And how courage and flexibility allowed them to pivot within 24 hours during the pandemic.
Oftentimes, it’s only after an obvious gap in the market is filled by a keen entrepreneur that people realise that gap existed in the first place. Such was the case with Ponglada ‘Bell’ Paniangwet, the CEO and Co-Founder of Freshket (www.freshket.co), the fresh produce delivery platform of choice for many of the city’s premium restaurants, as well as consumers who crave the convenience.
Having graduated from Thammasat University with a Bachelor’s degree in liberal arts and a Master’s degree in International Marketing, Bell started her entrepreneurial journey when she and a friend launched their own business as a food processing centre and supplier in Talaad Thai, sourcing products from wholesale fresh markets and farmers, and delivering the produce to restaurants. That’s when she realised the challenges present in the industry, as well as the huge opportunity ripe for the picking – literally.
“I discovered that this industry is very hard to scale and very fragmented; with each supplier owning their own freights, and delivering themselves,” she recalls. “On top of that, it was very difficult to find restaurants or buyers. I just wanted to streamline the whole process.” Determined to fill the need in the market, Bell pitched the idea of Freshket to the prestigious DTAC Accelerate Batch 4 competition.
“I was so lucky to win the competition, which gave me the chance to go to the U.S. for their start-up boot camp twice,” she says. “There, I learned a lot about how to build a start-up from scratch.”
Despite the advantage this afforded her, Bell didn’t rest on her laurels when she came back, starting Freshket from scratch in 2017. Beginning life as a B2B business which allowed restaurants a hassle-free supply chain, Freshket has already raised funds from its investors for three rounds, helped partly by its willingness to pivot immediately after the pandemic temporarily shut down their entire consumer base.
Bell speaks to Masala further about how innovation, flexibility, and an indomitable spirit are key to Freshket’s success and exponential growth in the industry.
Tell us about the unique concept behind Freshket, and how you’ve developed it into the success that it is today.
We initially launched Freshket as a marketplace to connect suppliers and restaurants, and allow them to transact through our platform. It would allow suppliers to list their prices, and deliver the orders themselves to the restaurants.
However, the industry didn’t work that way. Because we sold commodity products, the restaurants didn’t want to choose e.g. tomatoes from 10 different suppliers; they wanted us to choose the best price and quality for each product. At the time, we had mostly small-to- medium-sized suppliers from the markets, so they weren’t able to control on-time delivery and product quality. We therefore decided to pivot our model 10 months after we launched, and evolved into a food supply chain platform. We did this by using vertical integration; our strategy is upstreaming and buying directly from farmers, so we can build an ecosystem of fresh produce.
At that time, I didn’t know the specific terminology of what we were, but I knew what restaurants wanted. Firstly, they want quality products with reasonable prices. Secondly, they want reliability. Because we deliver fresh produce, if we can’t deliver on time, they can’t open the restaurant, so we knew logistics was key.
Because of this, we implemented a number of changes. Firstly, we installed a warehouse, because we wanted to solve the issues of price and quality by becoming an aggregator. We bought from the suppliers in bulk, based on our demand. We also reduced the number of suppliers greatly – from 100 suppliers, we went down to only around 35. This was not only good for our customers, but also for our suppliers, because they only had to deliver to one place, and we can do quality checks before we delivered the produce to the restaurants.
We developed our own warehouse management system to pick and pack in the warehouse, our own logistics management system to control on-time delivery, and an e-commerce Order Management System (OMS) for both the restaurants and our suppliers. We currently have two distribution centres and 10 hubs throughout Bangkok, and we just launched our own processing centre to serve more farmers.
How did COVID-19 affect your, business, and what have been the challenges and advantages unique to running an e-commerce business in the wake of the pandemic?
Last year, the first wave of COVID hit Thailand. I still vividly remember the 23rd of March, the day that the government announced the first lockdown and temporarily closed restaurants. 80 percent of our orders were cancelled because at the time, we had a B2B-only business model. 24 hours later, we opened the platform to the consumer side.
Our team was and continues to be amazing; they all helped each other – the tech side, operations, etc., so that we could pivot within 24 hours. We learned that the right time is very important. If we pivoted later than that, it would have been too late. Because that was the first wave of COVID, consumers were panic buying and wanted to stock many things, especially food.
We were the first platform to pivot so quickly, and we soon learned how important that was. More importantly, I learned how important team work is in situations like this. Initially, nothing worked as planned: when we opened to consumers, we didn’t yet understand what individual consumers wanted. It’s totally different from the restaurant side; for example, we needed smaller basket sizes, and our logistics and consumable costs increased a lot.
The silver lining thing is that the consumer- side pays cash, while restaurants pay with credit. Last year, we were raising funds at the time, so it turned out to be a good trade off. We managed to get cash in hand, which was one reason we could raise funds for the next round – prior to that, we were finding it very difficult to raise funds because even before COVID, the Thai economy was already not doing well.
Of course, another aspect of the pandemic is that we’ve had to follow strict COVID protocols in our distribution centre, processing centre, and with our riders, with records shared to the district government and health department every month. We’re very serious about this.
What are the advantages for consumers in the B2C side of your business?
What consumers want is straightforward – good prices, good quality, and convenience. Our prices are great because we sell the same products to restaurants in our B2B side, so we use the same wholesale prices. At the same time, the quality is always good because the quality standards of the premium restaurants that order from us are very high. While some platforms have pickers who’ll pick and choose the product for you, with Freshket, there’s no need for that because every single piece will pass through the quality control in our processing centre.
As for convenience, if you place an order today, you can receive it tomorrow, and you can pick the time slot yourself. For consumers, it’s 10am to 4pm every hour, and the minimum order is THB 1499 but with our current promotion, it’s only THB 799.
Moreover, consumers also like us because of our product variety, especially in terms of fresh vegetables. We offer over 7,000 types of products, including over 3,000 types of fresh produce, because we serve more than 4,500 restaurants in Bangkok – any ingredient you want, we’ll have.
How did you manage to scale your logistics to cover the increased demand during the COVID-19 pandemic?
Logistics in Thailand has improved a lot and keeps on improving. There’s a lot of competition, but that’s good for the customers. This year, the challenge was different from last year. Last year was about the demand side, as it was the first time that restaurants completely closed. This year, it’s about the supply-chain side. If you want to scale, it’s not about demand, it’s about how the supplier works. Our strategy was to build our own processing centre within three days. We call it our Temporary Processing Centre, because we’d already planned to have our own processing centre in December, but because of COVID, our suppliers can’t operate. We had two choices: we close the business temporarily, or we fight for it. We definitely didn’t want to close, not even for a few days, so we found a solution.
What are Freshket’s expansion plans?
We will be launching Freshket Hua Hin! We want to jump into the hotel segment, and Hua Hin is a good choice. After observing the landscape, I’ve discovered that their occupancy levels are very high right now, but there is no big fresh market in the city. Next year, we plan to expand to two more provinces, and then afterwards, who knows where opportunities will lead?