Building a New Age Trading Business - Vedansh Gupta - Coniferous
In our 5th episode, we speak to Vedansh Gupta, Founder and Head Solution Provider of Artica International DMCC and The Coniferous.
Since 2014, Vedansh has founded and scaled two paper trading companies - one in Dubai and the other in India. We speak to Vedansh about the lessons he has learnt about the future of trading that he has discovered through this journey. With the advent of global B2B marketplaces like AliBaba and IndiaMart, informational asymmetry between manufacturers and buyers are quickly evaporating, thus leaving traders without any room to work. The future of Trading Businesses lies in the ability of traders to find value that they can add to their suppliers and customers through favourable credit terms, technical aptitude or technological prowess. We dive deep into the added value that Vedansh provides to his customers to be successful in this increasingly competitive field.
Vedansh Gupta on Linkedin
The Coniferous on Linkedin
“A trader in today’s world is a financier”
These were not the words I expected when speaking to Vedansh Gupta, the Founder and Head Solution Provider at Artica International DMCC and The Coniferous. Through this discussion, we explore in detail the future of trading businesses in a world of online B2B marketplaces such as AliBaba and IndiaMart which democratise information. Vedansh has a strong belief that value addition beyond just basic buying and selling will help trading organisations survive and thrive in the modern business world.
As a trader, you were willing to tell the manufacturer who your end customer was?
Vedansh: We are very, very transparent on who the buyer is, and a lot of companies are not that transparent. I found all my clients through yellow pages, the web, export data or other sources of easily accessible data. I feel that a manufacturer has more ability and more resources to get that data. If I’m not transparent and if I keep hiding, then there’s a form of distrust that keeps building. So when that distrust was never there to begin with, they trusted us and they just opened up lines of credit.
We tell them how much we’re selling for too.
Most people, especially when trading, you never tell your manufacturer who you’re selling to because you’re always afraid that my manufacturer is going to approach the client and just basically steal the business that they’ve worked so hard for.
Vedansh: My family also believes in what you’re saying. But like I said, I feel that we’re in a very open sourced word today. If someone wants to find the entire history of Vedansh today, there are so many platforms on which they can find it even if you’re not very well educated with computers. There’s so much of data out there that you can’t actually hide anything from anyone anymore. The old school mentality of trading is where you hide the customer name.
What I personally believe in is that you can add a lot more value as a trader by telling your customers about the latest trends. We actually practice a lot of techno-commercial sales rather than just selling the goods. We handle all the shipping and logistics, we ensure that goods don’t reach during holiday season so that they are not burdened with demurrages, we handle the banking, we tell them different ways that they can deal with the banks and enjoy better interest rates than they would enjoy from our end. That way, we manage our customers quite well. We have become a good advisory source for them and that’s why we call everyone in our company a solution provider. We don’t call anyone a sales person.
There must also be something that you’re providing to the supplier. What’s that angle where you’re very confident that, “Hey, I’m providing XYZ to this supplier” and therefore he’s not going to try and get to the customer.
Vedansh: The Chinese or the Indian suppliers that we work with, they are not yet that advanced that they would like to go international themselves. A lot of them don’t actually travel and meet the customers themselves. Some of them can’t communicate well. Some of them only know how to sell based on price, they don’t build relationships and all of that.
I think where we are successful to a great extent because of relationship building and relationship selling. A supplier would only sell to a customer because he’s interested in the business right. For example, a manufacturer needs to sell what he has in stock. But as a trader, I’m not interested. If suppose I believe that what has been manufactured is not a good fit for my customer, I will not sell it. Rather, I will tell my customer please don’t buy it even if the price seems good because I don’t think it’s workable. I’ll do this even if I’m making a cut on it. Suppose they say, I’ll give you 10% if you sell it. I know my customer can buy it, and I’ll make 10% commission on it. But if I know my customer is going to be in trouble downstream, I still wouldn’t sell it.
My customer doesn’t leave me because of that loyalty and some of my suppliers don’t leave me of that transparency.
The real value add is the advisory piece. Once you add that, you can generate a lot of confidence that your customers are just not going to buy it at 10% cheaper from somebody else.
Vedansh: That’s a large part to it. We have live examples where customers have flat out said to the suppliers, “We will not deal with you.”
An incident happened with the customer just a couple of months back. The paper mill allocated the customer to a different agent and asked them to service the customer because they were thought that our business is growing too fast for their comfort levels. They wanted to de risk themselves and pass on some of our business to another agent. But the customer flat out said he’s never going to buy from them again, unless Artica are involved.
As long as you can give your customer security, I think your customers will never leave you. And as long as you can give transparency to your suppliers, your suppliers will never leave you. If a supplier actually wants to find out my end customer, he can easily Google it. If you’re not going to be transparent, then people know that you’re hiding something, and you only hide when you’re not confident, right?
As a trader do you not feel a little bit hesitant because now everything’s online? What is the role for a trader going ahead? It seems like the role for traders seems to be logistics and advisory.
Vedansh: My family hates me using this word for ourselves. But I think a trader in today’s world is a financier. A trader is nothing else than a financier.
A mill or a supplier is given security that his money is going nowhere. The customer is given security that the trader will take responsibility for the material that’s been delivered — often suppliers don’t take responsibility for it. Therefore, a trader is basically like a financier on both ends. He finances the mill by paying them upfront and he finances the customer by extending them a line of credit. Going forward, I think a trader is ultimately going to be a strong financial institution.
In order to be a financier you need to have access to cheap capital. Where do you suggest people get access to this capital?
Vedansh: Actually all the capital is from India and India is not that expensive. The Middle East is more expensive than India in terms of lending rates. If you see the bank charges in India, it’s almost insignificant, whereas in Middle East, it’s almost about 1% of your transaction value. India is actually a good place to source your capital from.
Secondly, most of our customers are people who can’t generate a lot of capital For example, their banking limit might be for $10,000 but they need material worth $15,000 every month. They are good pay masters, it’s not that they don’t pay but it’s just that the industry is so low valued downstream, that they can’t generate much capital by themselves.
What I’m hearing is that if trading is going to continue in India and people have to make money in trading then you have to add a lot value on top of the basic buying and selling.
Vedansh: Unless you actually add value in any business, you have no use. If I don’t add value I’m always replaceable. The next big guy on the block will get it, businesses change all the time. If suppose he has a better supplier relationship than we do, then I’m easily replaceable at any given stage.