Co-Founder & CEO
Interviewed by Akhlaqur Rahman Sachee, Team MBR
SupplyLine is a distribution tech company through which suppliers and institutional lenders are connected with mom-and-pop retail stores, which are commonly known as “Mudir Dokan” locally. 90% of the sales of FMCG products in Bangladesh take place through a wide network of 1.4 million such neighbourhood retail stores. Through the SupplyLine smartphone app, these retailers can check the prices of the products from all the suppliers to grab the best deal. It also provides invoice financing facilities to eligible retailers. Team MBR was in a conversation with Irfan Rafique, Co-Founder and CEO, SupplyLine, to learn about the inspirations and vision behind SupplyLine.
Akhlaqur Rahman Sachee: SupplyLine is providing a digital B2B solution through which retailers are able to procure inventory from a single platform and suppliers are able to meet the demands of the retailers more efficiently with the help of real-time market insights. What is the story behind this innovative idea?
Irfan Rafique: I started my career in trade marketing and distribution at one of the largest multinational FMCG companies. I served in different markets, which gave me a hands-on opportunity to work closely with retailers.
Procurement is a serious challenge for retailers. In the case of procuring products from big brands, they have to wait for 7 to 10 days for a sales representative to visit and receive the order. In addition to that, they have to carry 14 days’ additional stock of critical SKUs to ensure proper stocking. For commodity and niche categories, they have to pay frequent visits to the nearest wholesale hubs to procure products, and they have to take the products by public transport to the store themselves.
For retailers using SupplyLine, we are providing them with a one-stop solution to these procurement problems, which makes life easier for retailers so that they can concentrate on selling instead of buying.
Akhlaqur Rahman Sachee: How are the retailers responding to your innovative model? What are the motivations for them to pick your solution over the traditional distribution model?
Irfan Rafique: Our services are being well received by retailers. Over 40% of the users are placing orders weekly, and we have been expanding on an exponential scale since launch. Traction-wise, we have already started observing the early signs of product-market fit.
As retailers are getting products on-demand at their doorsteps, this hassle-free service is their biggest motivation to join our network. At the end of the day, users love solutions that make their lives easier and save time and money. And, we are concentrating our efforts on ensuring just that!
Akhlaqur Rahman Sachee: SupplyLine provides retailers with the facility to avail of collateral-free invoice financing. Would you kindly share with us how the retailers are being financed? How are the associated risks with financing being mitigated?
Irfan Rafique: Any financier’s most valuable assets are transaction data and retailer social equity. We are enabling our banking partners to leverage this through our systems.
As we all know, Bangladesh is home to many prominent micro-finance institutions, and they have a time-tested process of risk mitigation. The comparison between the industry NPL ratios of MFIs and banks/NBFIs speaks for itself. We take lots of inspiration and borrow the best practices from BRAC micro-finance operations. Moreover, our additional risk mitigation tools provide our institutional lending partners further comfort.
Akhlaqur Rahman Sachee: Do you think that SupplyLine will be able to take the place of a field-level sales force someday? How is SupplyLine helping the suppliers cut costs?
Irfan Rafique: I do not think so. Machines or automation will not outperform the selling and salesmanship skills of human beings anytime soon. The field-level sales force is always the best choice when it comes to driving product development, placement, and business growth. Through SupplyLine, we are automating the part of buying that involves fulfilling orders often, and we want to keep doing that.
Through our systems, our suppliers are currently selling more than the conventional operations process without increasing their overheads. Additional sales generated by SupplyLine assist them in accelerating stock turnover and directly increasing profitability.
Akhlaqur Rahman Sachee: What are the revenue streams of SupplyLine? How does SupplyLine make money out of the service it provides?
Irfan Rafique: We charge a fixed rate to the suppliers, and our institutional lending partners share a portion of the revenues earned from invoice financing. Overall, we have multiple revenue streams from various services and category verticals. And we are consistently expanding on this end.
Akhlaqur Rahman Sachee: SupplyLine has already onboarded more than 5,000 retailers. What is its current geographical area of operations? How is it planning to expand in the upcoming days?
Irfan Rafique: Since our inception, we have been gradually expanding our footprints. As a result, more than 5,000 retailers are already enjoying our services. Currently, we are piloting within Dhaka City Corporation and its nearby outskirts. Within the next 12 months, we plan to expand our operations to all divisional headquarters.
Akhlaqur Rahman Sachee: What are the challenges SupplyLine is facing these days in its way of smooth operations? How are you planning to overcome them?
Irfan Rafique: Supplier-side adoption and on-time fulfilment from third parties are the key challenges for us right now. We are developing inclusive joint business plans and operational modalities for our suppliers to improve on that. In addition to that, we are developing our technological and operational capabilities in order to make massive strides in terms of visibility and to improve logistic efficiency. Starting from introducing automated route and fulfilment planning through our in-house solutions, we aim to reduce many of the existing inefficiencies in the distribution game.
Islamic finance, which adheres to Shariah principles, is one of the thriving segments of the global financial system. A recent report published by Refinitiv, one of the world’s largest providers of financial market data and infrastructure, postulates that the size of the Islamic finance industry is expected to grow from USD 3.37 trillion in 2020 to USD 4.94 trillion in 2025, representing an annual growth rate of 8% on average over the course of the next five years.
Bangladesh is one of the fastest-growing economies in the world. In line with other economic activities, Islamic finance in Bangladesh has also been witnessing robust growth. The country is among the top ten economies holding the highest Islamic financial assets and is growing above the global average growth rate.
Out of the USD 50 billion Islamic finance market, Islamic banking alone possesses a market cap of USD 48 billion, which indicates that the Islamic capital market, the Islamic insurance (Takaful) market and other areas of Islamic finance have not flourished to the extent of Islamic banking expansion in Bangladesh. Nonetheless, the recent issuance of Sukuk (Islamic bond) by both the public and private sectors, the gradual development of the Takaful market (Islamic Insurance), the penetration of Islamic microfinance to the doorsteps of marginalised people, and the advent of Islamic FinTechs indicate that other areas of Islamic finance have a bright future.
Considering the high market demand and growth potential of Islamic finance in Bangladesh, different financial institutions are trying to offer innovative Islamic financial products and services to their clients. Undoubtedly, this growth momentum of Islamic finance indicates that our financial ecosystem is en route to new horizons.
Md. Shah Jalal
IDLC Finance Ltd.