We integrate cosmetics suppliers with their clients (beauty salons, pharmacies, shops), providing automated order management based on actual clients' stocks and product usage. Moreover, the system will automatically recommend new products and promotions and solve typical order issues. Besides, real-time access to product stocks allows the platform to predict future orders and detect new trends. As the result, the suppliers will decrease manual work up by 90% and total suppliers’ costs by 30-35% and have direct access to clients’ communication and feedback.
More than 40 hours of customer surveys done and new customer surveys with US clients in progress
Developing MVP version in progress - forecasting model is done, the prototype is ready, interface for suppliers and clients in progress, integrations with CRMs will be started soon
Starting pilot with one of the biggest suppliers
100K+ cosmetics suppliers worldwide (10K+ in the USA), $200B professional cosmetics market worldwide in 2019 (sales through beauty salons, pharmacies, shops, and marketplaces). 4.6% YoY growth.
Primary target: US market (27% of the world market), testing playground - Ukrainian market, as we already have 1500+ salons as clients and contacts with the biggest local suppliers.
Problem or Opportunity
While working with beauty salons, we uncovered that they experience troubles making an order for professional cosmetics. They are unable to make the right order since they hardly calculate stocks and cannot predict product usage. This leads to wrong stock (both shortage and extra units left) and frequent or urgent orders. As a result, suppliers experience a huge amount of work with order preparation, low average check, unpredictable demand, and others.
We found out that in many cases suppliers hire hundreds of sales representatives (managed directly or by distributors), who go to the salons by foot, help them to calculate stocks, predict usage and make an order. It takes 3-4 hours to make one $1K deal and increase the cost of the deal by several times. Some advanced salons make orders via phone or e-mail. However, solving questions with the client about out-of-stocks on the supplier side, price and logistics troubles takes a lot of time.
All this leads to a high cost for the order and little time to sell new products and search for new clients. Moreover, professional cosmetics suppliers face the same problem with other their clients: shops & pharmacies. Lately, cosmetics suppliers have understood the importance of the problem: a big number of sales representative staff makes acquisition costs too high, and, consequently, the whole segment of small orders became unprofitable.
On the other hand, the suppliers have poor information about clients' stocks and usage and final demand for the products. It makes the situation even worse. Suppliers experience uncertainty while planning their stock, as they no information about final demand and trends (which is even more important for new products).
To summarize, we found a big complex problem connected with the unorganized ordering process, a huge amount of handle work, and uncertainty in the professional cosmetics sales process.
On the other hand, for the last several years the market for B2C cosmetics sales boomed with online marketplaces. They proposed wide choice, moderate prices, and a much higher level of service compared to the current suppliers' manual ordering process. So, a significant part of B2B clients switched to marketplaces. Suppliers almost lost direct influence on the sale process, information about consumers’ behavior, and control over final prices.
Solution (product or service)
We integrate clients (beauty salons, pharmacies, shops) and suppliers through integrating clients’ CRMs and suppliers’ ERPs with the Supplio platform. Supplio will collect information about stock, usage, and orders. Base on the collected data Supplio will help clients make orders (our planning model is already tested and showed much better results than manual orders), react on critical stocks level forehead, and even make automatic order planning. Then the system will proceed with the order directly to the supplier’s inventory. Notice, that supplier in most cases will not need a manager that tells actual price, available positions, and so on. Moreover, the system will automatically recommend new products and promotions and solve typical order issues (for example, help with substitution products). Besides, real-time access to product stocks allows the platform to predict future orders and detect new trends. As the result, the suppliers will decrease manual work up by 90% and total suppliers’ costs by 30-35% and have direct access to clients’ communication and feedback.
According to detailed research, there are no active competitors, providing automatic products ordering in the cosmetics industry.
Several big suppliers currently developing their own solutions, also there are automatic products ordering in other industries - FMCG, construction, etc. (Ordering.co, Baxterplanning.com, Relexsolutions.com).
Advantages or differentiators
The crucial differences between Supplio and competitors are:
1) common platform for all suppliers instead of a separate solution for each supplier:
1.a) much easier and more reasonable for clients to connect to one instead of dozens of such systems,
1.b) network effect - new supplier invite more clients, new client introduces his other suppliers,
2) more integrations with clients & suppliers CRM systems and open API to fit even the biggest suppliers needs,
3) industry-specific mechanics in order planning, product recommendations, and solving typical order issues.
At the current moment, we invest limited resources in Supplio development & marketing from AI Helps company - CRM system for beauty salons (same founders, 2000+ clients in 24 countries, $0.5M ARR, 42 employees, bootstrapped).
We have no payments from suppliers yet (Supplio started several months ago), but negotiations with one of the biggest suppliers on the market are in the final stage (that will greatly decrease our interest in external funding).
1) Transaction fee 2-5% from each automated completed order
2) Subscription fee $2K–$15K/month to access the salons’ analytics and distributors management
3) Auction model for advertising new products, promotions, etc.
Reaching suppliers via:
1) LinkedIn and e-mail (cold contacts)
2) Taking part in exhibitions (after the end of the epidemic)
3) Motivating referrals between local offices of one supplier
4) Content marketing
Money will be spent on
1. Speedup MVP development - to finish product in 2 months
2. First sales & testing marketing channels on US market - check unit economics before scaling
1) One of the biggest suppliers or suppliers alliance propose their own platform
2) Strong resistance from suppliers sales representatives as the majority of them will be fired or moved to other positions
Incubation/Acceleration programs accomplishment
Sector X (Kyiv, Ukraine) - https://ua.sectorx.city
Won the competition and other awards
One of the top-20 winners "Best Early Stage Startups in Ukraine 2020" - https://awards.center42.tech/results2020#rec207875531