Pricekoto.com claims itself to be the largest player in B2B bidding platform in Bangladesh. Salman Ali, the founder and CEO of the company, envisions a future for Business purchases which is free from under-the-table transactions and efficient in terms of prices and speed. Till date they have succeeded in reaching a handsome number of buyers and suppliers and buoyant about the future of the venture. More interestingly, Salman is building this platform from the port city Chittagong, whereas entire startup ecosystem in Bangladesh is Dhaka-centric. We recently sat down with Salman to know more about the progress of the company, state of its business, challenges and growth and the future plans.
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Salman Ali: I have done my masters in Computer Science, intermediate ACCA and also hold an MBA degree in Marketing. I used to work in Citibank N.A. abroad. I worked and studied at the same time. When I was around 30, I realized that I want to do something of my own. Technology is my cup of tea and when I thought of starting something of my own, technology-based startup become a natural choice.
Salman Ali: In 2015, I and some of my friends sat down and decided to do something, and in July of the same year, we started operationally. Our launching was very good. We actually started by piloting with BSRM, the country's leading steel manufacturer. We are in fact indebted to them because they helped us immensely in structuring our business. I learned a lot from them as they are a 50 years old business and they have a very formal process in place. That process can be replicated and applied to any business.
Since we started our pilot with a big company like BSRM, we were able to develop a standard operational procedure in a short span of time, which is quite rare in our Startup Ecosystem.
Salman Ali: Right. Though they helped us a lot, we, in fact, learned the business from them, we have always maintained the procedure. We signed a formal agreement of the piloting. Fortunately, they did not treat us as the customer, instead as an organization that is trying to learn a thing, which was very helpful for us.
Salman Ali: Our idea was validated during the piloting with BSRM. You see, Purchasing/sourcing is not easy in Bangladesh, there are multiple problems associated with it. There are issues of unethical practice. You know what I mean. Besides, there are cultural problems of not accepting automation or technology.
When we pitched our idea to the company owners, they were quite positive seeing the opportunity of ensuring transparency in procurement. Being said that, it was not all that easy, in some instances, we had to face issues but fortunately, we have managed to overcome those challenges since the owners and higher management wanted to use our service.
Salman Ali: From buyer side, traditionally, when we need to purchase something, we go out to the shopping malls or centers and check different shops for a product. If we do not have any idea about the price and quality, we usually check few shops to get to a base price and choose between the prices for a certain quality.
In Pricekoto, price discovery is super easy. The buyer gives his requirement in form of Indent and our system, using custom algorithms, matches the items in Indent and notifies to the relevant suppliers. The suppliers then give quotation against the Indent. Within hours of floating indent, the buyer gets 4 to 10 quotations and this way they can easily get a base price for the product. They can then choose the quotation from the pool and ask the supplier to provide the items. The whole process of indent giving and quoting and matching happens in real time and it's super easy for the both ends.
Our main USP for the buyer is we can get them a reliable supplier because we have suppliers from both Dhaka and Chittagong and the pool of suppliers is big.
For a supplier, Pricekoto is also a boon. They can quote to companies like Berger, Marico, BSRM within minutes from their smartphones. Our suppliers know that companies buy using Pricekoto and they are quoting regularly. We repeatedly tell our buyers that do not give us fake indents. we do not want to increase the number of indents to make it lucrative. We want to keep indents genuine and we maintain a policy that no sales staff (of Pricekoto) will input an indent. They can help the buyer in educating only. Since the indents are genuine, suppliers are being more serious in quoting the price.
For the actual company owner or the management, there is also big benefit in using PriceKoto. With our system now owners can actually see the documents i.e. indents and quotations. It eliminates dishonesty and corruption in the process.
So, owners love us, purchasers are using us and suppliers are happy getting work orders.
Salman Ali: Yes, the whole thing happens on the website, from floating indent to quoting a price. We are very strict about some of our policies.
Salman Ali: Pricekoto staffs can not see the prices of quotations. Even if a buyer calls our call center or sales team to know the prices, they will modestly tell you that they don't have access to the price of quotations. The reason behind this is we want to stop price leakage and ensure a level playing field for all suppliers. Only the buyer who floated the indent can see the price.
We are so strict about our policy that, believe me, we could have hit 10k suppliers mark within this time if we relaxed our KYC. But we will never do that as we want to keep our service useful to buyers. You will be surprised to know that suppliers in our country maintains 4/5 trade licenses against one shop/location and quote price from different name to increase their odds of getting an order. City Corp. doesn't care about it, but we must keep it in check for the benefit of our customers.
Salman Ali: No. We don't handle any kind of payment. We run on the subscription model. Basically, we do not want to interfere with the transactions. we only want to play the match-making role. Since all are industrial products, transactions range from a million to several hundred million Taka.
We do not want to meddle with the big figures, rather we charge the buyers and suppliers a small yearly fee, usually BDT10k a year for the buyer and BDT30k a year for the supplier to use our service. At present, it is discounted at BDT5k for the first year. With this subscription, the supplier can quote as many times as they want and there is no limit for buyers either.
Salman Ali: Yes, we have display advertisement. All our spaces are sold out right now. All ads are local ads.
Salman Ali: Yes, we recently have taken foreign suppliers based on the applications we received from China and India.
Salman Ali: Yes, we are not the Alibaba of Bangladesh. We are only engaged in local procurements. What Jack Ma is trying to build is a global platform for world trade and it is mainly for the exporters. We were, in fact, approached by Alibaba but had to decline their offer due to our disagreement over commission structure.
Salman Ali: Of course. After we launched, we went to Bayazid Steel. It's a very old company and they have strong processes in place to keep things running. When we pitched the idea, the purchasing guy said that if Pricekoto can give him a cheaper rate, then he would use it regularly. We accepted the challenge. He put up an indent of 35 gumboots. He usually buys per gumboot at BDT 1400. After few minutes of floating an indent, he received a price of BDT 1400. He said, ok. Then he receives another price of BDT 1300. After an hour, he received a price of BDT 1050. Now, this was a very interesting price. The purchaser was happy to get the good price but doubtful about the quality considering the price gap with the market price. Later on, we found out that this guy quoting the lowest price was the original importer of the product.
I will also talk about the experience of BSRM. They were looking for a certain dia-pipe with some rare specification. The purchaser said, he visited all the markets but could not find the pipe. We asked him to give an indent but with a long expiration date. He gave an indent with 4 days time. Then we started to wait. There was no response in the first two days. We ourselves also contacted some suppliers to see if they could supply the product. and after two days, some supplier from Dhaka quoted for the exact specification. The BRSM purchase officers were ecstatic. Though they have an office in Dhaka, it was not possible for them to go and visit every shop in Nawabpur, the hardware market. After getting the quotation, they did not even negotiate the price and just asked for immediate delivery. So, you see this is where Pricekoto wins, in matching right supplier with the right buyer.
Our another buyer SA Group was purchasing Docu paint. They got a quotation from Dhaka which was offering much lower price, even after adding all transportation and other costs. This efficiency in price discovery won't be possible without Pricekoto.
Salman Ali: We look at active buyers and active suppliers to get a picture of how we are doing. Initially, we used to look at the total number of buyers and suppliers., but we have passed that stage.We also look at the number of indents, the number of products indented, and number of quotations. We do a 3 months cyclic review.
We also look at the quality of the indents, because we need to keep our 2000 suppliers happy.Besides, we make sure that every indent receives at least two quotations.
Salman Ali: Our platform is more like an auction platform and unfortunately, it will happen to all quote providers except the winners. What we do is we ask suppliers to give the genuine price. Besides, there is no limit to the number of quotations you can give submit since suppliers are paying a yearly fee.
Salman Ali: In last 12 months, we have added around 1400 new suppliers to our system and around 300 buyers.
Salman Ali: It will take us some time to get there as it is often the case with building a platform. Being said that, we are now making up 30% of OpEx from revenue.
Salman Ali: We are still bootstrapping. I and my uncles have invested here. We have been in touch with investors, but mostly small-scale investors whereas we will need good investment.
Salman Ali: I’m very lucky to have a great team. I always give credit to my team as they did some record turners, did some nearly impossible jobs. They on-boarded 400 suppliers in two months. I was expecting 100 suppliers and they just outperformed my imagination. Not only onboarding, there is also a task of KYC and training. They have been very energetic, which is very crucial for any startup.
We started with 1 staff and after running few months we started hiring. Today we are a team of 19 persons and we are hiring. We have a fantastic flow of indents and suppliers now, credit goes to my team. We are about to hit 2000 suppliers within this month. If you look at number of products, over 28000, then it is also a big number given the market size of Bangladesh
And if you look at the number of processed indents and quotation applied, you would find them also very promising considering the size of Bangladesh Market.
Salman Ali: I make sure my teammates make a good living and get rewarded for good work. We have zero employee turnover. We try to make sure that our teammates have a work life balance and have a sound family life.
My colleagues used to come to me and share any problems they have. We try to accommodate their requirements within the company policy. Sometimes we play around and make the win-win deal. Last Eid, we announced a 10-day leave which is not common in Bangladesh. We decided to adjust it around the year from their regular leave. This made the team super happy as they got some scope to spend quality time with their family.
In-house, we do many things around the year to keep the team energized. We try to make our work fun and enjoyable.
Salman Ali: We are mostly general sales based for now. However, we do love PR. We got a big boost from a feature Daily Star did about us last year.
Salman Ali: It has been a great help. I got BSRM as my piloting partner through the personal connection. It always helps to get access to a lot of people and places. I am grateful to all who has supported me time to time.
Salman Ali: We are in our second phase now. Initially, we were trying to build a verified supplier base, we have done that quite successfully and now we are going after the buyers. We want to onboard a huge number buyers from all over the country.
After that, we plan to go global. Many of our buyers are already asking us for arranging international purchases. We are also planning to launch our operation in EPZs and industrial areas around the country. In the near future, if needed, we plan to assist buyers with logistics too.
Salman Ali: Not really. However, we are testing a new platform named quickroy.com which is not so-called B2C. It is more like a B2B marketplace. The difference between Pricekoto and quickroy is that one is auction based another is a marketplace. Quickroy is for small procurements. We wanted to keep PriceKoto only for industrial products with a big price tag and for smaller procurement, quickroy.
Salman Ali: In terms of business model, we find no competition in the country.
Salman Ali: We faced many challenges like cultural challenge, ethical challenges and many more. Procurement is a different world and it has its own mechanism and here we are trying to break that. We have overcome many of those initial challenges. For now, our challenges is to go from point A to B, and expand our business and maintain a healthy growth.
Salman Ali: Be ready to do everything, from the role of peon to CEO. Building a company from scratch is nothing sort of a grand job. It will take everything you have got to build one. The second thing is: focus more on the product and not on marketing.