All large companies suffer similar procurement problems: long supplies and lengthy documentation. However, looking for suppliers is becoming a headache for medium-sized businesses now as well. They have to manually search for the goods and services they need, then contact all suppliers and compare offers. To facilitate this process, the Tomsk company Supl.biz in 2015 developed an electronic procurement platform.
The system works as follows: companies place orders for certain goods and services, and suppliers pick the order they want to contract to fulfill. “Butter 40% in 20 kg pieces” or “Palladium (70%) in 200 kg bars” are the sort of standard orders suppliers from 28 industries from printing and household goods to building materials and freight service browse through.
“Before starting this business, I did numerical simulation of water filtration at Tomsk State University and earned my Ph.D. in physics,” says Supl.biz founder Yevgeny Dyachenko. “When research came to a standstill, I decided to start a business and realized what a struggle it was for a small company to find suppliers. One needs to look through the offers, call each supplier, and compare their prices. Since I had a developer’s background, I had an idea: why not address this problem?”
In 2015, the founders of Supl.biz applied for a grant from the Foundation for Assistance to Small Innovative Enterprises (FASIE) under its Start program – a program to support small innovative projects in the early stages of development. They used the RUR 1 mio ($15,650) grant (at present, the FASIE Start grants are twice that amount) to hire developers and begin to implement the idea. Now Supl.biz employs more than 60 people.
The first order was placed by the platform creators themselves who ordered prints for their first business, manually built a small pool of suppliers and told them about the website and its capabilities. This triggered a chain reaction as companies began placing orders. The founders claim the geography of orders reached beyond the Tomsk Region within the first month.
Initially, printing services accounted for the major part of the orders placed via the website, but gradually, Supl.biz started attracting representatives of other industries as well. Currently, the most sought-after categories of supplies include rolled stock, construction materials and food.
The platform itself profits from suppliers’ subscription, with the minimum fee of RUR 21.7K ($340) for three months. Companies can start with a trial period in order to make sure that there are suitable orders placed at Supl.biz and they are real. Over four years, the platform assisted with over half a million orders for a total cost of RUR 123 bln (1.9 bln).
“At first we wanted to capitalize on advertising but abandoned this idea pretty soon,” Yevgeny Dyachenko says. “We could not promise our advertisers any specific stats or guarantee a certain number of clicks. So we sold RUR 10K ($156) worth of advertising and switched to the subscription model.”
The average number of orders completed by suppliers each month depends on the industry. For example, printing works need to close around 50 deals to make up for the subscription fee while companies with bigger contracts can just do with a couple of orders. Supl.biz developers say that once a timber logging company decided to do a trial period and within the first hour landed a huge order that provided it with work for the next 12 months. The company did not even need the subscription after that.
Although all requests are processed by moderators, the platform does not interfere with the deals and does not give any guarantees. The website’s security service conducts a background check of all its users across publicly available databases of tax authorities, commercial courts and so on. For example, if a company has unpaid debts or seized bank accounts, its contractors will see it. The developers also considered embedding a contract signing module into the platform but dropped the idea for now.
“It is more convenient for companies to interact directly,” Yevgeny Dyachenko explains. “It is a common practice in business relations. Everybody knows when to send invoices and acceptance statements. There is just no point for us in interfering because our clients are not interested.”
Since 2017, Supl.biz has been operating in Kazakhstan and almost a year ago, the company started selling franchise licenses in other CIS countries. The company has earned RUR 48 mio ($751K) over the past year. So far, the platform management invests almost everything into promotion and software development. Supl.biz creators say they get inspiration from Alibaba and other retail giants and plan to expand their business further.
By Natalya Bobryonok