Khatabook - The digital clerk for digital India
Re-inventing the wheels of age-old Bahi-Khata system
From registering losses of INR 129 Crores in 2019-20 with zero operating revenues to acquiring a business management startup, Biz Analyst for $10 million(~INR 75.5 Crores) in a mix of equity and cash, Khatabook is now more than just a book-keeping app.
Khatabook is the early market leader in the digital bookkeeping sector in India, ahead of rivals such as OkCredit and Vyapar, as it is already expanding across the MSME ecosystem, with new apps launched for e-commerce enablement and staff management. Yes, like any other popular app, we can attribute the growth of Khatabook to smartphone proliferation, cheap data plans, and the push for digital payments – but was it just that?? Let’s dig deeper:
Healing the pain points
Khatabook succeeded in onboarding 8 million active merchants on its platform within a year – what could be the reason for this stellar performance? Well, they had hit a sensitive nerve that the innovators had been ignoring from so long – a huge credit backlog of Kirana Stores. It’s not only consumers from the vicinity who promise to pay on a later date, but shopkeepers also get supplies from wholesalers and distributors on credit. Recording these transactions and settling these payments is a pain point for small businesses.
According to Government of India, the micro, small and medium enterprises sector in India just like the population, only second to China. In financial year 2020, the total number of MSMEs in the country was more than 63 million. This represents the total market size that services like Khatabook can serve to! Khatabook enables these small and medium enterprises to not only keep an account of receivables but also send regular reminders to debtors. This process, which was earlier done manually and was subject to human errors, saves around 3 to 4 hours per Kirana shops daily – meaning 24 million to 32 million man-hours saved each day, which can be utilised for other productive tasks!
Innovation is not just for the Rich
Be it a video streaming tech giant like Netflix or a mom n pop store modelled FMCG wing of ITC, we have seen the importance of innovation for both sides of retail. Considering that majority of the user base of Khatabook are small business owners from tier 2/ tier 3 cities and belong not-so tech-savvy generation, innovation becomes even more important. Khatabook’s intuitive UI resonated with SMEs in the language of their choice, navigation they can understand and ease of handling which was way better than their traditional physical bookkeeping practice.
In December 2020, Khatabook launched an employee management solution, Pagarkhata, to help small merchants digitize attendance, payroll and salaries. This was the third major service launched by the company besides its flagship bookkeeping app, and digital online storefront for kiranas, MyStore. What’s more is that the company has plans to disrupt digital invoicing and goods and services tax (GST) collections for micro, small and medium enterprises (MSMEs), with the launch of a separate app in the second quarter of 2021! Let us all wait and watch what does that hold in store for us!!
A Pot of Gold at the end of the Rainbow
Many contest the ability of the founders to not being able to monetise Khatabook yet. What they don’t know is that even though there are no operating revenues from the app as it is freely available, the founders are actually sitting on a pot of gold.
Khatabook has 8 million active users as of January 2021, with 10% being from countries like Bangladesh, Pakistan, Nepal and from the Middle East. In India, the network is spread across 700+ districts (more than 95% of total districts) and more than 500 types of businesses. For those who still can’t see us getting closer to a point, let’s take an example:
What do you think is biggest strength of HUL? Its dealer networks! HUL's distribution network comprises about 2,500 redistribution stockists, covering 6.3 million retail outlets of Urban India. About 250 million Urban India and another 250 million rural people are consumers of its 35 major Indian brands.
This means, whenever HUL wishes to launch a new brand (e.g. some shampoo or oats brand), they already have a network base of millions as a channel to reach their billions of end consumers.
Similarly, who would you turn to for the data of MSMEs (who are not present on internet), to whom you want to sell or advertise your product? An app that already has access to millions of merchants in the country, and knows their purchase patterns, ticket sizes, and whatever customer behaviour parameters you require – Well, Khatabook!!
With Google eliminating third-party cookies, the database of apps like Khatabook will become even more important in next 2 to 3 years. It is more than a pot of gold, since it keeps multiplying with every passing day! Are you too holding your breath right now?
Also read:
A cookie-less world : An evolution or Apocalypse?
The fantastic product
While the founders are focusing on building a fantastic product with added functionalities for the drivers of economy, the vast nature of the market will give it a huge pool of opportunities to play in & strong technical background will help maintain edge over competitors.
No wonder the app saw transactions worth $100 billion last year, & more than 1 million daily active users! When “Digital India” is a topic of rallies, some people are actually working behind the doors to enable India digitally and Finns&Marks wishes nothing but more power to them!
If you agree with our opinions, don’t forget to spread the word and share this article with your friends and family! Until next time, Cheers!
By: Anmol Gupta | Isha Garg