Chicken and Egg problem of our startup - Grocery delivery platform
How we have built supply and demand side of the Marketplace
In the last post of our startup series, I have explained how we have come up with the framework for deciding to build a platform to deliver groceries to doorstep. Incase if you had missed that post you can find it here.
1. Identifying the problem Building the Product: The genesis of our startup without a technical co-founder
2. Chicken and Egg problem of Marketplaces: How we have built supply and demand side of the business: Current post
3. GTM: How we have growth hacked our way into the market
4. Organizing the Supply Chain: Strategies for vendor collaboration and inventory management.
5. Pricing Strategy: Keeping our prices competitive and up to date.
6. Customer Engagement: Addressing customer needs and feedback.
7. Scaling Our Operations: Expanding within our city and beyond.
8. The Decision to Exit: Why we chose to exit despite positive cash flow.
One of the biggest challenges we faced when starting our grocery delivery platform was the classic "Chicken and Egg" problem that faces all marketplaces - how to build supply side (grocery vendors) and demand side (customers) when one is depending on the other.
Building demand side of the Marketplace
We decided to build the demand side(customers) first, and we got another question, as Tirupati, our hometown where we were building our startup in quite a big place, which side of town we have to concentrate on first, so that we would be able to serve one set of customers the best first and scale on top of that. We observed a trend where south part of Tirupati is having growing appartment community and it is mostly crowded with elderly people. And this would ease our supply chain constraint in the initial days. Hence we have decided to build demand on the southeren part.
Instead of doing social media marketing and digital ads for building our customer base, we decided to take a “doing things that don’t scale approach” inspried from Paul Graham. We went to each appartment community and spoke to chairman of that community and requested for a meeting with their apparment residents to explain who we are and how we can help them in getting groceries during these hard times. And by that time we had our MVP built and we have shown them the products listings, and explained how they can use our app to order groceries.
Overcoming Barriers: Serving Elderly Customers Through WhatsApp Orders
During that time we came across another challenge from elderly people, where they are saying we don’t know how to operate these smart mobiles and we don’t have any young persons at home to order for them, they were asking how they can order? We paused for a minute and thought which could be a best to address this. Since most of our target customers who are elderly are educated and they can read and write properly. We requested them to write the groceries that they need on a peice of paper and asked them take a picture of that and send it WhatsApp (by then almost all the family members are having Whatsapp on their mobiles and they were clicking and sharing pictures). And we made WhatsApp as our another channel to full-fill our customer orders.
Building supply side of the Marketplace
After reaching out our customers, we now have data to show it to local grocery distributors and stores. From the last post like I said these grocery distributors and stores are looking for ways to reach wider customer base and also looking out to full-fill the existing orders that they are getting from their customers. We propsed a way, where they can acheive what they want, without building any tech, hire new employees for delivery which would cost them a lot both in terms of money and time to build infrastructure. And with the data that we were having they were convinced and we have explained them how they are going to get consistent orders as we are mainly concentrating appartment communities.
Sourcing Fresh Produce: Partnering with Street Vendors
Although we have suppliers for groceries, we faced a hurdle when it came to sourcing fresh fruits and vegetables. The existing shops we had onboarded had limited variety and higher prices for produce, making it difficult to meet customer demand. We knew we needed an affordable and reliable way to fill this inventory gap.
As a team we have started thinking, how can we address this and one of my friend, co-founder of our startup have come up with this brilliant idea of partnering with street vendors. These vendors procures produce daily from the markets at great prices. Tapping into their supply chain would solve our inventory challenges as well as provide them an additional source increased earnings.
We approached a few vendors with our proposal- we told them that we would give steady of orders to fulfill, on top of their normal street sales. In return, they would buy extra supply to cover our demand. By simply taking on some additional bags of vegetables and fruits from their existing suppliers, which they do every moring before the sunrise. The only request from them was, we have to give them the list of produce that they should procure the day before, since we were also taking the orders from our customers a day before, we agreed with as we are on the same page. This is a win-win for our vendors and for our customers as they were getting produce at market price.
This is how we have cracked our chicken and Egg party of our marketplace, Our second step. Next series of posts will be continued, on how we built our GTM, supply chain, pricing, Customer engagement, scaling our operations to an exit that we made.