Kochi: Scene 1, Cherthala: Mathew Joseph, a small-time entrepreneur based in Kochi, was absolutely bewildered. On the one side, he was getting tremendous response to his online fresh fish retail portal, seatohome.com. On the other, he was finding it unable to service his customers as his website crashed every time a few hundred people logged on to it. As complaints began to soar, Mathew had no other option but to shut down his business temporarily. He had asked his tech partner, a software company based in Kochi, to tackle the issue and started his hunt for funding the cost of expansion.
Scene 2, Bengaluru: Shan Kadavil, India Country Manager of Zynga, one of the leading social game developers in the US, was upset, too. Reason: the Malayali techie was not getting his favourite Seer Fish and Black Promfret from the State.
Shan was a regular customer of Seatohome as it provided fresh fish. But when the delivery stopped all of a sudden, he called Mathew over phone to enquire about it.
That conversation which centered on finding a possible technological solution to address the problems faced by Mathew, however, also marked the beginning of a long-term business association which eventually saw the setting up of India’s leading online fish and meat store.
Innovative thinking can often drastically change any traditional business, even the fish trade. In this issue we present such a unique success story scripted together by two businessmen, technocrat Shan Kadavil and fish trader Mathew Joseph, who came from two entirely unrelated business domains. When Shan agreed to partner with Mathew in his fresh fish business, he brought along with him the technical knowhow which completely changed the way the business was conducted. Thus was born the new venture, Freshtohome, the country’s first venture which brings fresh catch to the consumer’s doorstep. Read the inspiring story.
Freshtohome, the new avatar of Seatohome, co-founded by Shan and Mathew, also widened the product basket by adding meat and poultry products. To put it in Mathew’s words, “when a corporate lent its technological knowhow to a traditional business, a company of global scale was born.” By associating with 1500-plus fishermen, and several other livestock and poultry farmers, Freshtohome brings fresh, chemical-free fish and meat to consumers. It sources products directly from farmers and supplies them to customers eliminating middlemen, thereby benefiting farmers as well.
Started in 2015, Freshtohome now has 4 lakh-plus registered users and a turnover of around Rs. 150 crore. It is now eying to double the business at the end of the current fiscal with multiple expansion plans within India and abroad, a foray into offline stores and diversification of the product portfolio by including fruits and vegetables.
“The immediate target is to achieve 10 million registered customers within the next one year,” Shan Kadavil, the CEO of Freshtohome, told Destination Kerala. “We did a soft launch in Dubai recently. Soon we will be foraying into various Indian cities such as Mumbai, Pune, Hyderabad, Kolkata and Kozhikode,” he said.
In India, Freshtohome currently has operations in Bengaluru, Delhi, Chennai, Kochi, Thiruvananthapuram, Thrissur and Cherthala. “In terms of revenue and number of orders, Freshtohome is now the largest brand in India in this category. We have the maximum number of repeat customers as well,” says Shan. Freshtohome, which had already received two rounds of funding worth multiple million dollars from some of the big names in the industry, is now getting ready for another round of funding in June/July period. It was one among three tech firms mentioned by Mary Meeker, American Venture Capitalist and internet and mobile technology analyst, in her annual internet trends report 2017. According to her, Freshtohome has re-imagined online marketplace.
The investors of Freshtohome include Mark Pincus (Founder, Zynga); David Krane (CEO & Managing Partner, Google Ventures); Rajan Anandan (former India Head, Google); Paval Ongole (former India Head, Softbank Capital); Walter G Kortschak (MD & Executive Chairman, Signalfire and Founder, Kortschak Investments); Pete Briger (Principal and Co-chairman, Fortress Investment Group); Timothy P Flaherty (Managing Member & Co–founder, Silver Creek Capital), Cadir Lee (President & Chief Technology Officer, OhmConnect ); Thomas Middleditch, Hollywood actor (X-Men fame) and Alex Garden (CEO, Relic Entertainment).
The Phone Call That Was
Soon after the telephonic conversation, Shan flew down to Kochi to meet Mathew personally and asked him to come over to his office in Bengaluru. “Once inside his plush office, I was quite surprised to see large display screens mounted on walls which were showing in real time the number of players engaged in numerous games in Zynga.com across the globe. Seeing my amusement, as soon as we settled down for the conversation, Shan pointed his fingers towards the screen and said to me, ‘around 5 lakh players are currently logged on to our website. Do you need to handle a website traffic as much as this?’,” Mathew, the COO of Freshtohome, recollected the meeting, at his office in Aroor near Kochi.
“I told Shan that a few thousands would be enough for me to which he replied, ‘we have the technology and you have the market expertise. Why don’t we associate?’ I readily agreed,” Mathew said. The rest is history.
According to Shan, fish and meat business in Indian local markets together constitute around $150 billion. Of these, fish alone accounts for $50 billion and it remains largely in the unorganised sector. “So, I found a huge opportunity in the business. Also, as a customer, I liked Mathew’s products. Hence, I didn’t need anyone to vouch for its quality,” said Shan, who hasn’t had to think twice to exit Zynga.
Though Shan’s ambition was to become an engineer, his father, who was a doctor by profession, influenced him to venture into entrepreneurship. In the early days of his career, Shan, along with A K Faizal (now one of the Directors of Malabar Gold & Diamonds), started a jewellery manufacturing unit but Shan had to quit that venture. Leading Zynga’s India business, Shan was instrumental in creating Farmville, a hugely popular online social game. Prior to his stint with Zynga, Shan was with Supportsoft Inc. as the Vice President Products and Country Manager India. In between, he also started Dbaux, which provides Cloud and Appliance-based solutions for Connectivity, Remote Access and IT Management. The serial entrepreneur is also the Chairman of Dbaux Technologies now.
Mathew Joseph, on the other hand, has more than three decades of experience in fish trade. His first job was with a seafood exporting company as an accountant way back in 1985. “Though my work finished at 5 pm, I used to spend time at the processing unit there because of my passion for fish business. Noticing my interest, the managing director posted me in the Purchase Department as Assistant Manager. For the next 13 years, I travelled to almost all fishing harbours across the country for procurement,” he says.
Riding on this vast market experience, Mathew decided to start export of fresh fish. “Back then, I had only seen companies which exported frozen fish. To set up such a facility, it would cost around Rs. 5 crore, something I could not afford. During that time, one of my friends in Dubai told me about fresh fish being exported to Dubai from various places. Raw fish had a high demand in the Dubai market. As he suggested, I went to Dubai and learnt how it worked. The most important part was the packaging of fish. I came to know that nobody was exporting raw fish from Kochi to Dubai despite the presence of a huge Malayali population. So, I decided to export fresh fish to Dubai. During that time, CIAL was inaugurated giving an opportunity for me to tap Dubai’s fresh fish market,’’ he said.
Fresh fish being a highly perishable commodity, the business cycle is small compared to export of frozen fish. “Once the product reaches Dubai, it would be distributed to customers within hours. The very next day you will get the feedback. But in the case of frozen fish, it is a different cup of tea. It takes 10,000 kg of fish to fill a 20-ft. container. Until you receive the entire quantity, the fish would be in cold storage. It would take around 14 days for the container to reach Dubai. Upon reaching there, it would again be in cold storage and distributed according to demand,” Mathew explained. Soon, he started supplying fresh fish to many countries such as Saudi Arabia, Singapore, Taipei and Australia.
Consequent to the global meltdown in 2008-09, Mathew’s export business also started feeling the pinch. “The price of fish went down globally except in Indian harbours making it difficult for an exporter like me to sustain the business. In short, we were forced to procure for a high price and sell it in other countres where the prices were low,” Mathew said.
“Why do you want to sell fish to a foreign country rather than explore the local market?” This question from his wife was the game-changer for Mathew. “That’s when I really thought about it. Back then, the latest innovation in the fish selling business was to set up exclusive shops. I discussed the idea with my brothers and decided to set up shops in Delhi, Bengaluru and Kochi. However, there was a problem. You would not have a direct control on the stock at each shop. Fish is not a commodity wherein you can verify stock in a retail outlet based on weight or total count. Customers’ demands vary, while one might want cut pieces, another person would take one whole fish. So, it’s complicated. We have to believe what the shop manager says,” he said.
Mathew’s solution for this problem was to get into online fish business. Mathew set up Karondkadavil Ventures and associated with a software firm in Kochi for setting up the website. “After eight months, we launched Seatohome.com. We did a trial run for a month and launched sale in Delhi, Bengaluru, Kochi and Thiruvananthapuram. Without any marketing, we started getting orders,” he said.
A year later when Forbes magazine approached Mathew for an interview, he came to know that Seatohome is the first online store in the country which sold fresh fish. “They told me, nobody in the world has ever tried this.” Subsequently, Mathew drew the attention of the local media in a big way. “Some time in 2013, the mega coverage in a leading vernacular daily in Kerala resulted in a massive traffic to our website. Consequently, it crashed. I am not a tech expert. Our software firm also couldn’t tackle it. Orders multiplied but we could not service properly. Complaints galored and I had to shut the website down temporarily but only to bounce back with added vigour backed by the support of Shan,” Mathew said.
Fish Trade turns Hi-tech
Business at fishing harbours in Kerala begins at around 3 am every day and closes by around 7 am. But in other South Indian ports like Tuticorin, business starts at 10 pm and finishes by around 12 midnight. Mathew and his team have to remain awake almost the entire night, coordinating the procurement over phone. “We had to respond to calls from different fishing harbours simultaneously. By the time we fix our price and inform our men at the harbour, the deal would have already been struck by another bidder. So, it was very frustrating. We soon realised that it would not work for long,” Mathew said.
In a bid to tackle this, Freshtohome developed an app which allows fishermen to trade directly with the company. “To make it fishermen-friendly, we created the app similar to Whatsapp. Before bidding they would open the app, in which pictures of different varieties of fish are shown. If Tuna is available for bidding, they will tap the picture of Tuna in the app. Following that, they will be asked to select the size. Upon doing so, they will be asked to enter the price. If the rate is ok, the system would show a green colour along with required quantity. Otherwise, a red colour will be shown indicating rejection. The system approves the price based on transaction history as well as business expected on a particular day. Thus, we created an app-based bidding process for fish trade for the first time in the world,” Mathew said.
The success of Freshtohome largely depends on the quality of the products they provide to the customers. Before launching the venture, Shan and Mathew were on the same page with regard to no-compromise policy towards adding any sort of chemicals in the products. Once they procured fish from local markets and sent it for testing in a few leading laboratories.
“The results were shocking. It revealed large-scale use of ammonia, sodium benzoate and formalin on fish to prevent decaying. Right from the beginning, we have taken a firm decision not to use any kind of preservatives on fish. We only use high-quality ice and deliver it within 24 hours of the catch reaching the harbour,” Mathew said.
According to Shan, Freshtohome sources from small fishermen with fresh catch instead of large trawlers in order to ensure that the consumers receive the best quality fish. “Large mechanised trawlers are in the sea for fishing anywhere between three days to three months. By the time the trawler reaches the coast, fish could be already frozen. That’s how the use of chemicals became part and parcel of fish trade among many Indian fish suppliers,” Shan added.
Similarly, the involvement of many middlemen also leads to break in cold chain, which in turn affects quality. “In a normal scenario, once the produce reaches the shore it goes through at least four middlemen – the wholesaler at the harbour, the transporter, the wholesaler at the retail hub and then the retailer,” Shan pointed out.
At Freshtohome, the management ensures that the cold chain – maintaining the optimum temperature of 0-4 degree celsius – does not break until the product reaches the customer. “Once the bidding is successfully completed, our men will ascertain the quality of fish and transport to our nearest factory. Subsequently, the produce will be packed and categorised based on the orders from the customers and transported to regional hubs for distribution,” he added.
Freshtohome sources 90 per cent of the fish varieties from harbours across Kerala. The rest of the produce comes from Andhra Pradesh and Tamil Nadu. On a daily basis, the company takes part in bidding at around 125 fishing harbours though it will only procure from around 15 or 20 among them based on the availability of required types of fish and acceptable rates. While mutton is sourced from Jaipur, chicken is procured only from a factory in Chikmagalur in Karnataka district.
“We only procure antibiotic-free chicken. Sale of fish products constitutes more than 75 per cent of the business for us. However, when we consider a single product, chicken is our highest-selling item. The popularity of fish varieties also vary. While smaller fish like seer, mackerel, sardines, and prawns are popular in the south, freshwater fish is more popular in Delhi. Customers can choose delivery slots as well, but the number of slots varies in each market. We also have express delivery facility where the products will be delivered within two hours but the number of products for the customer to choose from would be limited. Also, we have an option wherein customers can book their favourite fish in advance. We will inform them based on availability and execute the delivery,” Mathew said.