Ship part

How this startup enables Indian MSMEs to ship direct to consumers halfway around the world

India is home to over 63 million micro, small and medium enterprises (MSMEs) across the country. They contribute nearly 40 percent of India’s overall exports, accounting for nearly 6.11 percent of the country’s manufacturing GDP and 24.63 percent of the service sector’s GDP, according to the Indian government.

However, many of these MSMEs cannot sell directly to customers and resort to the business-to-business (B2B) channel, resulting in a backlog of paperwork, delays in delivery and opacity in doing business.

This is where the Bengaluru-based startup LogiLink France stepped in to bridge the gap and provide a viable solution to MSMEs through its Made in india Brand LEXSHIP.

The startup works with retail e-commerce exporters and MSMEs, enabling them to sell their products to a global audience.

How did it start?

Founded in 2012 by the husband-wife duo Padmanabhan Babu and Kadambari Padmanabhan, LogiLink India was a consulting company helping large companies to create and manage logistics solutions.

Padmanabhan, CEO of LogiLink India, has been working in the logistics industry for just over a decade and Kadambari, the company director, is a chartered accountant. In 2018, they were joined by Ravi Manhass, who is the Business Manager – Sales and Marketing and who was previously part of DHL Express and Bluedart, as well as Bhuvnesh Raisinghani, who is the COO and previously worked with Genpact .

From 2014 to 2017, the team began exploring the transaction space, signing with SMEs and managing their supply chains. In this phase, the company recorded a turnover close to Rs 1 million per month.

“In 2017, we started working with e-commerce retail because we found it to be a fast growing business and it had a big reach. Retail exporters entered the fray and people were selling directly to customers, so we thought there was a big opportunity here, ”said Padmanabhan Babu, Founder and CEO of LogiLink India. Your story.

The problem statement

“For a retail e-commerce exporter, there are no viable solutions available in the market,” says Padmanabhan, explaining that the existing service providers are all designed for B2B and not B2C operations. Each service provider – the marketplace, payment service providers and logistics service providers – worked in silos.

However, with the evolution of the global economy and business methods on a global scale, the team realized that it was not about multi-tiered supply chain networks, but rather about selling directly. to customers.

They also realized that the biggest issues were huge paperwork, frozen working capital, and lack of transparency.

“The buyer and seller didn’t know each other, so the market was very gray. We wanted to streamline the whole process, ”adds Padmanabhan.

Giving an example, he explains that if an exporter were to register to send shipments to an international buyer, the average time would be between 15 and 20 days before the shipping account was approved. Then they should file documents for customs clearance. Multinational companies would also demand a large amount on deposit from a shipper in India.

“So we changed that; we have targeted that within 24 hours you will be online and your KYC will be digital. You can make digital payments, you can only pay for what you ship, and you won’t have any working capital blockages. All documents and statutory compliance associated with international vessels are all managed through our software, ”explains Padmanbhan.

What is the startup doing?

The startup mainly focuses on digitize the entire maritime transport ecosystem and bring transparency, accountability and efficiency to the supply chain ecosystem which is filled with regulations and red tape.

Its clientele includes nearly 4,000 exporters and MSMEs, of which nearly 25% are women entrepreneurs. They are spread across India, with almost 60% of them originating from Tier II and III cities.

Launched in November 2019 – just months before the start of the pandemic, LEXSHIP claims to have transported goods to over 19,000 PINs across India and delivered to almost every country in the world. They are the main logistics partners for eBay and Amazon users across the country.

While it generated revenue of Rs 20,000 in November 2019, a year later, in September 2020, it recorded huge revenue growth, reaching Rs 25 lakh as 600 traders started using the service.

USP and competition

Some of the other startups in the space include international companies such as DHL Ecommerce and FedEx.

Unlike them, the startup maintains a lightweight asset model and deals in the B2C segment. It provides end-to-end delivery service and provides pickup and drop-off by partnering with delivery partners in other countries.

Unlike other shipping companies such as FedEx, the startup differentiates itself by its price factor and the absence of a deposit. He charges between $ 6 and $ 7 per shipment weighing between 100 and 150 grams.

“Now people all over the world want to buy products from different countries, which can be cheaper or unique. This paradigm shift in the way the business is conducted cannot be sustained on the basis of a certain package that was built for a different business model, ”says Padmanabhan, adding that products of specific geographic importance such as that handicrafts, health products, beauty products, jewelry, etc., are in increasing demand.

“We have continued to create a market that we support because there are three things that need to flow in tandem: information, finance and physical products. This is where we find information, interrupt the flow of data, respect compliance, provide transparency and make shipping economical, ”he adds.

Challenges and capital raising

The biggest challenge the team faced was the lack of awareness, even in a growing segment.

“We see a lot of investors strategizing around the concept of ‘what sells in the west sells in the east’. Explaining the market to a potential investor is a challenge because it is new and growing, and probably in three years it will be fancy to be in the modern e-commerce space, ”he shares.

The business initially operated very frugally using personal equity. The team consists of 15 members, three of whom work in the field of technology.

“Every time we invested our money in the business, it showed our faith in the business. We went from Rs 20,000 in turnover in 2019 to Rs 1 crore in December 2021 ”, explains Padmanabhan.

Because they were building a platform that had a limited profile, the founders decided not to raise any capital early on. They decided not to use capital to acquire customers and instead their Go-to-Market (GTM) strategy was to “work for the markets, deliver real solutions and solve real problems”.

A startup in this industry is measured in terms of added sellers per exporter, shipment volumes, and revenue per shipment. It has transported more than $ 10 million worth of cargo over the past two years, carrying 100 to 150 shipments per day.

The startup is looking to raise capital in 2022, which would be used to expand its tech team and their product. He also has a plan to expand the geographies to South Asia, Europe and the United States.

As the startup plans to replicate its model in South Asia, the United States and Europe, it plans to set up a warehouse and more.

Cross-border trade market

One of the stimulating engines for economic recovery is cross-border trade.

PayPal’s 2021 Cross-Border Trade (CBT) report puts India’s total export market at $ 526 billion. Of that total, nearly 60 percent is goods, representing a market of $ 313 billion for local Indian artisans of tribal products, handicrafts or small exporters of gems and jewelry, and nearly 213 billion dollars (40 percent) in service exports.

The benefit that small businesses have to gain from harnessing global B2C demand is to reach a large audience, as the adoption of online shopping has shown a new market for purchasing bespoke products. from anywhere in the world.