covid: Covid outliers: Smaller e-commerce brands that thrived during the pandemic

The story of Suryaflame is one of grit and perseverance. Since its beginning in the early 1980s, this Delhi-based kitchenware company has had to fight with retailers and wholesalers to wangle some shelf space alongside bigger and more popular brands such as and Prestige. But all that changed when the company opened digital channels.

Now Suryaflame sells over 5,000 gas stoves and 1,000-odd mixer-grinders every day. It also manufactures and sells irons, copper bottles, utensils and kitchen chimneys in large numbers. Higher online orders have helped the company book a 10% sales growth every month for the past two years. These were pandemic years when the fear was that only larger manufacturing brands with sizable balance sheets would survive. The prognosis for smaller, local manufacturers was dire.

Suryaflame is one of the companies that bucked the prediction and thrived during Covid-19, thanks to ecommerce platforms. Some of them booked four-six times growth in turnover, albeit on lower bases. ET looks at nine such outliers across consumer spaces.

It took nearly 40 years for Suryaflame to go pan-India, with its products available in many pin codes across the country. Says Vaibhav Malhotra, MD, Suryaflame: “The kitchenware industry is highly decentralised and competitive. It is still at the mercy of large wholesalers and retailers. But with ecommerce coming up in a big way over the past two years, the ground is changing fast. At least the digital space is a level-playing field. The competition is relatively fair there.”

Ecommerce platforms such as Amazon, Flipkart, Udaan and Meesho have helped many consumers discover numerous small brands. The frenzy to add more sellers on the platforms and the race to the hinterland to connect with more buyers have helped these manufacturers grow at a faster clip. High smartphone penetration, cheap data and consumers’ eagerness to shop online during Covid have helped these local businesses. “Scaling up is important for any product manufacturer. But to scale up, they need access to a big market, a network and credit support. Well-established ecommerce players have managed to offer all the three critical elements to small manufacturers,” says

Bidasaria, business head (general merchandise), Udaan, a prominent B2B buying platform for retailers and traders.

“Ecommerce platforms could remove a lot of supply chain-related bottlenecks. Covid-19 hastened digital adoption in India — both on buyers’ and sellers’ sides. Manufacturers could leverage the success of these platforms. They benefited from market access and timely payments,” he adds.

Can this sustain as we move to a post-pandemic or living-with-Covid age? While identifying markets and getting new customers have been relatively easy for digital-savvy business owners, high input cost, power shortage, slackening demand and excessive debt could derail the growth path of smaller manufacturers.

Before the pandemic, Tweakymod, a Hyderabad-based company that manufactures mobile phone covers, fulfilled barely 80-100 orders per day. But once it started selling on ecommerce platforms in 2020, orders went through the roof. In 2022, it achieved 10x growth in sales over 2020. The company fulfils over 2,000 orders every day.

During festival season, Tweakymod books over 5,000 orders a day. “We are thinking of adding newer product lines. We are able to add a lot of value to our products because we manufacture them in-house,” says Raghavendar Gupta, founder of Tweakymod. “We operate on decent margins; our products are sold all over the country now. Only logistics need to be streamlined. Very often we have to wait for other bulk consignments to gather at hub locations to have our goods dispatched too,” he adds.

Similarly, Delhi-based Pexpo, which manufactures and sells vacuum flasks through online and offline modes, has been posting a month-on-month sales growth of 20% over the past one year. The company sells close to 18 lakh vacuum flasks a year. “We have a lot of competitive advantages because we manufacture locally. We are able to sell our products at MRPs that are 30- 35% lower than those of established brands,” says Vedant Padia, founder-director of Pexpo.

But business has become tough for Pexpo with steel prices going up. Commodity price inflation is hurting many companies. Metal prices have gone up 70-90% over the past two years, prompting many to redraw their production plans.

“We work in a very price-sensitive market, so we cannot pass on added cost to our customers,” says Akash Suresh, founder CEO of Bengaluru-based Ahar, which makes a range of pressure cookers and other kitchenware. “To retain our market share, we are now manufacturing lighter kitchenware but with high quality and safety standards. We have also reduced metal scrap to a great extent,” he adds.

In terms of online sales, Ahar has done appreciably well, with its products reaching many corners of the country. The company has launched 25 new products over the past year, but its best-selling product remains the 3-litre cooker, which logs sales to the tune of 50,000 units a year. Ahar’s sales have been growing 15-20% yo-y since 2020.

Even though people are shopping online, the quantum of their purchases has come down sharply over the past few months, says Sagar Kohli, MD of Foxglove, a Ludhiana-based bicycle manufacturing company. “Demand has tapered quite a bit since January. Customers are waiting for prices to cool down. Even resellers have trimmed their inventories. Also, for cycle manufacturers, the past few months have not been great due to the torrid summer,” he says.

The company sells over 8,000 cycles a month now, up from 4,000 before the pandemic. Foxglove sees better sales conversion rates online. The growing number of cycling enthusiasts, especially during Covid, has helped the company.

Most manufacturers who sell online have to do a bit of digital and social media marketing to increase their visibility. Priyanka Jaiswal, founder of Ghaziabad-based Samridhi Design Creations, sells over 1.5 lakh pieces of oxidised jewellery every month. She has managed to double her business over the past two years on the back of online marketing and social media presence. “Visibility is very important if you want to sell online so we focus a lot on marketing our products,” says Jaiswal. “The best thing about ecommerce platforms is that their payments are regular. Better cash flow helps us invest more in our business. The wider reach we get on these platforms help us get customers from smaller cities and towns as well,” she adds.

Most manufacturers prefer a hybrid sales model – where they sell through online platforms as well as through offline networks such as traditional stockists, wholesalers and retailers. Mobile phone accessories manufacturers rely on both channels to drive up sales. But relatively lower-value products such as power banks, chargers and earphones sell in large numbers online.

“Phone accessories is a fast-moving category so we have to be both online and offline to post higher sales,” says Sahil Kandhari, founder-CEO of Dvaio, a Delhi based accessories manufacturer. The company sells over 2 lakh audio products (earphones, speakers) every month. Its sales have grown by 20% over the last two years. “Digital channels can give you a wider reach that offline models can’t. Also, you can create your own space in the marketplace with very low investment.”

The use of both offline and online sales channels is desirable, but in some product categories, offline markets have come to a grinding halt. Take the case of garment manufacturers who are forced to push-sell their wares online. Many offline garment sellers in South India are not stocking up as they do not expect many buyers at elevated price points. “Cotton prices have gone up significantly; tee shirts that sold for `80 a few months ago now cost `120. Offline traders have stopped ordering fresh stock from manufacturers,” says Rajat Jain, proprietor of Smartees, a tee-shirt brand based out of Tirupur and Coimbatore. Smartees gets over 7,000 online orders every day, up from 2,000 orders in 2019-20. During festivals, it sells 14,000 pieces a day. Last fiscal, the company booked sales worth `32 crore. “Offline business is difficult because there are lots of intermediaries in the value chain,” says Jain.

Most of these MSME owners have plans to expand their businesses and product lines over the next few months. Many are setting up manufacturing plants. Platforms such as Meesho and Udaan offer loans to SME owners either through their own books or via NBFCs and bank tie-ups. Says Lakshminarayan Swaminathan, CXO (supply growth), Meesho: “The idea is to sell quality products at affordable prices. Price becomes even more important in times of inflation. We are still seeing reasonably good demand on our platform; 70% of our buyers are from tier-2 and tier-3 cities. They are still buying,” he adds.

Several small manufacturers have taken a lot of debt on their books. There is a problem of overleveraging in certain pockets. Only sustained demand and cash flows will help these companies reduce debt over time. Inflation is the sword hanging over their heads. “MSME turnover is fairly stable even now; but overleveraging is an issue,” says Mukesh Mohan Gupta, president, Chamber of Indian MSMEs. “The government will have to control inflation to keep up demand.”