Interviewed by Anisha Saha, MBR Team
Fashol.com is a B2B supply chain network for fresh vegetables & fruits, connecting farmers with retailers. We source vegetables and fruits directly from farmers cutting down 6-9 middlemen and distributing them among retailers using efficient logistics and technology.
MBR: Please tell us how the idea of Fashol.com was initiated. What were the factors that motivated you to come up with this innovative idea?
Fashol.com: In 2019, I observed that chicken was being sold for BDT 175 per KG whereas my uncle who owns a farm in Barishal was selling the same for BDT 115 per KG. So, I first talked to a local shop in Dhaka and told them about the farm where my uncle had around 1200 hens and asked if they would buy it, if I supplied them at a lower price than the local market. When the local shop owner agreed, I rented a truck, got some labourers, and supplied the chickens to the shop at 3 AM. For that deal, I purchased chickens from my uncle at BDT 115 and sold them at BDT 160. My total labour and truck rent cost was BDT 22 per KG and I made around 25,000 taka profit in that deal. That got me hooked into the scenario of why there is so much price gap.
Then I visited 38 districts in the following eight months; I stayed over at Bogura, Rajshahi, Rangpur, Jessore and I visited all of the big markets. I stayed 2-3 nights over there and saw how they were procuring from farmers, how they were Omit “doing the”. sorting, how their transaction behavior was etc. I was also in the truck coming from outside Dhaka to calculate how much money was going into the tolls and extra costs. I also talked with many farmers and tried to find out their problems, how they were selling and whom they were selling to.
After visiting all of these markets and talking with many farmers, I found out that the immediate problem for a farmer is not the agri input or financing. The main problem is that they cannot sell their products at the right price at the right time.
On the other hand, retailers cannot sleep at night with their families because they have to visit the wholesale markets at night to procure their products. And, as the middlemen are charging high prices, they purchase at a high price too and their margin becomes very low.
Right now, farmers can sell their products in Fashol collection centers easily and conveniently. Retailers get the delivery of their products every single day early in the morning at 6-6:30 AM. in the morning.
MBR: We would like to get a glimpse of Fashol.com in terms of the offered services, the number of current clients and the business size.
Fashol.com: Under Fashol network, we have 5,000 retailers working with us. We have 150 team members coming from different industries and very prominent companies.
MBR: Please tell us how the farmers, retailers and customers are benefited using Fashol.com and their response to the service you offer.
Fashol.com: On the retailer’s side, they are getting lower prices than wholesale markets. Moreover, Fashol ensures doorstep delivery of quality products that are very convenient from the retailer’s perspective. Now, they can sleep at night properly for Fashol.
On the farmers’ side, they can earn 10-20% more after working with Fashol. Fashol has a transparent selling process and farmers get their payments within 24 hours.
On the consumer side, they are getting hygiene and quality products products handled through the Fashol supply chain.
MBR: What are the changes that Fashol.com has brought into the supply chain system?
Fashol.com: There are some micro things and macro things. On a macro level, we have brought personalized pricing systems for retailers. We try to ensure procurement to delivery within 12 hours with a less than 1% wastage rate whereas industry wastage rate is 25-35%. On a micro level, we do the sorting and packaging using the technology with which we can do it really fast. From procurement to delivery, we trace the packages so that they are supplied at the right time to the right customers.
MBR: Please tell us about the strengths of Fashol.com that have helped to overcome the challenges during the pandemic.
Fashol.com: Our main strength is our team and our culture. In our culture, we tend to focus on the problemsolving rate rather than the problem facing rate. During the pandemic, we faced logistics and safety issues. But, our main focus was on the customers. When they could not come to the market to run their business properly, we helped them to run their business which was the main inspiration to overcome any obstacles we faced during the pandemic.
MBR: What are the strategic priorities of Fashol.com at the moment? How are you planning to expand the business in the future?
Fashol.com: We will build procurement centers at every district and union in our country where farmers will be able to come and sell their products without negotiating with any middleman and can get a fair price. We will build distribution centers and fulfilment centers for the last mile delivery. And, above all, we will focus on the technology to leverage the data we are gathering and build a robust supply chain. We have come up with another pilot project with meat and fish. We will also expand our SKUs to serve the best to our customers. This market is a multi-billion dollar industry and we have got an excellent shot to organize this market. In the end, what matters most is the farmers-retailers linkage, where Fashol or any other agri tech company have the potential to do that. We has to reduce the wastage rate and change the behavior of the retailers to bring them under technology and help the farmers for getting convenient life. For Fashol, growth will be the main focus in this journey.
SUPPLY CHAIN FINANCE: Optimizing financial flows in Bangladesh
Supply chain finance is deemed as a win-win opportunity for all stakeholders in the supply chain ecosystem- the corporates, their suppliers and the factor. Rather than waiting on its large customers to pay invoices, the supplier can submit invoices to financiers for early payment. In turn, this provides immediate access to liquidity which can help the supplier keep operating in a “business as usual” environment in any business climate. These along with factors such as proper fund utilization, authenticity of cash flows of borrowers, etc. have garnered much popularity in the country for this particular financing vehicle.
IDLC Finance Limited pioneered and introduced supply chain finance in 1999. Despite its commencement 23 year back, this particular segment of finance is yet to live up to its potential. The clear concept of supply chain finance is still absent among customers in our country. Additionally, the corporate buyers lack interest in supporting their suppliers and as a result, the suppliers end up availing loans at a high rate.
From regulatory point of view, Bangladesh does not have any specific policy guideline or legal framework for supply chain finance. Nor there is any legal framework for the security of the payment for these products. Hence, for this segment to thrive, the driving force needs to come at policy levels. Meanwhile, corporate buyers have to come ahead and support their suppliers by means of reverse factoring.
RIFAT ISHTIAQ KHAN
Manager
IDLC Finance Ltd