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Do you calculate your Business Numbers ? – Mahaveer Shah

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Mr. Mahaveer Shah runs a trading business which uses technology to sell various products all over the world. I had an interesting hour-long discussion with him regarding various online selling items and trading business.

Mr. Shah said that the toughest failure in the business was when he developed an application for import but could not develop it as planned due to some coordination points and safety measures. Recovering from this failure was the top challenge, he faced during that time. Because usually, the business is of the initial capital and recovering back takes time. He tried to sort it out but what he had expected, didn’t happen. Technically, things didn’t go the way we think. There should be more clarity with all that you do. If you think for doing something, the cost is X, but when you implement the project it may become 2X more than the expected; something which we may never thought off. The learning which he gained in his tough time was that you should have a good team. Delegating and having a proper correlation with the supply is essential.

Mahaveer further added that digital business is growing because it has a wide range of people whom we can target, something which brick-and-mortar shops cannot. So, if you want to reach a place, or if your product wants to reach a customer, traditional ways will be challenging and limited in scope. In this digital era, where everyone is moving towards digital world, it’s easier to manage when it comes to online selling and purchasing.

The online digital medium gives Mahaveer a path and a channel, so that he can reach his customers. On an added benefit, due to no geographical boundaries, he could tap more market compared to the traditional/offline trading business. So basically, when compared to traditional businesses, his business could grow 10 times in the next three years if they move digitally. If they were set up a physical store, they would limit our self to geographical boundaries. When they expose themselves to the internet, they are free from a lot of things and can expand their horizons.

I asked Mahaveer which digital methods did he implement, and what helped him scale his business. Mahaveer replied that they created their own website and also, they have tried with google keywords. And they used those keywords to market their products.

I further asked if they had done anything related to stock management, or any digital tech they might have used. To this, Mahaveer replied that yes, they have their complete stock management handled through software which gives the details of the current stock. And from the API enabled software are there, they are able to scale further and manage the complexities of inventory management. They also use an Inventory management system, which syncs all the stock information to all the front engines, via which they sell. The major marketplaces where they sell their products are Amazon, Flipkart, Paytm, Snapdeal, and Amazon USA. A piece of advice by Mahaveer, is that e-commerce is a very challenging market & it’s full of excitement. But it is very important to have your unit economic calculations very precise. He said that one should start small and have a very good basic understanding of business, as compared to starting big. Things will fall in place if your numbers are calculated well. Because at the end of the day, it’s a trading business but done in a modern way – using technology, where everything can be tracked.

In 2017, Mahaveer’s company was in the Top 10 Health and Personal Care Seller in Gujarat, and they were the first one to start selling with the Amazon USA from Gujarat. Apart from that, they have a very good strong base in the adult diaper market. They have a strong e-commerce business team and are also venturing into other business, which is technology-enabled. So according to him, if retail has enabled technology and is giving shape to the e-commerce industry, there are a lot of other industries which would need the technological plugin to have a better performance. And his goal for his e-commerce business is to have a valuation as a  100 crore business by 2025.

According to Mahaveer, in e-commerce – unit economics is the key. So, one should learn the basics and should have a complete understanding of unit economics, before venturing into this field. Unit economics means the profitability of each product after sales. One should keep in mind the structure of the business – the cost and the sales parameter. Everything from advertisement cost, your operating cost, compared to the revenue from it. He further added that you should never sell for a loss. If you know the game of business, you can run it, and grow. But the business ethical fundamentals will be the same. So focus on the fundamentals, and you will win the game of business.

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