How A Successful Go-To-Market Strategy Helped An Indian Start-Up Build B2B Distribution Channel
Indian sanitary product market is growing very fast — fueled by rising awareness of feminine hygiene, strong demand for superior quality child and adult care products and Govt support.
Four 40 Healthcare is a start-up from Ahmadabad, Gujarat who could foresee future demand for superior quality personal hygiene products and invested heavily in research, technology and infrastructure to come up with world-class products. They offer premium quality sanitary pads, baby diapers and adult diapers.
The Indian sanitary product market has national brands like P&G, J&J with premium, pricey products as also cheap, inferior quality products from unorganized sector. Four 40 Healthcare had its eye on capturing market with premium quality products at competitive price. They first Introduced the hygiene products through e-commerce platforms and immediately received good response. Encouraged, they invested in manufacturing capacity expansion and soon introduced large modern retail format.
With expanded manufacturing capacity they were looking for entry into Indian retail market of Kirana (Grocery) and Medical Stores which account for major sales in both urban and rural markets. This required effective B2B distribution channels for reaching out to these retail shops in vast Indian market. Accordingly, sales managers were appointed in local Gujarat market as also in neighboring Maharashtra state, which incidentally is the largest market in India for personal hygiene products.
However, they were unable to appoint any distributor in either of the target markets (Gujarat and Maharashtra). The pandemic affected markets posed major challenge, restricting field visits and physical contacts. Besides, the traditional offline way of building distribution channel through field visit is extremely expensive for any small and medium business. Being a start-up, Four Forty was looking for an inexpensive, fast, online solution.
Mr Noor Ali, founder-partner, got reference of Vanik Online Distribution services through one of his friends and after discussion with Vanik Customer Success Manager, subscribed as Platinum Member during Sept’ 2021.
Experienced Distribution Experts at Vanik helped them finalize pricing and channel strategy and identifying initial target markets for product launch. As a Go-To-Market (GTM) strategy it was decided that the product should occupy shelf space of both Grocery and Medical retail stores. Margin break-up was decided, keeping in mind retail commission, marketing cost and salesperson salary. Special customized catalogue, oriented towards requirements of distribution partners, was developed by Vanik support team. Using special Vanik tools such as List Of Healthcare Wholesalers And Distributors helped the company to identify potential channel partners. Powerful and targeted email campaigns in Vanik database elicited excellent response from interested distribution partners. Soon enough, the company started getting responses from interested parties across the country.
However, initial discussion with prospective parties failed to get any headway. The brand was unable to finalize any distribution contract during next two months. The Four 40 Healthcare management team approached Vanik for solution to this problem. After detail discussion, Vanik Trade experts discovered few issues in distribution contract that were preventing successful closure of negotiation. For example, Vanik advised the management team against security-deposit as established channel partners were uncomfortable about it for a Start-Up brand.
As a solution, it was agreed upon that instead of security deposit, the brand would prefer Post Dated check as security. Vanik also suggested to accept small orders in the beginning to establish mutual trust and confidence. The suggestions turned out to be win-win solution for both and during December 2021 — Four 40 Healthcare were able to finalize two distributors-one in Rajkot , Gujarat and another in Nashik, Maharashtra. Both the parties have retail network of FMCG and medical stores — exactly matching the brand’s requirement. Within a span of few months of subscribing to Vanik services, Four forty healthcare has been able to appoint distributor in key markets and hope to cover all major states of India within next one year.