The world’s third-largest startup ecosystem, India, is filled to the brim with stories of grit, resilience and perseverance shown by Indian founders when the country was knee-deep in peril during the Covid-19 pandemic.
Despite facing the toughest time in several decades, many of these founders not only took their businesses to unfathomable heights but also infused new hope in the country’s D2C space, which as per a KPMG report, is projected to surpass the $60 Bn mark by 2027, growing at a CAGR of 40% from $12 Bn in 2022.
One such story is of Rajesh Kumar, who, pivoting from B2B, launched his omnichannel seafood brand Freshma in February 2022, along with his brothers Ram Kumar and Raj Kumar and childhood friend Paranthaman G.
While Rajesh is the managing director of Freshma’s parent, RRK Retail Pvt Ltd, Ram and Raj are directors, and Paranthaman is the group CEO.
The brand offers a wide range of seafood options like freshwater and sea fish, lobsters and prawns, crabs, and dry fish via its website, app and eight offline stores in Chennai, Tamil Nadu.
Launched with the aid of an INR 20 Lakh loan arranged from family and friends, the brand today serves an average of 85K customers a month across channels. It claims to generate a monthly revenue of INR 2.1 Cr and has grown its revenues 2X since going omnichannel in January 2023.
However, what made the Freshma founder ditch his B2B model to embrace D2C in the market that is being ruled by deep-pocketed competitors like the ones mentioned above?
Well, the answer to that lies in Kumar’s entrepreneurial plunge when he incorporated RRK Retail in 2016. You may find it shocking to know that the only asset Kumar had back then was a fish stall in one of Chennai’s fish markets.
Freshma’s Humble Beginnings
Kumar has always felt a very strong connection with the seafood industry because of his father who was a permanent employee in the Tamil Nadu Fisheries department.
Being a kid, his father would take him to his workplace and familiarise him with his line of work. It is from this point that he started to associate himself with the industry. When he grew up, he applied for the same job role as his father. But, as luck would have it, he got rejected.
Finding himself in a fix, Kumar felt that the connections he had built in the fishing industry in the coastal town could row his boat in trade. Putting his contacts to use, Kumar entered the fish trade with his first stall in 2016 with eyes set on opening other stalls gradually.
Pursuing his vision of capturing a juicy chunk of the Indian fish market and becoming the “Fish King” of Chennai, he opened his second shop in 2017 and third in 2019.
By the time Kumar opened his third stall, he was already supplying fish to several intermediaries, which he later found were being supplied to players like Licious, which further sold the fish at almost double the procurement price.
Interestingly, the seafood D2C brand today locks horns with its erstwhile client Licious, and other heavyweights like Fresh2home and Captain Fresh in the Indian D2C meat segment, which is anticipated to breach the $85 Bn this year.
Freshma Gets The Pandemic Shot
With his three stalls and a B2B vertical serving big industry players, Kumar was enjoying a smooth sail with little to worry about. But then, the pandemic shook the nation and the economies came to a screeching halt.
With multiple lockdowns hitting his business, there was only little he could do but think about how to build a sustainable business and eventually become the “Fish King” of Chennai.
Consequently, he sought help from his family and friends, and after several brainstorming sessions, the idea of Freshma germinated.
Identifying disruption in the industry, Kumar pivoted to D2C to provide end users seafood, especially fish, at competitive prices compared to the ones who engage middlemen for procurement.
Plus, we were told that Freshma focusses on procuring hooked fish directly from fishermen (without middlemen) rather than the ones caught using nets.
“The key distinguishing factor in our procurement lies in the hook-caught seafood we sell. Given that a fisherman’s net sits in a water body for 5 to 6 days, there are possibilities of catching dead or stale fish. Further, we have restricted our procurement to the Bay of Bengal because of the superior quality of fish in this region,” Paranthaman G said, pointing out what sets them apart from other players.
Another reason for Kumar to pivot to the D2C model was to give tough competition to existing players by providing higher-quality fish at cheaper rates. A key deficiency that Kumar observed was the overwhelming amount of chemicals and preservatives used in fish by these brands.
“When it comes to choosing fish, consumers seek freshness and variety, but with today’s fast-paced lifestyles, convenience is key. Our aim is to provide this convenience and value, sans middlemen. We’ve established a robust network directly with fishermen and farmers, ensuring access to high-quality, chemical-free produce. This network also enables us to deliver to consumers swiftly,” Kumar said.
Freshma’s Growth Hooks
Ever since the Freshma founders decided to go omnichannel, things have stacked up quite firmly for them. For instance, the online fish marketplace became an instant hit among consumers soon after its launch.
In addition to this, what has worked in their favour is Paranthaman G’s stardom as a food influencer. Notably, the group CEO has more than 2 Lakh followers on Instagram. He utilises his influencer skills to promote the brand as well as looking after the aesthetic appeal of the platform.
Meanwhile, strengthening its omnichannel play, the brand today boasts of having eight offline branches in the coastal city.
As of now, Freshma is expecting to report FY24 revenues in the range of INR 35-40 Cr, with INR 46 Lakh coming from online business alone. This would be a 2X jump from INR 17 Cr garnered in FY23.
Given its strong offline play, the startup is planning to open three stores in Coimbatore this quarter — yet more conversions for their online business still elude them. Freshma is also planning its wholesale foray.
“As of now, the most pressing task at hand is to convert offline consumers to online. For our offline growth, we have opened eight stores in Chennai and one dark store, which is solely used for online trade. Our first appearance outside Chennai will be in Coimbatore with three stores in the next three months. Bengaluru and Trichy will follow next. But, online growth will need more investment in terms of advertising and marketing,” Paranthaman added.
For this, the group CEO said that they are in talks to raise a seed funding round of INR 20 Cr.
All in all, the online seafood marketplace has several advantages working in its favour, including its low-cost, and high-quality offering. With several positives working in tandem with their growth timeline, it would be interesting to see if the D2C seafood brand is able to emerge as the “Fish King” of Chennai and lock horns with its rivals on a nationwide level.
Interestingly, the founding team is in no rush and wants to take on the industry giants one city at a time, preferring to test the waters gradually.
[Edited by Shishir Parasher]
