The Real Life MBA – FoodSpot – The 9th Pass Entrepreneur
Entrepreneurship has seen a steady rise in today’s time. It’s not only about making profits, but it is also a process of designing and crafting an enterprise that sustains in the long run and also has a value addition to the society. And it definitely is not an easy process. It starts with an array of uncertainties and challenges but it can only have three possible outcomes – one, it will take off and do really well; or two, it will not work and you will drown; or three, you will just manage it enough to make ends meet. As Robert Kiyosaki and Sharon Letcher put it in their book ‘Rich Dad Poor Dad’, “Starting a business is like jumping out of an airplane without a parachute. In mid-air, the entrepreneur begins building a parachute and hopes it opens before hitting the ground.”
Inspite of such uncertainty and complexities, entrepreneurship is quite popular in today’s day and age. Despite advanced degrees and high profile education, many start-ups do not see the light of success in their first venture (almost 50% of start-ups will fail within the first five years).
Meet Vinod Nandu, 9 th grade pass, a Kuchchi businessman who made it big despite all odds. He has 5 retail shops spanning all over Mumbai, something only most entrepreneurs can dream of.
Mr Vinod’s story was no different from the millions of people who migrate from across the country to the “City of Dreams”, seeking that one right opportunity. Hailing from a middle-class Kutchi business family, he was always inclined to make it big in business. Vinod’s father Mr Chapshi Nandu was into trading textiles and gray fabric. Vinod’s familiarity with the textile industry prompted him to start his first venture in this field. However, much couldn’t be accomplished and being dissatisfied with his performance, he decided to move on and he commenced a new start up trading ball bearings. Second time unlucky, Vinod could not envision a flourishing business in this industry as well and was forced to move out for the second time with nothing but the rigour and motivation to start again. This was in 1989 – already 12 years from when he started his struggle, but this time he got it right. Foodspot, Vinod’s most successful venture, was started in this year with the first 400 sq.ft retail store being established in Ghatkopar. From 1989 till date, he has always been on an expansion spree with 5 new stores and a warehouse being established.
The Target Audience
On being asked to give a description of his target audience, he said, “We always target the upper middle class.” This is probably one of the reasons he has chosen some of the most posh areas of Mumbai like Breach Candy, Nepean Sea Road and Worli as his store locations.
We met Vinod at his maiden store which has already grown three times in size since its inception and were amazed by the amount of products stocked at the store. He said, “We stock more than 2000 items in this store which include everything from packaged and canned food items, snacks and confectionery. Everything is outsourced from our network of old and tested suppliers. I personally sample and taste all the products before placing them on the shelves. Later, a sizable amount of sample is purchased for our customers to taste it and receive their feedback. The cost of performing this feasibility test is the only investment that we make before introducing a new food item. If we get positive feedback and a go-ahead from our consumers, we would definitely introduce it in the store”.
When it comes to innovation and ideating new recipes, Vinod handles it single-handedly. “For example when I meet my supplier supplying plain sindhi pani-puris to my stores, I would always suggest him to experiment and add new flavours to them. It is only because of regular interaction with my customers that ideation comes naturally to me. However, it is very easy for recipes and product innovations to get replicated by competitors. We hear consumers complaining that a similar product is available elsewhere at a cheaper price.”
What sets you apart from your competitors? “There is no difference in the packaged foods category. When it comes to dry snacks and farsan, it is only the quality, variety and quantity that helps us. These are the 3 pillars of my business.” One more aspect that they focus on is after-sales service. “In case if we receive any complaints within 15 days from the date of purchase, we promise 100% replacement.”
Vinod says that logistics and warehousing has never been a serious cause of concern, since he follows a hub-n-spoke model with only one warehouse in Chembur, where goods are repackaged and distributed to other stores. However, perishable foodstuff which need to be replenished on a daily basis is distributed directly from the supplier’s location.
“We are doing gross sales of almost 12 crores at an average margin of 30%. I would love to expand this business to 10 stores and even more if resources permit. We opened up a branch in Vile Parle as well, however, it did not meet my expectations and was shut within 2 years. Some establishments do well and some don’t. The key is to acknowledge bad decisions, learn from them and move on as soon as possible.”
“We see a footfall of at least 200 walk-ins on a daily basis at the Ghatkopar store. However, the average footfall is lower at the other branches. That is when we introduced home-delivery and this trick worked very well at the Nepean Sea Road store. Today, at least 25% of the total orders are received through phone-ordering.”
How do you perceive e-commerce as an additional channel to boost your sales? “I started our website way back in 1992 and realised the potential of the web as a channel. However, it cannot match the impact of word-of-mouth publicity. We have also listed ourselves with a few e-commerce websites like Hoodly, Lookup etc. There are rare occasions when our monthly sales through the web crosses INR 25,000.”
Another serious drawback to e-commerce is returns. “We have received a lot of complaints when we sell online. In case of fragile items, there is a high possibility of consumers returning the product if there is any damage during transit. Those returned products are a complete waste for us. We have to dump them. I do not see e-commerce companies taking adequate measures to overcome this problem. My experience with e-commerce partners has been bad both in terms of sales and service”.
We also asked him to opine on modern retail stores and whether he considers them as a serious threat. “I know my items are unique. Kirana stores would be affected but we don’t see any competition from them. Moreover, it is my personal relationship with clients that drives sales and customer loyalty. A store manager of a well established retail chain would not greet his customers personally. People would fill up their trolleys, pay and leave. These players are relatively new in the market staffed with educated employees. They have expertise but we have experience”.
“ We are always looking for new people to join us. The attrition is very high. They are uneducated and a small increment of 200-300 rupees is enough to lure them.”
How do you single-handedly manage 5 stores? “We have a team of 50 members. If I find that an employee has considerable experience and is trustworthy, I would readily employ him as a manager at a new store. And that’s how I manage 5 stores. Moreover, I personally take stock of purchases, sales and the remaining inventory at the end of every month. However, there is always a provision for losses in inventory to the extent of 2% of annual expenses”.
How important do you feel is education in the line of business?
“Education is very important in this age. I have only one son who is studying in Massachusetts. He is not ready to join this business simply because he is not interested in this industry and wants to pursue something bigger in life. If I was well educated like him, I would have never been here too.”
1. Fall seven times, stand eight.
2. Be clear about your target audience.
3. Acknowledge bad decisions, learn from them and move on as soon as possible.
4. Involve your customers in your decision-making process.
5. Expertise matters. Experience matters more.
As told to Hiral Sanghavi