Corporate veteran starts up in B2B space with Aahaa Stores, an online B2B marketplace for office supplies that claims to help businesses save 20-30% percent on indirect spends.
For 34 years, Asokan Sattanathan held leadership roles in supply chain and marketing across telecom, automotive and engineering industries. He has been on the board of Airtel, various Tata Group companies and with the Eicher Group. In 2013, he finally gave in to the call of entrepreneurship and founded BETA Solutions, a boutique strategy and operations consulting firm.
However, another opportunity was waiting to be explored.
Large corporates traditionally curate direct material purchases with streamlined procurement processes and technology implementations. But when it comes to indirect purchases, usually non-production items, it’s a different story.
Office supplies are as unorganised as the general retail sector. About 20 percent of any organisation’s spend requires huge amount of sourcing efforts, approvals and organisational resources.
Instead of buying thousands of units from 100 different vendors through 1,000 transactions, Asokan’s idea was to build a one-stop destination for office supplies.
Asokan recollects, “While technology has transformed many a corporate process, purchasing activities have remained static. Collaborative tools, big data analytics, cloud-hosted data base, e-commerce solutions etc have been ignored for long.”
He identified the opportunity to revamp sourcing processes from demand aggregation to fulfilment into a more integrated process.
Asokan wanted to give his startup a name that aptly captures the reaction of customers when they avail their services. Fittingly, Aahaa Stores was named after the joy and exhilaration of the service offered.
Aahaa Stores was launched in Chennai in 2013 as a one-stop solution for all business needs pertaining to office management, which are classified as indirect spends. An online B2B marketplace for all office supplies, Aahaa Stores claims to help businesses save 20-30 percent of expenses incurred in indirect purchases by managing their supply chain, bringing collective bargaining benefits, and streamlining the vendor network.
Aahaa Stores started with the strong backing of experienced professionals. One of the co-promoters, Rajaraman Sundaresan (now CEO of Aahaa Stores) had the experience of founding and running technology-enabled start-ups in Detroit, US. The other promoter, Shri Harish, was instrumental in designing and deploying cutting-edge processes that shaped e-commerce industry offerings.
Asokan says, “All of us were entrepreneurial in our thinking and were fortunate to have jobs with adequate operational freedom and P&L responsibility. We want to remain a technology company engaged in transforming trading than a trading company using technology. So we invested time and resources to build a robust platform that caters to various needs of the industry.”
Aahaa Stores started with the team’s own savings. Over 30 months, they have pumped in about Rs 4 crore into the company. Being based in Chennai, the SAAS capital of India, has been advantageous to Aahaa Stores.
“Since our strategy uses cutting-edge cloud-based technology customised to meet requirements of individual companies, we have to continue with software development and system integration tasks over a long period. Chennai would be cost competitive and would have adequate resources to help continue our development,” Asokan says.
Differentiation for the win
E-commerce for office supplies is hardly explored in India, although startups like Nuoaura, Kobster, and eSupply have had a head start in the space. But Aahaa Stores stands out by providing insights to organisations on consumption patterns, cost effectiveness and efficiency issues to help them reduce costs and manage resources efficiently.
Asokan says apart from tight resources and the need to be versatile, they did not face any challenge while starting up.
“Yes, we were truly overwhelmed at the opportunity to quickly conceptualise, design and move with the implementation of our solutions rather than any protracted bureaucratic deliberations,” he says.
Aahaa Stores not only lets customers order products, but also automates reorders in case of product shortage, reduces time consuming paperwork and manual data entry, tracks order status at any time, and makes deliveries predictable. It also enables easy identification of environmentally preferred products.
Aahaa Stores’ 70-member team works across offices in six cities. They are aiming for a presence in the top 20 cities, covering all popular industrial areas and business centres. Manufacturers, importers and large distributers of office consumables, indirect supplies, IT products and gifting items are their primary stakeholders. Aahaa Stores also partners with logistics and warehousing service providers.
Growth in numbers
Aahaa Stores’ target customers are the major consumers of stationary, IT accessories, facility management products, cafeteria consumables and promotional gifts. These companies mostly spend over Rs 10 crore on indirect purchases in a year.
Over 85 percent of the products sold by Aahaa Stores are manufactured in India.
“We have the capability to deliver in every city in the country,” Asokan says.
The startup claims to have tripled its revenue in the last one year by acquiring clients, including IndusInd Bank, Bosch, Wipro, ITC, Samsung, Yes Bank, Ashok Leyland and Chola. The company has grown its revenue three times - from Rs 18.5 crore to approximately Rs 65 crore - in the last one year, and is looking to reach Rs 200 crore in the next three years.
Asokan believes they are well poised to reach Rs 100 crore run rate and attain breakeven volumes by the end of this financial year.
“We earn through a markup on traded commodities and in another model through a managed service fee. We also provide technology services and charge a platform usage fee,” Asokan explains.
Last month, Aahaa Stores raised $1 million its second round of pre-series A funding from an investor group led by YourNest Angel Fund. The company had raised its first round of an equal amount in 2016.
“We plan to increase our geographical presence, moving on to additional verticals and increasing our client base,” Asokan says.
Vision for the future
Aahaa Stores currently has over 140 large corporate customers; about five new customers are added every month.
“We have been growing over 3X for the last couple of years. We will continue this trajectory and are reaching out to new geographies. We do not make any operational or cash losses,” Asokan says.
Aahaa Stores, currently focusing on foraying into new markets, hopes to be profitable in a year or two. “BFSI and IT sector are our target areas. We will look at other segments after we gain a good market share in the current areas,” Asokan adds.
In the stationery market worth Rs 20 billion, multiple players can establish themselves through office supplies. Uncomplicated design and fail-safe delivery are key to customer confidence in any business. In the B2B segment, core components like technology, processes and infrastructure must be able to adapt to customer needs and scale up. This is exactly what Aahaa Stores aims to do.