B2B eCommerce marketplace Sindabad is one of a long list of companies who have taken a hit as a result of coronavirus pandemic shutdown and widespread fall in demands.
Being a B2B company, Sindabad was in a precarious situation as businesses moved to close offices and asked employees to work remotely and from home. In the first two months of the lockdown, the company saw a sharp decline in its orders. “We saw our orders to go down by a significant margin in the first week of the lockdown,” says Zeeshan Kingshuk Huq, co-founder, and CEO of Sindabad.
This was similar to what every other business experienced amid the coronavirus pandemic. And companies across verticals used a pretty much identical strategy to respond to the crisis - which is in most cases employing measures to cut costs such as salary cuts, laying off people in large numbers and postponing employee benefits, etc. Many companies pivoted to new verticals as they experience a dramatic fall of demands in their own verticals.
Sindabad, however, has applied a different strategy to tackle the crisis. The company did not lay off any employee from May’20. Did not execute any monthly salary or benefits cut. It made some adjustments such as reducing festival bonuses and freezing increments for employees for the year. At the same time, it put together processes to ensure benefits and healthcare facilities for employees working during the pandemic with the health risk, and rewarding delivery personnel who took risks to keep the business running. “This is a difficult time for everyone”, says Mr. Zeeshan. The job market is in disarray. We were in a tough spot at the beginning of the pandemic. But we decided not to let anyone from the team go whom we didn’t want to go, and fortunately, we have been able to keep all of our people.” Instead, the company found other ways to control costs and make up for the lost revenue.
It also helped that Sindabad was already working on improving company-wide efficiency even before the pandemic. The company was already going through a systematic downsizing of its team with an ambition to improve the efficiency and productivity of the company it started in December last year way before the pandemic hit Bangladesh and let go of any remaining non-performers before the freeze. By the time pandemic and subsequent lockdown took effect, Sindabad was a much more lean and efficient team which allowed the company to absorb the shock from the pandemic well.
At the same time, the company worked hard on finding a strategy that would allow it to recover its business, find new opportunities, and come out of the pandemic stronger.
A strategy is all about knowing what to do and how to do it well. Good strategies are usually simple, unambiguous, and straightforward.
The Sindabad team sat together and worked hard to come up with a set of actions to achieve its objective. The company made a number of critical decisions such as pivoting to the consumer market using its existing strength of sourcing products at scale, focusing on safety products and equipment that is in high demand, ensuring employee safety and offering healthcare coverage for working in the pandemic, and focusing on smallholder retailers to supply them with non-perishable grocery items among other initiatives.
The combination of a number of right moves and excellent execution by a team motivated by a sense of belonging and ownership helped the company successfully tackle the pandemic challenges. Today, Sindabad sees an excellent growth in its consumer business, and a rebound of its B2B businesses helped by reopening and strong demand for safety equipment.
In this article, I aim to distill the various strategic initiatives Sindabad has taken to fend off fall in business amid the coronavirus pandemic, how these initiatives have changed the core business of Sindabad and what other businesses can learn from Sindabad in handling the crisis.
What to do: The first task of strategy formulation is understanding what to do. This is a tough question and requires not only a thorough analysis of the business environment you operate but also an excellent understanding of your SWOT as a business. You have to be clear about the challenge you are facing and the outcome you are expecting. A good strategy allows you to identify actions using the resources that you have to achieve the goals you want to achieve. It is a tricky job. A fuzzy strategy can cost you both resources and your goal. Sindabad decided to take the following initiatives in response to the coronavirus pandemic business fallout.
1. Opening up Sindabad marketplace for B2C
The first step of strategy formulation is understanding what to do in a given situation. Now there is no easy answer to that question. There are aspects to consider both internal and external. Usually, the go-to route is to understand the environment you operate, identify your strength and resources, and put the three together. Sindabad did an excellent job of identifying opportunities. Instead of joining the race to pivot to grocery, it took a predictable route - opening up the Sindabad marketplace for consumers meaning B2C which was previously only open to B2B or large number purchases.
At the beginning of COVID-19 shutdown, Sindabad’s B2B business took a severe hit. Sindabad used to sell in bulk to, mostly, enterprises. Suddenly, the company came to see that every one of its clients moved to close their offices and went for working remotely or working from home. The ensuing changes make the need for office supplies, the biggest segment of Sindabad’s business, almost non-existent. The company saw a free fall in its B2E business in the early days of coronavirus pandemic lockdown in Dhaka.
This was a desperate time but the Sindabad team took time to understand the situation and eventually formulate a response. First thing, the company in one week opened up its platform for consumers. Previously, you could only buy products from Sindabad in bulk. It withdrew the limit allowing anyone to buy any number of products. Then it started to push its products to consumers with targeted communications.
Initially, it focused on safety products related to COVID-19 since there was already a huge demand for these products. Sindabad worked with its suppliers to ensure enough stock of hand sanitizers, gloves, PPE, and other relevant safety products. This has helped the company to recover some of its lost demands.
Soon, Sindabad.com used it’s existing supply chain tie-ups to also introduce dry-grocery in the same segment. It offered the same wholesale prices that it used to offer for bulk purchases to individuals, too. That way, buying dry groceries like cooking oil, packed rice, etc. became popular amongst the B2C segment.
In fact, initially, the orders came in droves and Sindabad overestimated its ability to serve the demands which led to some momentary missteps. The company could not fulfill many orders on time. Its collaboration with third-party logistics companies did not serve well either which eventually led to bringing a large part of its logistics operation in-house. The company then made some tough decisions such as not taking orders beyond its capacity and maintaining stock, etc which eventually helped the company to improve its service and gain customer trust.
Consumer business is significantly different from B2E. The logistical and infrastructure needs are different. Through a consistent effort, Sindabad managed to establish a strong B2C operation that helped it recover some of the businesses it lost in B2B.
The transition was not devoid of challenges and hiccups. Initially, it faced challenges with delivering products on time. Then came ensuring the availability of products and so on. As its B2C business grew, the company gradually strengthened operation to tackle these challenges resulting in consistent growth.
On the B2B end, as the businesses gradually reopen, Sindabad has been seeing a slow rebound of its B2B business. The company says its B2B orders have rebounded to almost 30% of what it was before COVID-19. But instead of extending more credit, the company encouraged customers to pay upfront or on short-credits, while enabling and educating customers to make informed choices, such as whether to buy certified surgical masks or non-certified, ideal specs of PPE gowns, possible solutions to mitigate health risks, alternative brands of antiseptics (because Dettol and Savlon went out of production), etc.
Sindabad response strategy to the coronavirus pandemic crisis can be an example of what a successful pivot looks like amid a global pandemic when everything falls apart. The company saw that there was no point in pushing its B2B business because the demand was not there since most companies decided to work from home. It also did not take the route of a pivot to grocery, which many ecommerce companies tried seeing a rise in demand for online grocery because the grocery supply chain is complex and requires a heavy initial investment. Instead, the company decided to pivot to consumer business using its existing products and supplies. This is a great example of strategic synergy and using your unused strength to gain an advantage in a rapidly changing environment.
2. Recovering B2B business
The second step Sindabad used was to find ways to work with B2B customers in different capacities. The company found that opportunity in supplying safety products to B2B customers.
Many companies needed safety equipment and products in bulk for employees and teams, Sindabad quickly grabbed the opportunity of supplying these companies with necessary supplies of PPE and other safety products at bulk. This helped the company regain some of its lost B2B orders. The company says its B2B business has rebounded to more than 30% of what it was before the pandemic.
3. Expanding Sindabad’s B2R business
Sindabad has been working on a business it calls B2R (business to retail) where Sindabad works with small retailers and supplies them with non-perishable grocery items from suppliers. The business saw excellent growth in the business during the pandemic.
Sindabad works with suppliers both brands and exporters and supplies these goods to smallholder retailers in Dhaka and related areas. The model is simple. Smallholder retailers download the Sindabad app, place orders, and Sindabad delivers the goods to their doorsteps within the designated time.
The company has worked with some 500 retailers in April, but the number is already beyond 1,000 showing excellent growth.
Sindabad has partnered with IPDC Finance to help these retailers secure finance. Now a number of retailers who work with Sindabad receive financing from IPDC. These retailers get products on credit from Sindabad, which IPDC pays to Sindabad and the retailers repay IPDC in monthly installments. Sindabad sees this is a huge growth opportunity for its existing marketplace as well as a potential opportunity to explore in the long run.
How to do it well: The second pillar of the strategy is to understand how to do what you wanted to do. You need to understand the critical resources requirements. Your strength. And the reality of the market. The first part, knowing what to do, does not matter if you botch up your execution. One aspect of the strategy is to achieve a competitive advantage in the market. Harvard Professor Michale Porter, the father of the modern strategy field, suggests that there are two ways to achieve competitive advantage: one, through achieving price advantage, which means you can offer a better price than your competitors. Second, through meaningful differentiation, which means your product is different from your competitors in a good way. It means you can’t achieve a competitive advantage directly. You do things that allow you to achieve competitive advantages such as manufacturing or sourcing efficiency that helps reduce cost and innovation and customer service that help you to differentiate. Sindabad has taken a number of initiatives to ensure it executes well on its ambition.
1. Taking care of people
When a crisis hits, the first challenge any company faces is diminishing team morale. The situation gets more complex and negative when the company decides to go for cost-cutting measures such as laying people off, salary cuts, etc. These measures do help save costs. But at the same time, they also negatively affect team morale. It dampens the mood of the organization, eventually exacerbating the crisis.
Sindabad tried to avoid such a condition from the beginning of the COVID-19 crisis. The company did not cut salary or employee benefits and did not lay off any employee due to the coronavirus pandemic. It has taken measures and announced benefits for employees working amid the pandemic and run the risk of getting infected. The company offered medical benefits for the employee and immediate family members in case they get affected.
Instead, the company worked hard to keep the net profit the same or grow it from a smaller number of customers by growing per-customer revenue and setting newer prices. It gave targets to teams and asked them to work hard to ensure the targets. The result came in surprise. Every team member worked doubly hard to achieve business targets eventually taking Sindabad out of the crisis successfully.
2. Putting customers first
One of the defining market trends all of us experienced amid the coronavirus pandemic is the unnecessary hike of price of essential safety products. Many businesses took the crisis as an opportunity to make riches using the unprecedented demand for safety products. However, a good number of businesses did not take the crisis as an opportunity to make money instead of as an opportunity to serve customers and achieve long term growth. Sindabad is of the latter camp. The company kept the product price reasonable. Instead of taking the windfall from the crisis by charging customers more, Sindabad decidedly moved to offer reasonable prices to customers, which has helped the company to gain greater customer trust and thus achieve sustainable growth.
A sound strategy delivers results. Of course, the market is a dynamic environment. Things can change at any time. And at times, your strategy may fall short of achieving its intended objectives. But if you are able to design an effective strategy, it should save you a lot of bad outcomes if you are not supremely unlucky.
While Sindabad has suffered some business losses at the beginning of the pandemic, the company says it is now on a far more solid footing than it was at the beginning of the pandemic. Using a combination of right decisions, excellent execution, and luck, the company has been able to tackle the fallout from the coronavirus pandemic and come out of the crisis stronger.