The survival rate of a startup is very low: Rahul Jain
Chaos is the right word to describe this industry. Everything seems to be unruly and chaotic. Some 20 years ago it was still better. Going back another 20 years it was very good. Then, getting into the agarbatti business was not rocket science. People could begin with less capital and limited knowledge. The quality of raw materials was good. The price was within limits. Today, it is very different. The price war by big players. The trends of lending and borrowings. The unavailability of raw materials and their skyrocketing costs are just, the tip of the iceberg… a startup has to go through. Not getting good distributors kills the dream of a productive supply chain. That is the reason why a bulk of startups shut down even before completing their first financial year. A message clear enough by Rahul Jamed. He owns Oswal Trading Company which primarily deals with incense-based products in Jaipur.He started Oswal Trading in 2014. He began trading in 2008. Rajasthan is his main market. He also sells hisproducts through Flipkart and other e-commerce companies.
Rahul Jamed told Sugandh India that his company deals in forty to fifty different kinds of; agarbattis, dhoop and dry sticks. His products range from 5₹ to 100₹. His supply chain spans every district of Rajasthan.Elaborating further on the challenges faced by startups he said “, A startup in the agarbatti industry faces direct competition from established brands. They (startups) cannot compete with national brands as all such brands keep on updating their products. Moreover, cash-rich traders do not want to become dealers. They have productive brands in their kitty. Startups, therefore, have to approach lesser-known traders and dealers. Startups cannot trade off quality over costs. If they do, then dealers will not move their stock. The startup owner will keep getting some excuse or the other. His products won’t reach the last mile. Debts will continue to pile up. Getting hard-working labour and skilled staff is a matter of luck.
Rahul told Sugandh India that door-to-door supply was the trend during the pandemic. It was a hit. Dealers were picking up goods worth Rs two to three thousand. It was a boon for unemployed youths. Now, all that is a thing of the past. The same dealer cannot sell goods worth 15-20 thousand. Markets today have an excess of goods. Moreover, you can start an agarbatti business in just a Lakh or two. There’s a crowd of manufacturers and suppliers hogging the market; from MNCs to local and everything that comes in between. This makes efforts made by startups all the more impossible to succeed. If the startup company does not deliver quality and originality— it is bound to fail and shut down.
Explaining the situation further to Sugandh India, Rahul said “, Startups and small-time manufacturers face impedance from National players. This impedance is the price war! It is a monopoly that cash-rich companies enjoy and this can be found in any industry. Startups cannot mass-produce quality incense products. Big players have an advantage of outreaching the nation’s hinterlands with their superfine products. Moreover, dealers and distributors won’t accept the rates of a startup at the rate he buys from an established brand even when the startup’s quality proves better. Newly established companies have to keep on adding newer products of quality to the market and this requires money.
Rahul said— Expenses on raw materials, manufacturing, labour and marketing are somewhat fixed and when the stock is not picked up by the dealer in their supply chain; it’s a direct loss. Such repetitions adversely affect manufacturers. Even if a sales agent pulls an order from another state or somewhere far, the startup has to brainstorm on his payments. It is not easy for a startup to get payments on or before dispatch. He also informed Sugandh India that companies manufacturing soap, tea, confectionery and other products have also ventured into the agarbatti industry.
Talking about hisbrand’s major market and top selling product, Rahul said “, I’m focussing on my home state. Our 50₹ Magic 4-in-1 is the most popular brand. It comes in four fragrances in a zipper pack of 250g. Other than this we also have OMG which also comes in 4 fragrances in 200 gram Zipper.”
