3 Key Focus – Collect Cash Faster, Integrate and Automated the Delivery Management with Delivery Partners and Data Driven Purchase made the difference for JOMSOLEK. With these key focus they took 4 measures that turned things around for them.
Jomsolek was struggling to manage their business as they were trying to grow. They switched to Cash On Delivery business model which gave them a lot of traction with customers as a new business where customers started to trust them more, and that is when the struggle started. They were unable to process the orders, number of returns started to increase, customer complains started to increase as sales started to grow, receivables from logistics partner started going up, cash involvement increased as more orders needed more stocks.
Jomsolek was buying from local wholesale market and selling online on Facebook. There price were similar, they were bundling multiple products in a single bundle that was convenient for customers to decide easily and optimize the delivery cost. The value match was quite good – so the sales went up. And that is when all those problems started happening.
The amount of Cash Stuck at Delivery Partner was becoming a concern. From pick up to delivery it took around 4 days and after that it took another 7 to 10 working days to get the cash collected from the delivery partner. So as a whole it took almost three week from the time of shipment to collect cash from an order.
As the order volume increased, time to pack and hand over to delivery company started taking up a lot of resources. Printing the invoice, consignment note, organizing products, packing – there were lot to do. Also creating orders in delivery company system took a lot of time.
Orders started getting delayed due to unavailability of stocks. More cash was needed to buy more stocks. It started to become a never ending cycle to challenges that were getting worse everyday as the business was growing. It was like a never ending necessity of money. A day with low sales was kind of a day of relief – as there were less things to do. But it also meant less business.
This is the story of many, if not most small businesses.
And being a small business is a never ending cycle of living and running business from hand to mouth. I have been working with Micro and Small businesses for more than four years. What I learned is, Micro and Small Businesses are small primarily because of smaller vision and lack of ambition. They fail to recognize that a 1Million/month business does things very differently from a 100K/month business. And a 10 Million/month business does things even more differently from 1 Million/month business. The difference is not in WHAT they do, the difference is in HOW they do it.
No matter how passionate we are about our products, be it the dress we design, food we make or the service we render – we must recognize that there is little or no differentiation in the products or services that we offer in the market specially when I am a Micro or Small Business.
Mostly in any given market, price of the products and services are more or less fixed and decided by the market, cost of supplies or goods sold are also more or less same or similar for most of the players. There can be some variations due to scale or volume. But that is never extra ordinary. This means, gross margin of a product or service is more or less same (or within a range) for all players in the market. Then why some businesses are 100K/month, some are 10M/month and some are 100M/month in the same market.
The answer is NOT money. Money is essential but NOT a guarantor of scale. Money is probably the most easily available resource when you are on track and things are going right for you. So the critical part is making things go right for you first.
We started working with Jomsolek and few simple steps started showing instant results.
- Next day settlement after delivery – JOMSOLEK started to delivery using a partner who agreed to settle the payments next business day after delivery. This was an instant relief, as the constant need to cash is now reduced.
- Direct Bulk Submission of Orders from JOMSOLEK system to delivery company – Direct bulk submission of orders to delivery company took away the huge work load of creating every single order in delivery systems.
- Bulk Printing of Invoice and Consignment Notes – after orders were submitted in bulk, JOMSOLEK started to print Invoice and Consignment notes in bulk before they started packing – this reduced significant time in printing.
- Analytics driven purchase – before preparing for packing, JOMSOLEK started to look into the pending orders and ideal stock requirements. They started purchasing based on the data – that eventually gave them the opportunity to buy in bulk and get better rates during purchase
As they started growing and became more matured, they started using analytics and automation in different other areas of business but, just by implementing the above 4 measures they instantly came out of the never ending cycle of challenges.
They got the cash faster from delivery partner, automated the order to delivery information flow and started buying based on data to avoid out of stock – simple 3 measures have put them in a position of unlimited scalability. Now they can confidently approach growing sales – they know, they can handle almost any volume of sales comfortably with minimum customer complains.