As one more key player in Pakistan’s startup ecosystem, Jugnu, operating within the B2B e-commerce supply chain, has made the decision to shut down its core business operations.
“To ensure that Jugnu continues to live its mission of empowering small and medium businesses, Jugnu will be pivoting towards a tech-platform play by utilizing the expansive tech and data suite to enable commerce and financial inclusion among other enhancements.”, stated a statement sent to ProPakistani by Jugnu’s Team.
It also added that Jugnu will be moving away from the current footprint of self-managed fulfillment centers, logistics and inventory model. It stated that Jugnu has been enabling 100,000 plus small and medium retailers for the past few years but new global macroeconomic realities have been forcing Jugnu to become more capital efficient and work toward profitability and that will require Jugnu to recalibrate its business strategy.
“Unfortunately, this shift in business model will have a significant impact on some of our teams for which we are personally reaching out to organizations to help transition some of the best minds to be key enablers in their respective missions,” added the statement.
Behind The Curtain:
“An investor has pulled out from Jugnu and that’s the primary reason they are closing down” confirmed a former Business Development Executive at Jugnu talking to ProPakistani. He added that E-commerce FMCG companies cannot be in profit due to low margins on products in which they are dealing with high costs.
Jugnu was founded in 2019 by two former Unilever Executives and co-founders of retail automation tool Salesflo, Sharoon Saleem and Yasir Suleman Memon. It was aimed at digitizing, empowering and growing small and medium-sized retailers and enabling them to take more control of their inventory and capital flow.
It raised $25.7 million in total over three funding rounds with the last in Series A in March 2022 of $22.5 million from MENA-based eCommerce marketplace Sary, Sarmayacar and Systems Limited. It had already connected with 30,000 retailers in the twin cities of Islamabad, Rawalpindi and Lahore with expansions planned in other cities.
Jugnu’s Response
“Jugnu maintains an IRA of 99.9% indicating inventory losses of less than 0.2% which is in most cases better than the industry, said Jugnu’s team in a response to ProPakistani’s query.
“Corruption charges and parties are unsubstantiated and uncalled for accusations. All procurement happens through a professional procurement team with 100% transparency with supplier listing, quotations all managed through SAP Procure to Pay systems” added Jugnu.
For shelf life checks are implemented at Good Receiving where by at-least 2/3rd (67% shelf life) should be remaining for stocks to be accepted from suppliers, stated Jugnu.
They further added that all procurement happens directly from the brands/companies.
“No wholesale is involved in any procurement. The company further has always relied on state-of-the-art route management software for efficient routing and automated fuel receipts from the system based on Google Maps,” Jugnu stated.
“Moreover, all vendors are paid on time and in full. No payments are un-necessarily withheld. SAP deployment along side audits performed by a big four audit firm since inception has ensured process maturity and proper controls”
“The hiring process and promotions have always been done through a cross-functional committee whereby 6 monthly reviews with clear feedback and ratings are shared with employees on a regular basis,” added Jugnu.
“The Jugnu tech stack includes numerous retail and supply chain solutions that come together to lay the rails for a digital business-to-business economy.”, stated Jugnu while talking to ProPaksitani.
They added that Jugnu’s tech solutions include but are not limited to procurement management, order cashing, fleet management, dynamic vehicle routing, and customer relationship amongst many more. When asked for more details, they responded that they would be made public in due course.
“It is important for any startup to focus on the problem statement which defines the reason to exist for that organization (startup).” added Jugnu’s team.
“While Jugnu has about 210 employees the new structure and team for the pivot is being finalized, so it’s premature to say what number of people will be transitioning. We remain committed to our teams and will provide full support in this transition,” added Jugnu talking to ProPakistani.
On the other hand, Jugnu still has its founders and their apparently strong understanding of the FMCG market, their existing tech suite offerings mentioned above, and above all the backing of Systems Ltd which interestingly also has a Fintech named One Load that raised $11 million last summer.
Any Lessons Learnt?
Launched right before the Covid-19 pandemic, Jugnu was exactly the kind of solution people were looking for at the time and with founders already having a strong understanding and network of distribution and retailers through their earlier venture. The same was the case with Salesflo which came right alongside the launch of 3G services in the country which lowered the cost of operations significantly through smartphones.
Some startups can also be found burning VC money on marketing to achieve crazy growth in gross revenue so they can raise the next round. This utmost dependence on external investment without perfecting its own operational management is a recipe for failure.
It says everything about the need for rethinking required by the startup community to better equip their founders and upper management to get a grasp of ground realities because that’s found to be the primal cause behind these failures at least in the case of Airlift.
One positive outcome from all of this is the market understanding and the data these ventures have been able to gather in a short span of time which will come in handy when economic revival prevails maybe onwards from the second half of next year and the interest rates come back down, and they will come down eventually.
This story has been updated following the response from Jugnu.
“Some startups can also be found burning VC money on marketing to achieve crazy growth in gross revenue so they can raise the next round. This utmost dependence on external investment without perfecting its own operational management is a recipe for failure.”
Spot on!
Get rich slow.
Warren Buffet logic.
Yes, for effective business management, optimal operations management is critical.
This is not reporting, it is slander. Completely baseless and hearsay.
I know the entire Jugnu team and they are professionals of the highest caliber.
Business has its ups and downs, and sadly this was a down.
This is a new low, even for propakistani.
Mr. Bilal Farooq should go back to his original calling of agriculture and leave journalism for people who know the difference between baseless defamation and reporting.
Wonderful conclusion by the writer.
Very poor reporting. Extremely unfair to the founders and the team.