Report - Apr 2022
The Aqua Spark Import Report 2020 is there! Download it now.
The Aqua Spark Import Report 2020 is there! Download it now.
In this blog post, we want to take a closer look at e-commerce in India in particular and how it’s transforming the country’s domestic fish and seafood supply chains.
Worldwide, B2B and B2C e-commerce is changing the way that consumers and restaurants buy and sell fresh fish and seafood. Traditional retailers and wholesalers are losing market share as B2B and B2C e-commerce platforms disrupt traditional supply chains. Digital technologies—whether digital traceability solutions or big data analytics algorithms to predict demand—are often an integrated part of e-commerce platforms. The amount of funding these platforms are attracting is also increasing rapidly. In India alone, hundreds of millions of dollars of capital has been raised recently by e-commerce platforms to fuel the further transformation of its $50bn fresh meat and fish market and the associated supply chains.
Most e-commerce platforms in India focus on both meat and fish. But here we’re going to dive deeper into the effect of these platforms on fish and seafood supply chains in particular, and especially on how Indian aquaculture producers and fishermen are now selling their fresh fish and seafood.
Figure 1: a local fish market in Chennai, a large city on India’s South East Coast
India’s two largest fresh meat and fish e-commerce platforms—Licious and Fresh to Home—have raised $244m and $121m respectively over the last 2 years alone. The total capital raised since the inception of the two companies now stands at $339m and $152m respectively. Fresh to Home is the largest in terms of the home delivery of fish and seafood, while Licious dominates the home delivery market for fresh meat. Other B2B and B2C e-commerce platforms—such as Captain Fresh and TenderCuts—raised an additional $102m and $15m between 2020 and 2022. All of these e-commerce platforms aim to overhaul India’s $50bn fresh meat and fish market in a country where consumers still largely depend on traditional wet markets and long, fragmented supply chains.
Figure 1: funding raised by India’s largest B2B and B2C fresh meat and fish e-commerce platforms
Video 1: Just to Give You an Idea of India’s Largest Fish Market: Gazipur Fish Market in New Delhi. Source: Youtube
Traditionally, before reaching urban wet markets, fish and seafood would be sold by a farmer to a middleman. This middleman would then sell directly to a wet market nearby or to another middleman who would sell the product onward again. In this way, before reaching the consumer, the fish and seafood would have changed hands and ownership multiple times, and would often have traveled hundreds if not thousands of miles.
You can imagine that this traditional supply chain makes it hard—if not impossible—to maintain the freshness and the quality of the products sold, let alone to verify claims about their traceability or sustainability. And, what’s more, as Indian consumers buy fish in the wet markets based on physical inspection, fish traders are sometimes accused of using chemicals to cosmetically improve the products’ appearance, making the formalization of the supply chain and markets even more essential.
The long and fragmented fish and seafood supply chains and the lack of consumer confidence have so far limited India’s domestic market potential. The accessibility of fresh fish and seafood for consumers has been a perennial problem due to a lack of organized supply chains in this business. Less than 1% of India’s fish and seafood goes through supermarkets or organized players. This translates into a big opportunity for e-commerce platforms to sweep in and fill this gap. Today, the majority of B2B and B2C fish and seafood sales still happen through traditional urban wet markets where families (or their domestic workers) or chefs will buy their fish and seafood on the spot. The further away from the coast, the harder it is to find fresh fish and seafood. But over the past 5 years or so, e-commerce has gained momentum and has started to provide consumers and restaurants with an alternative way to buy fish and seafood. COVID-19-related movement restrictions have also accelerated the expansion of these platforms as greater numbers of people have moved online for their everyday needs.
E-commerce platforms usually offer similar prices—or even lower prices—to those of supermarkets or traditional wet markets. When ordering, most guarantee delivery of the freshest fish and seafood to your doorstep on the same day. But in India, where distances between where products are bought and where they’re sold are so vast, it’s not easy to deliver on this promise. This requires investments in a cold chain all the way from the places where the fish and seafood are caught or harvested right to where the consumers or restaurants are located. No single e-commerce platform can yet provide full coverage of India, but when all of the platforms are looked at collectively, they do cover every major Indian city. For India’s growing urban middle class, it’s easier than ever before to buy fresh fish and seafood.
Video 2: A Promotional Video of Fresh to Home. Not to Promote the Company But to Give You an Idea About the Proposition the Company Offers to Indian consumers.
Fresh meat and fish e-commerce platforms in India aren’t only changing the way in which consumers buy fish and seafood; to deliver on their promises, they’re also transforming the way in which farmers and fishermen sell their fish and seafood. This is because to work, they need to break the traditional supply chains and engage more directly with farmers and fishermen. While some B2C e-commerce platforms are already engaging closer to the source through proprietary in-house sourcing platforms and supply chains, others work with partners such as Captain Fresh, which is a B2B e-commerce platform specifically focused on sourcing fish and seafood for a variety of retail and wholesale clients. Fish and seafood being such a broad yet specific product category makes an in-depth understanding of the supply chains a prerequisite for success.
Fresh to Home, headed by Shan Kadavil, former CEO of gaming company Zynga India, and Mathew Joseph, an Indian seafood industry veteran, has developed a proprietary trading platform through which India’s fishermen and fish traders across the many fishing ports of India can directly offer their products for sale to the e-commerce platform. It works by the fishermen uploading a photo of their catch to the trading platform. Using the photo, the system can determine the species, quality, and size of the products uploaded, and will offer the fishermen the opportunity to sell their products to the platform. As fish is landed and procured early in the morning, Fresh to Home already knows how much it can sell that day—and the price it can charge—long before the fish even arrives in the city where it’ll be sold, and even before consumers place their orders. Once sold to the platform, Fresh to Home’s procurement team will then collect the fish and ensure that it’s kept fresh throughout its journey along the supply chain.
Captain Fresh focuses on the B2B market. Headed by Utham Gowda, who was formerly an investment banker but also briefly worked for an Indian shrimp exporter, Captain Fresh has built a B2B e-commerce platform where it aggregates demand from 5,000 smaller and larger retailers and wholesalers—it counts Spar and Metro among its customers—and generates more than $1m monthly in fresh fish and seafood sales revenues. The company has a purchase network and cold chain across the country through which it buys a full range of fish and seafood products. The company claims to source from 16,000 fish and shrimp farmers, mainly through middlemen, and has access to 1,500 fishing ports along the coastline. The company has digitalized its entire supply chain so that it can have an overview of the fish every step of the way, and also reduce wastage along the supply chain.
Although e-commerce platforms aim to source most of their products directly, many insiders in the Indian industry suggest that even if these companies do have their cold chains in place, they still buy their aquaculture products through middlemen. For this reason, data-driven platforms—such as Aquaconnect in India—may well play an important role and could prove to be crucial partners for e-commerce platforms by connecting farmers directly to the larger e-commerce platforms. This will, in turn, allow farmers to benefit more from the rise in demand of their products that we’re currently witnessing across India’s domestic market.
While current iterations of e-commerce platforms are not necessarily very technologically advanced in terms of AI, they can easily become so once their full potential is exploited. If an e-commerce operator knows the price fish and seafood have been procured at in the morning, they’re already aware of the price they can sell a product for to the consumer who orders it later on that day. In this way, pricing strategies can be sharp and continuously adjusted based on the latest real-time purchase information. Once these platforms reach scale and generate sufficient data, algorithms will allow them to become better at predicting demand. Fresh to Home’s CEO Shan Kadavil recently told us that through its proprietary system it’s now possible to predict demand 9 months ahead. As a result, the company can communicate its requirements in terms of sourcing volumes much earlier to its suppliers. This means supply follows demand, contributing to a more efficient supply chain with reduced inventory costs and less wastage.
In India—or any other country where fresh fish and seafood are traditionally sourced from a fragmented supply chain and sold to consumers and restaurants through wet markets—e-commerce is proving to have strong disruptive power to the benefit of both consumers and producers. For consumers, fresh fish and seafood—and maybe also their frozen equivalents—become more readily available at equal, or at better, prices. This could in turn drive up fish and seafood consumption—a good thing, given the high protein levels and other health benefits associated with them. At the same time, producers would become more closely connected to the market and achieve better payment terms as well as fairer prices for their products. If e-commerce platforms reach scale and start reaping the benefits of big data analytics and AI, supply and demand will ultimately become better aligned. And this is something that will certainly benefit consumers and producers around the globe.
With over 300 investors from more than 25 countries, Aqua-Spark is a global community of investors supporting the growth of a new sustainable, commercial aquaculture industry.
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