'New Age Raw Material Procurement To Drive The Business Profitability'

In an exclusive interview with SMEStreet, Mr. Akash Kishore, Founder and Director, Dhatu Online Solutions highlighted trends in new age digital procurement.

• How has been the journey of Dhatu Online Solutions since its inception?

Our journey has been exciting and challenging. Starting the company during our college days was a huge responsibility. Generally, start-ups take a long time figuring out their ‘Product-Market Fit’ (PMF). Fortunately, I realised a huge gap in the industry and started working towards a B2B aggregator platform, specifically dealing with metal and allied solutions to MSMEs. Our first milestone was to develop a working prototype with good IT infrastructure and data security, which we achieved within six months. Since it’s a very big platform with its own exclusive processes, which we offer to buyers and sellers, we had many sleepless nights, but in the end, everything was worth it.

Our next target was to find the first few customers and achieve the PMF. Today, I can proudly say that we have 4000+ active users along with 1500 buyers and 2500 sellers on the platform. We started our company with tech development from Bengaluru office. However, our research indicated that nearly 40 per cent of all iron and steel trade/raw materials are supplied all over India from NCR. We opened our first office in Delhi- NCR, in October 2020, and there has been no looking back.  We is now expanding our operations to Mumbai, Pune, Chennai and Bengaluru.

• What makes Dhatu Online Solutions different from its competitors?

The metal buyer largely depends on conventional methods to identify the sellers, but there is no true aggregator platform. Recently, a few players such as Moglix, Industry Buying, Power2SME, etc., have tried making inroads into this system. However, these are more on the lines of B2C methodology and are very different from the concept and services that Dhatu Online Solution offers. Our platform is the only one that provides various options to the buyers to get their exact requirements at the lowest possible price, with confirmed quality from a multitude of sellers.

With the pandemic hitting the industry hard, we are uniquely placed to fulfil the needs of our industry clients and provide them with a variety of suppliers. Today, buyers need to just provide the requirements in Dhatuonline.com, and they can get the best pricing from 50-60 sellers for each product. The sellers are filtered automatically in the backend, and buyers are provided with the best pricing amongst them.

Our online RFQ process helps them to get the best price quotes within their timeline. We are revolutionizing this sector with the help of deep tech.

We are offering our services to the manufacturing sector, which uses metal as raw materials, especially steel and consumables, such as cutting tools, oil and other value-added-products, like power tools. We are focusing on automobile industries, machine tool industries, hydraulic industries, Oil & Gas, and construction industries.

The industry is growing at a CAGR of 7.2 per cent, and is poised to grow at a much faster rate seeing the growth of the Indian economy.

• How has the escalation in raw material cost affected the industry?

Escalation cost is a major factor that affects this industry from time to time. However, as an aggregator with a zero-inventory model, we are not affected much directly. Despite a drop in demand during the lockdown, prices are on the upswing, particularly steel, oil and other raw materials.

Here, Dhatu plays a major role as we help to plan purchases in an efficient way with less overall lead time, which was not possible in the past because of offline constraints.

We have a portfolio of satisfied buyers who confirm that they can plan purchases better with the help of technology offered by Dhatu Online.

• How has the customer experience been? What kind of issues and challenges is being faced on this front?

The raw material industry is largely relationship-based, and the customers generally do not keep looking for new suppliers as they don’t have the time. Getting them to adapt to technology has been the biggest challenge. It will remain a challenge for the first few months and evolve just as the B2C platforms have today. We are at a very nascent stage, and Dhatu Online has the unique first-mover advantage. We are continuously evolving and developing the tech as per the buyers’ and sellers’ feedback.

Our objective is to provide our users with a seamless, hassle-free experience of buying and selling. Also, this is a credit-driven industry, and we work on a cash model both for our buyers and sellers. Currently, we are in the process of tying up with various NBFCs and banks to help them grow without risk.

We have received a very encouraging response from our users (both buyers and sellers). It has so far been a positive experience, and we have been able to generate repeat sales from our active users.

• What kind of products is your prime focus?

We have our prime focus on metal and allied solutions, which covers steel, industrial hardware, power tools, cutting tools, oils and lubricants.

• What are your plans for the next two years?

At present, we are providing services in six categories. Very soon, we will expand it to 10 categories, such as electric motors, rubber products, construction steel and electric accessories. We aim to achieve INR 100 Cr GMV during the current financial year, and by the end of the third year, we expect to l cross the GMV of INR 1000 Cr.

We want to be a pan-India provider of industrial goods to our clients, breaking geographical barriers and saving at least 5 per cent-7 per cent of their input cost. We aim to provide our sellers with access to new geographies and buyers. We want Dhatu Online to work as a one-stop- solution to all raw materials and consumables.

• There is competition in this space. How are you differentiating from them?

We are riding a whole different wave by providing fair orders, free-of-cost registration, and quotations and a completely unique RFQ system, which provides equal opportunity to every seller on board.

• How are you targeting MSMEs?  fewer

We understand the pain of the SME sector, where micro and small industries are facing a lot of problems, such as tedious supply chain management, lack of awareness of quality raw material suppliers, intermediaries resulting in high cost of raw materials, inaccessibility of financial options due to lack of knowledge, fluctuating raw material price and unsatisfactory services by sellers. Our platform functions effectively irrespective of the number of orders.  It may be a small quantity from a single buyer but through our platform, sellers can sell more quantity due to a large number of buyers. As a result, we can provide competitive prices through our platform.

Dhatu Online provides a unique business model that replaces the traditional way of doing business in the MSME sector, resulting in substantial cost savings in purchases and efficient utilisation of resources.