Problems & Solutions
Problem
- The lead and lag in demand from the economic uncertainty have tied up £498 billion in excess working capital.
- Cascading impact of the generally volatile economic front resulted in volume retail sales dropping by 5.7% as the inflation hit consumer pockets.
- Now the retail sector seems to be sitting on £2.8 billion worth of excess stocks, which threatens working capital and risks becoming obsolete.
On the flip side, UK inflation rose to 5.4%, representing the highest figure in almost 30 years.
- Over a third (35%) of consumers admitted to stocking up on everyday items.
- Due to supply chain disruptions, SMEs in the UK cannot procure stocks and maintain supply chains causing revenues for over 80% of these businesses to decrease.
- The UK service sector grew at its slowest pace in 2021, hit by shortages in staff. Due to competitive labour market conditions, wages are steep , making it difficult for cash-starved SMEs to hire professional help.
Solution
- Create a digital, cloud-based platform that connects disparate market segments.
- Vendors/manufacturers can list their overstock as packaged bulk discounted deals helping them release the working capital bottleneck.
- SMEs/bulk buyers can buy listed deals or part thereof, helping them create a passive earning opportunity or bridge finance to keep their business afloat.
- Once the deals are financed, they are sold to end consumers at a mark-up but lower than the market price easing the inflation burden.
- Through DealsHunters, service providers and manufacturers can also list their slack capacity due to slow business activity or seasonal demand.
- SMEs can engage this slack capacity from professional service providers to bridge their service requirements.
Every creative work starts with spark
Innovation
- Wholesale platforms predominantly offer deals from overseas suppliers. A gap in the market is thus observed where local, UK-based sellers are overlooked in favour of overseas manufacturers and distributors. This is largely because goods sourced from China (a major source of imports) are available at lower prices and hence can be put up as wholesale deals in the UK. However, if a UK-based seller is to compete with these overseas products, they will need to offer a highly competitive price for resellers and crowd funders to be interested. It is here that the business develops a niche target market strategy.
- It has been said that through crisis comes opportunity. The ongoing global supply chain crisis, along with the pandemic and Brexit, have significantly impacted UK-based SMEs – the backbone of the country’s economy. The impact is evident in the country’s GDP growth rate, which has remained at a marginal 0.8% and is forecast to contract by 1% owing to global inflation and the war in Ukraine. Hence, many businesses in the UK are at a vulnerable stage where their working capital is strained, and stocks and capacity are tied up. Giving an avenue to these businesses, which are not primarily wholesalers and merely need to offload their stocks/capacity to ease working capital pressure, will ensure deeply discounted deals. Similarly, service-led businesses that have faced challenging times due to movement restrictions are also invited to list their slack capacity. In this instance, the service-led small businesses can sell vouchers for future services to fund their working capital needs, helping them stay afloat.
- At the same time, crowdfunding has seen a phenomenal increase in the UK. The total annual volume of equity-based crowdfunding grew from £30 million in 2013 to £550 million in 2020. This demonstrates the appetite for passive investing in Britain. DealsHunters capitalises on the emerging opportunity and connects otherwise disparate market segments through its cloud-based platform, helping businesses at risk at one end and consumers facing inflation at the other.
Through crisis comes opportunity
Opportunity
- The platform will offer the following benefits to its users.
- Inclusive participation in the wholesale trade: Passive investment opportunities for small to large-scale
buyers/liquidity providers in the wholesale segment of the supply chain across multiple product and service categories.
- Deal planning tools: Proprietary planning tools to manufacturers/vendors to determine appropriate discounts based on their desired sale quantity, location and industry.
- 100% guaranteed advance payments: Advance payment of lump sum amount to manufacturers/vendors on purchase of bulk quantity while products and services are sold by the manufacturer/vendors one by one to the retailed customers over time, improving the business liquidity.
- Advanced insights: Preoperatory analytical tools will be given to resellers and crowd funders to help them make the right investment decision, e.g., estimated mark-up on given deals (e.g., 15% mark-up expected on retail to end-consumer), amount funded in each deal (e.g., 70% funded), estimated time to recoup the investment (e.g., 3 months), etc.
- Extend Support to Preferred Businesses: Additional tools to help buyers buy from businesses they support, such as cash-strapped SMEs, woman/elderly-led small businesses, socially conscious brands, etc.
- Support start-ups and SMEs: New businesses or SMEs often suffer from low sales in the initial months or during seasonal variations, which makes them go out of cash – a primary factor contributing to the high rate of business failure in the first year of run. On DealsHunters, new businesses and SMEs can maximise their sales by offering deep discounts.
- No sales skills or rated accounts required: Unlike Amazon, DealsHunters do not require any specific sales skills to maximise wholesale buyers’ revenues. Further, wholesale buyers will not be required to create exclusive “seller accounts” that will be rated by online retail customers. This system is flawed to its core as it only benefits big accounts with thousands of positive reviews. Further, research indicates that fake reviews cost nearly $152 billion a year. For example, an Amazon seller with thousands of reviews will monopolise the marketplace, discouraging new entrants in all product categories. To cope with this, DealsHunters will fully control the sales operations. The wholesale buyer’s inventory will be listed on the DealsHunters e-commerce platform, while retail customers will be invited to rate the “manufacturer/suppliers/brand” rather than each “individual seller”. This will enable the seller to always buy deals from top-rated manufacturers/suppliers/brands on the platform to ensure a high return on investment.
- Drop servicing: Bulk service providers such as catering agencies, event managers, and subcontractors can list their slack capacity based on seasonal demand. For instance, during the off-season, event management companies may substantially reduce their prices to fund their full-time staff salaries. In the meanwhile, a business can pick up the deal and make use of individual services. Similarly, a catering service provider can put up a bid for his capacity (premises, chef, waiters, utensils etc.). These can be sold to individuals in need of a space for an event, wait or service staff for extra hands, hire utensils or get a small party catered by a chef. Other professional services include accounting and bookkeeping (with intern hours that can be outsourced to SMEs), coaching centres (with space and staff capacity), utility services, etc.