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Wednesday, December 02, 2020

Fishing in pandemic waters, Bengaluru startup realises potential of delivering fresh to Indian homes

The company has for years had its job cut out trying to make people aware that stuff ordered online might actually be fresher, but the 'try and buy' initiative during the lockdown started showing positive response soon.

Written by Ralph Alex Arakal | Bengaluru | Updated: November 13, 2020 8:15:49 am
FreshToHome has raised $121 million (about Rs 890.8 crore) in a funding round led by the Investment Corporation of Dubai, Investcorp, Ascent Capital, DFC, Allana Group and others

Not everyone has had a bad run because of the coronavirus-induced lockdown. In fact, FreshToHome, a Bengaluru-based e-commerce brand focused on fresh fish and meat — netted a growth of 2.5 times since March thanks to the sea change in consumer behaviour amidst the pandemic. Buoyed by this surge, FreshToHome has raised $121 million (about Rs 890.8 crore) in a funding round led by the Investment Corporation of Dubai, Investcorp, Ascent Capital, DFC, Allana Group and others.

“Consumers in India who mostly go to the local wet market, which is considerably unhygienic, believe what is cut in front of them (meat, fish) is fresher. Little do they realise that it might have taken some days for the fish to reach there,” Shan Kadavil, Co-Founder and CEO of FreshToHome, explains to indianexpress.com.

The company has for years had its job cut out trying to make people aware that stuff ordered online might actually be fresher, but the ‘try and buy’ initiative during the lockdown started showing positive response soon. “This led to many new consumers trying our products and over 96% of per cent of them continued to trust our products after having a good first experience,” Kadavil says.

FreshToHome already had a supply chain that soured directly from fishermen and farmers. It then added another layer. “Our patent-pending Artificial Intelligence-powered supply chain technology is a key reason why we have seen larger growth in this category during Covid,” Kadavil said, adding how the pandemic has changed the fish and meat purchasing behaviour of Indian consumers dramatically. “Consumers also made the habit-forming shift to e-commerce and we saw online demand for our products going up because of the safety concerns.”

Shan Kadavil, Co-Founder and CEO of FreshToHome

The company’s AI-based system helps it forecast the demand. “This helps us to spend right and the price elasticity is also calculated to help us decide on where and how much to spend and procure. This in turn helps us to keep our wastage to the minimum (around 1.5 per cent),” says Kadavil, underlining how his is a business dealing only in perishables. The company also used Internet of Things (IoT)-enabled sensors to monitor, maintain, and manage temperature across its supply chain.

In 2012, when it began as SeaToHome, possibly India’s first e-commerce venture in fish and meat, Kadavil was India Country Head of leading gaming company Zynga which had major hits like Farmville. The Malayali in Kadavil made him an ideal customer of SeaToHome run by Matthew Joseph. “Mathew, a veteran fish exporter, used to take fish directly from fishermen and farmers and shipped it to Bengaluru and Delhi. But as he ran out of money to scale the SeaToHome business, it turned out to be a tragedy for many people like me,” Kadavil remembers.

Kadavil decided to pitch in his technical expertise to revive the venture and co-founded FreshToHome with Joseph in August 2015. “FreshToHome began as a concept born out of the love for food,” he asserts, adding how they wanted to ensure their produce did not have any harmful chemicals like ammonia in it.

“Our key differentiator of knowing where the food comes from — from the boat in which the fish has landed to the farm from which the antibiotic residue-free poultry was sourced from — has worked well, Kadavil says, adding how their commodities exchange platform for 1,500 fishermen and farmers across India helps deliver fresh, chemical-free products to the consumers’ doorsteps. “This value proposition has led to rapid growth and demand for FreshToHome.”

At present, the company supplies to the National Capital Region (NCR), Bengaluru, Chennai, Hyderabad, Mumbai, Pune, Kochi, 22 towns in Kerala and in all seven emirates of the UAE. It plans to soon expand to Kolkata, Coimbatore and Jaipur. “We use refrigerated trucks and a lot of ice across the supply chain. We have collection-centred infrastructure along 40 different harbours in India, vehicles ensuring last-mile connectivity and processing centres in different cities,” Kadavil says, explaining how the company is able to avoid using chemicals to preserve the fish.

In addition to this, the firm has contract farming linkages for fish and poultry around each city. For instance, farms in Kanakapura, Mysuru and near the Tamil Nadu border primarily ensure supply to Bengaluru. “The entire process, if completed between 24 to 36 hours helps us to eliminate the use of chemicals and that’s what we do,” Kadavil adds.

However, eliminating chemicals from the supply chain has not been the biggest challenge, but getting rid of the middlemen. “This is a hard task in India since three to four middlemen are involved in the most perishable supply chains of meat and fish and the cold chain is relatively absent. Eliminating middlemen to enable our sellers to directly offer products to the end consumer took a lot of time for us to stand by our brand claims,” Kadavil says, adding that it has helped the brand offer over 20 per cent of the price benefit directly to the fishermen and farmers.

The opportunity in getting this right is immense. “Interestingly, the size of the fish market in India is around $60 billion, much higher than meat which is at around $30B. This indicates that in most Indian cities, fish is more widely consumed than meat,” Kadavil highlights.

The firm has developed an application called FTHDaily which offers products on a subscription basis. “Over six lakh litres of milk and a lot of fruits and vegetables are supplied every month on this platform,” the company claims.

As of November 2020, FTH estimates it has over 20 lakh customers, facilitating around 15 lakh orders per month at an annualised sales run rate of Rs 600 crore. “Our idea is to deepen the supply chain to add more fishermen and farmers to the existing 1500 and to enable more jobs beyond the 17,000 that we have today,” Kadavil lays down his plans. “In the near future, we plan to reach 56 tier-1 cities and to achieve a revenue run rate of Rs 1,500 crore in the next 12 months.”

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