Distributor or Producer: What's your startup choice?

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May 8, 2019

If you are in Bangladesh and thinking of a starting a startup or already have one, there are only two ways to structure your company: either you are a distributor or you are a producer. Let me clarify.

If you are thinking of an e-commerce business, you are in the distribution business. Chaldal, Daraz, Rokomari or Amazon - they are all in the distribution business. And you need to compete with these guys. Pathao, Uber, Shohoz - they are all in the distribution business (connecting users with service providers). Companies like Handymama, Sheba are also in connection/distribution business. Hungrynaki, Shopup, etc. are also in a similar business. And similarly, Facebook is also in distribution business - they distribute ad and content to you. So, any startup that doesn't produce anything (content, product or direct service) is actually in 'distribution business'.

If you are producing anything - be it contents like 10 Minutes School or a product like Onnorokom Bigganbakso or a t-shirt - is in the 'production business'.

There is a handful of companies who are operating in both 'distribution' and 'production' space. Because developing 'distribution channel' and 'content or product' at the same time is difficult and super costly.

The genius of Facebook is that it doesn't produce a single content itself, but the largest distributor of contents to users. All of its contents are being produced by users. It's the largest media company in the world now taking out the major chunk of revenue from TV Ad industry.

The reason why 10 Minutes School did amazingly good is that they produce an insane amount of contents. Before strengthening their own distribution channel (website and app), they use existing channels (Facebook and Youtube) to distribute their contents.

People who are in Education Startup space, also think like this.

Repto, tutoriaa, caretutor etc. are all in the distribution business. They don't produce content. They distribute contents or facilitate connection for their target audience. e-Shikhon is an interesting case who control the distribution and also produce contents through their tutors. Shikhbe Shobai is also into a similar model.

10 Minute School, Esho Shikhi, Light of Hope, Shonod, etc. are in the production business. Yes, these startups have their own distribution channels (e.g app, website, etc.). But at the core, these are in the content production business. For example, Light of Hope produces Teacher Training and Parenting Awareness Courses that are distributed through Teachers Time - Light of Hope's own brand. But at the same time, it distributes the courses through other platforms like Muktopaath, Repto, Youtube, etc. It also produces contents (e-book, hard copy books, videos, learning materials, etc. for children) that are distributed through its own platforms like Goofi or other online platforms like Rokomari, daraz or offline distribution channel like Aarong.

If you want to get into distribution business (be it online or offline), keep in mind that it's super easy and cheap to start an online e-content or service distribution business. But it's super competitive and someone else with more money and more network can come and kill you tomorrow. It's a winner-takes-all market. There will be 2-3 Ride Sharing business in Bangladesh. Others will die tomorrow or 5 years from now. There will be 3-4 big e-commerce business will survive in Bangladesh. When Amazon comes to Bangladesh (and they will), all 7000+ e-commerce & f-commerce will die painful deaths except few big players with deep pocket.

Doctorola made an interesting move recently. They started as a connecting media between patient and doctor. On top of that, they added more services. But for the first couple of years, they were more into connection/distribution business. But in recent times as part of their branding and giving values to their customers, they started producing contents - a lot. Specialists doctors come to their Youtube Show where they produce valuable contents for the audience. Since their contents got amazing responses, they are now getting sponsorship from various brands to continue producing these contents.

The contents give value to their customers (the patients), drive more traffic, give higher conversion. At the same time, the doctors who come to their show are also happy since they get to directly market to their potential patients. Brands are happy because they are putting themselves right in front of the target audience. Doctorola's Youtube Show has more views than similar TV shows.

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In this smart move, Doctorola established itself as a content producer, created their own brand and also getting stronger as a distribution/connection business. By doing this, Doctorola has taken themselves out from the different vertical competition like Sheba, Pathao, Shohoz, etc. (because all of these startups are going after 'super app' concept)

Bangladesh is a consumer market. In this market, either you produce or you distribute. For startups, it is easy to enter into the distribution/connection business, but very difficult to grow and survive in the long run. If you produce and produce a good product, content, service (with your own people) - not like Sheba, then it's a different story. It's difficult and often painful to start building a product from scratch, but if you do it properly and can distribute through the right channel, you might have a winning ticket.

What I am excited about and I think most education startups (or any other) should do in Bangladesh is to develop 'production-based business'. Be it e-content (video, audio, e-book, etc.) or product (book, science toy, etc.). It's difficult, it's time-consuming and it needs to be really good to be noticed. But if you can develop an education business around 'content' and 'product', you have a higher chance to be successful. Once you develop the content, you can distribute across all the different platforms. For example, our Goofi books are available on most of the top e-commerce platforms and physical channel (like a library, chain shop, etc.)

In a world where only 5-6 companies are going to control the online connection between business and user, I think 'production model' has more chance than 'distribution model' to succeed as an education startup in Bangladesh.

In 10 years time, Google, Microsoft, Apple, Netflix, Amazon, and Facebook are going to be the largest education companies in the world. And they will be distributing contents, not producing. But they will need a lot of contents and products to distribute to parents, children, teachers, and schools.

Choose your startup carefully.

The article is written by Waliullah Bhuiyan, Founder & CEO, Light of Hope Ltd. The article was first published on his LinkedIn account. You can follow his other articles on startup and education sector in Bangladesh from his account


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Waliullah Bhuiyan is the Founder and CEO of Light of Hope. He can be reached at bhuiyan.waliullah@gmail.com

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