The why & what of Cital (@citalco)

tl;dr: Cital helps SMB construction companies in India buy concrete from local suppliers

Buyers with us get
✅ Best prices with real-time rate comparison from local suppliers
✅ Better efficiency with no guesswork on ETA
✅ Higher trust with no fear of bogus billing

Sellers with us get
✅ SaaS to digitize: quotations, invoices, deliveries, collections, fleet, and more
✅ Demand discovery & better capacity utilization
✅ Working capital with bill discounting, etc.

For many afar, who don’t buy concrete every day, it *doesn’t* seem like a big problem; one could argue that suppliers and buyers are nearby, easy to find, already transacting, and business happens as usual.

But taking a closer look reveals pain points even between known parties. Be warned; some side effects will make you ROFL.

Ordering is broken: 

WhatsApp requirements to Head office -> HO calls vendors to get quotations -> Receive quotation on Email/WhatsApp -> Email PO -> WA/Phone vendor to schedule delivery -> call for deliver confirmation & ETA

Repeat the above with weekly price changes

Desperate measures need to be taken. So…build…more…cabinets..wherever you can! You can’t go wrong with that.


That’s hilarious but what’s not is 

bad actors on both sides:

buyers are notorious - they don’t pay on time

sellers are notorious - slip in bogus delivery notes/challans

This is fundamentally a digitization problem, and the ultimate solution has to get two things right:
1. Distribution
2. Dhandha/Monetisation

So, how does Cital get these right?

1. Distribution:
✅ SaaS for suppliers to digitize quotations, invoices, deliveries, collections, fleet,..
✅ Marketplace with 10x exp for buyers: easy price comparison, 1-click ordering, no fear of bogus billing,..
✅ Zero commission

2. Dhandha/Monetization: 
✅ Working capital for suppliers
✅ Transaction fees for prepaid orders
✅ Private label supply for high-trust buyers

Why concrete, not steel?

Concrete is the largest component in a construction project, alongside steel.

If you happen to overhear a conversation of a construction manager, you most likely would hear: “Aaj kitna concrete hai? / How much concrete did we pour today.”

But unlike steel, concrete is fragmented/unbranded on both sides: the supply & the demand, frequently ordered - mostly every day, and hyper-local with bad actors on both sides; suppliers dread collections, and buyers fear bogus billing.

Is the market big & growing?

Just concrete will be a $10 billion market in the next five years. It's growing fast. And the overall construction materials market is $100+ billion. 

Any tailwinds that support growth?

Yes, strong tailwinds:
i) India became 2nd most sought-after manufacturing destination
ii) Increasing urbanization, growing population
iii) Rising government focus on infra
iv) Preferred: better quality, better for environment, saves time

Ready mix concrete is already preferred in markets like the US, where 40% ready-mix concrete is used, and in Japan, 70% ready-mix concrete is used. There is enormous headroom for growth in India, where only 10% ready-mix concrete is used.

Why only concrete?

Concrete is just the beginning, like books for Amazon. It’s the best growth engine available in construction that helps build distribution fast with network effects. Provides deep moats and massive scale to launch other products.

It helps conquer the $100 billion+ construction materials market with multiple product categories: bricks, blocks, pavers, wood/ply, nails, binding wires, paints, electricals, and more than 100+ SKUs.

Has nobody done this?

Not this way! But there are two unicorn competitors.

1. Infra Market
2. Ofbusiness (not really a competitor, more complementary)

Let’s first look at OfBusiness and understand why they are a very different business. 

Their core product is credit/loans, they are an NBFC. They do have a horizontal marketplace, not focused on construction, and only caters to SMBs that have loans with them.

They aren’t solving for digitising construction, they aren’t a vertical software platform, and by design they are only relevant to buyers/suppliers seeking loans for purchase.

Ofbusiness is fundamentally a very different business than Cital.

Now let’s look at Infra Market. It is a marketplace for construction materials and is a competitor in many ways.

However they have a very different DNA. They began with the promise of online however built a predominantly offline fully managed marketplace for concrete, aggregates, other raw materials. Fully mannaged means they take on working capital risk for every transaction.

How it works: they reach out to large real estate buyers provide them lower pricing and fulfill though multiple small suppliers. It’s a good business, there are hundreds of small local construction traders that do this.

The only issue is it doesn’t scale. The bottle neck to growth is the ballooning need of working capital as the marketplace grows. And risks increase. More equity rounds followed by debt rounds every few months, the need for money just doesn’t stop.

Deploying capital as a product is like a steroid with bad side effects. It’s alluring at first, then restricts growth and makes the business weaker each day.

Dig deeper, no real innovation happens, no moats are built, and the world remains unchanged—less impact, irrelevant for 99% of the buyers & sellers of Bharat.

They probably realise that and built offline retail stores to sell tiles, sanitary ware, pipes, chemicals, and more.

but experience tells us

https://twitter.com/ljin18/status/1178763537423855616?s=21&t=t-z8gxz6GUSqAbN40vISDA

One could argue that a few other e-commerce attempts in this space haven’t worked. That’s true; yes, some failed, but learning from them reveals:

1. wrong timing
2. didn’t build distribution with network effects
3. didn’t start small & monopolize
4. picked the wrong early adopters: urban/real estate builders
5. didn't build for Bharat

Cital gets it; it is distribution-first, with networks at its core. We are starting small with concrete & the right target buyers: industrial construction companies.

And today is the best time with macro shifts in the last 5-6 years with Jio, GST, Gov digital push, & Covid bringing readiness for digitization & accelerated adoption of tech in all SMBs.

This is apparent from successes in other industries like Bijnis for factories, Bijak for agri, and many other digital-first vertical platforms doing well.

How does Cital work?

Cital is a free mobile app (launching soon) for construction material suppliers (manufacturers & retailers) to digitize quotations, orders, invoices, payment reminders, and more.

There are built-in network effects; a concrete supplier buys sand, aggregates, cement, and admixture. A supplier is also a buyer and helps onboard other suppliers. The flywheel effects kick in, helping the network grow.

Gradually, the Cital Store will be launched for concrete, beginning with Dahej, the 5th largest SEZ worldwide. It's the KGF of concrete. Starting as a lightly managed marketplace with quality assurance, delivery tracking, digital invoicing, demand discovery, & finance discovery.

Simultaneously, the SaaS is growing and onboarding suppliers, providing visibility into millions of b2b transactions across the country. That's our pot of gold.

Data brings better underwriting capabilities, helping assume a more full-stack role, launching private labels, and owning more parts of the supply chain: logistics, financing, & quality.

This balanced approach to growth/distribution & monetization/profitability helps build a great business with deep moats and large profit pools.

*Software* is indeed eating the world; everything we see around will be digitized, now is the time for construction, which makes Cital vital for construction.

We are also hiring our early team esp. product & engineering, if you are interested or know someone who would be, please email me deep@cital.co

You can read the unrolled version of this thread here: https://typefully.com/deep5187/Nx9KrVi