked like a charm for the company which is now reportedly valued at over $320 Mn.
Fons Et Origo
Founded in 2015 by Thirukumaran, Kartheeswaran K K, Ashutosh Vikram, Sharath Loganathan and Vasudevan Chinnathambi, Ninjacart started as B2C hyperlocal grocery delivery platform where customers could order groceries and the company would deliver the order in less than 60 minutes.
But after just five months of operation, the team realised that this model is not a sustainable one and is plagued by structural challenges such as lack of practical technology solution to manage inventory, the wafer-thin margin for retailers and almost zero data-driven supply chain.
Plus, it relied heavily on expensive and erratic last-mile delivery fulfilment. This led to customers receiving only about 60% of the items they ordered. With little value in this, customers opted out which resulted in Ninjacart experimenting with delivery fees and zero discounts for 100% order fulfilment guarantees. This led to order volume drastically dipping by 70%. That’s when Ninjacart realised it was solving a problem that did not exist and therefore its business model was unsustainable. As it shifted focus to just fruits and vegetables — a category that generated better margin — it soon found out that the supply side was broken.
It was a hassle for Ninjacart’s kirana partners as well, as the daily procurement was painstaking with haggling over quality, price, assortment and other details. That’s when Ninjacart decided to focus on the thing that was truly broken — the supply end — and this proved to be the Eureka moment for Ninjacart.
“We found a great business opportunity in leveraging technology to build a reliable and cost-effective supply chain from the farm to store, on a daily basis. We wanted to add value to farmers, retailers and end consumers in one go,” Thirukumaran Nagarajan, cofounder and CEO, Ninjacart.
What Ninjacart and Thirukumaran realised was that FMCG companies managed the end-to-end supply and distribution for soaps, household essentials and other items such as biscuits and snacks. This considerably eased the burden on the retailers. But, there were no such companies doing the same for fruits and vegetables.
This realisation led to the discovery of significant inefficiencies in the fresh produce supply chain such as demand-supply mismatch, unfair market practices, unhygienic handling of food, the high quantum of food wastage and low income for farmers. Ninjacart pivoted from B2C to B2B to tap this lucrative business opportunity, and solve a real problem at the same time.
The Metamorphosis
Ninjacart’s renewed focus on solving problems in the supply chain, was backed by its desire to use tech and data science to simplify the infrastructure and logistics network.
“We realised that the supply chain is broken and we could we solve that. The opportunity was certainly bigger though we took almost one year to figure out that this model will work,” Vasudevan Chinnathambi co-founder, Ninjacart.
The science and technology of precise delivery for Ninjacart begins with accurate predictions. The first step was to acquire and understand the ‘farmer harvest calendar’, which would give the team an overview of the fruits and vegetables available in each season. This made Ninjacart aware of the demand and supply, and gives farmers a week’s notice of what is expected of them. Next, it needed a fairly good idea of what to expect. For this, the company gained complete past buying data of customers — what they ordered and the frequency of order to figure out a pattern and to know which items to procure.
Ninjacart educates its farmers on the desired quality and once this is sorted, all produce is put into crates at collection centres. In Bengaluru alone, it has 22 collection centres.
The startup has close to 7,000 farmers on its platform but on average, 2,000 transact on a monthly basis. The produce comes in between 4.00 pm and 6.00 pm daily, with some farmers traveling up to 400 km to make the drop.
“Once the produce is weighed and tagged, a message goes out through an app on the supplied quantity and the price so that the amount is credited to the farmers’ bank account the next day,” says Thirukumaran.
Then, Ninjacart moves the crates to fulfilment centres. The startup has brought in certain innovations like dolleys, which help load and unload the crates faster rather than the traditional lift-and-place. Unlike other logistics businesses, Ninjacart’s does not have a typical sorting and segregation system. “The supply chain experts we have hired from other ecommerce companies are stunned that we do not do any sorting or segregation as everything is directed through the app,” says Thirukumaran.
After this, these crates are loaded onto vehicles at the distribution centres for delivery, which starts at 2.00 am daily. There are no names on the crates as everything is enabled through the app. Every crate has a radio frequency identification (RFID) tag so that the company can know exactly which vegetables and fruits have been delivered.
The Social Impact Of Ninjacart’s Food Supply Chain
With farmers being the source of their entire operation, Ninjacart works very closely with India’s agricultural community to ensure that farmers receive a fair price for their output, which is higher than the traditional income generated through the middlemen route.
Apart from the direct monetary benefits, the social impact of Ninjacart’s model cannot be understated, as it has removed a major source of debt for farmers. According to Thirukumaran, Ninjacart is able to offer a better price than the traditional markets to farmers by reducing the cost of supply chain and removing unnecessary middlemen.
In many villages, the company claims to have helped increase farmland income by 20%, and as a result, farmers are able to buy equipment and input materials more readily.
With its burgeoning base of customers, Ninjacart is able to deliver consistent demand to farmers, which helps them plan their harvests better. It also protects them against the risk of price volatility by doing the heavy lifting in many cases. For instance, the proximity of the Ninjacart’s collection centres to farmland have helped farmers save up to 6 to 8 hours that would otherwise be spent travelling to markets to sell produce. While the startup has aced the game of building technology and data enabled supply chain, there is another initiative taken by Ninjacart which shows how great business can create a huge social impact. In 2020 when the whole world struggled with a pandemic caused by the deadly Coronavirus, Ninjacart stepped up to solve the problem of their comrades, the farmers of India.
Promising and exciting future of unique business model of Ninjacart
Reduction of agricultural produce wastage has always been on the forefront of Ninjacart’s vision. But, along the way the team realized that food safety is a bigger problem. In 2018, the startup adopted the vision of providing “Safe food for one billion”.
Ninjacart’s mission and vision statement says, “Our vision is to build India’s most efficient and largest Supply Chain platform and improve the lives of producers, businesses, and consumers in a meaningful manner.” They have already launched FoodPrint on World food safety day (June 7, 2020) to better view the whole supply chain and trace where the produce is coming from.
The startup is currently working on the beta phase of developing FarmPrint, which will help them get nearer to producing zero residue food. Leveraging technology, they will be able to monitor the whole process better. Ninjacart aims to provide “zero residue food” (having a low maximum residue limit (MRL)) and has started to invest in technology. A startup with an aim to create a strong societal impact, we are eager to witness the business and technological prowess that the Ninajcart team displays in the future.
Recently, E-commerce marketplace Flipkart and its US-based parent Walmart have jointly made their second investment amounting to about $30 million in fresh produce supply chain startup Ninjacart. In a joint statement issued, Flipkart and Walmart said that the investment would deepen their partnership with Ninjacart and would improve its offerings and enhance customer experience.
The startup is gearing up for a future that will be driven by data and predictive models. “We have a database of around 40 different markets in terms of the arrivals, supply, price, etc. In future, we can predict the prices of vegetables and fruits, and production output,” says Thirukumaran. “Right now, data it is not huge, but we are building it for the future.”
Ninjacart also toyed with the idea of storage facilities for the fruits and vegetables to see how it works. As an experiment, it did store some long-lasting vegetables such as potatoes and onion, and sold them at a profit by accurately predicting the price but it discontinued this process.
“This becomes a trading business and it is not our core expertise. We believe in giving a fair price to the farmer not squeezing them out of it,” adds the CEO.
The founders strongly believe that given their technology prowess, Ninjacart is a very defensible business.
As Vasudevan puts it,
“This is the sweet spot as our technology platform is extremely scalable and flexible where we can implement it for a large city like Bengaluru as well as for a place like Surat or Vadodara.”
From a business point of view, it makes sense as this a $180 billion plus market growing at 9 percent annually. Also, the market is very stable as it an essential commodity.
For Ninjacart, it is a 36-hour cycle from the time it collects produce from the farmers, reaches the shops and the empty crates goes back to the villages. As Thirukumaran puts it,
“Our shop never shuts.”
