What to Sell to the Mid-Market?

1. Small companies can only sell new customers. Large ones – only cost savings. But what can be sold to medium-sized ones?
2. Very simple tools for saving on very simple expenses 😉
3. This topic will take off very strongly now because such things can already be done with the help of AI. And here is a good example of a platform that can be copied for this:

Project Essence

Catalog helps B2B companies process more orders, spending less time and effort from their employees.

The startup’s target audience consists of small companies that sell products to their dealers or wholesale end customers. In this case, by “small” companies, we mean those with annual turnovers ranging from 5 to 20 million dollars. Among the existing clients of the startup are manufacturers of interior parts, household goods, and childcare products.

These are businesses that can no longer efficiently communicate with an increased number of customers via email or process a growing number of orders manually using Excel. However, building a serious IT infrastructure to manage the enterprise and support business processes is not yet suitable for them in terms of expertise level and implementation and support costs.

Therefore, today’s Catalog has made a simpler solution, the implementation of which does not require significant costs and efforts but significantly reduces manual labor.

First, the Catalog platform needs to be connected to the company’s product catalog, price list, and customer list. These data can be simply uploaded from existing Excel files and documents, or integration can be created with existing corporate systems. As the startup says, for some customers, this took no more than 24 hours.

The first result is the appearance of an internet portal with a product catalog, prices, and the ability to accept orders through this portal. Obviously, processing an order received through the portal is much easier because it is transmitted to employees in a standard form with item numbers, quantities, and possible comments.

An additional advantage of such a portal is that it allows creating individual product selections for each customer, lists of new products, or old products put on sale. Links to created selections can be inserted into emails and mailings, making the process of informing customers simpler and more convenient and increasing the conversion into orders received in this way.

However, many customers will still send their orders via email. But for this, the platform has a special AI engine that can be connected to corporate email.

This engine will automatically pick out from the flow of incoming emails those resembling orders, match senders with the customer database, and email texts with the product catalog and price list. The AI engine’s output is a standard order form added to the platform’s order list with a link to the original email so that the automatically generated order can be checked and edited.

Thus, employees now need to handle only one queue of standard orders — which already saves time. While processing orders, employees confirm them — after which the confirmed orders are automatically entered into the corresponding corporate accounting systems via platform integration modules. This also saves time and prevents errors that may occur due to manual data entry.

One of the companies managed to reduce the average processing time for one order from 10 to 2 minutes using the Catalog platform. Moreover, all customers of this company who placed orders through the platform, rather than via email as before, preferred to use the new method of placing orders in the future.

The startup decided not to take commissions for each order processed by the platform — so that companies would have an incentive to transfer their entire order flow to the platform. Instead, they charge companies a subscription fee — although its amount probably still depends on the number of products uploaded to the platform and the number of orders processed through the platform.

Catalog originates from France, and they launched their platform 11 months ago, and they already have their first clients.

The startup has now raised its first 3 million euros in investments.

What’s Interesting

Small and medium-sized businesses account for 99% of all companies in Europe and the USA.

Among them, of course, there are many very small companies that still work manually using makeshift tools like Excel — but for them, it’s quite enough for now. Moreover, as cynical as it may sound, they are so small that you can’t make serious money from them, and they die too often ☹️

Therefore, among this target audience, much greater commercial interest is represented by not-so-small companies — but those that have not yet turned into large ones. And that’s exactly who today’s Catalog is targeting.

So, the first conclusion is that not all small businesses are the same. And if you’re making products for them, it’s better to aim for those who are already starting to make decent money. Because they already have new demands emerging, and they have the money to pay for meeting those demands.

The founders of Catalog generally believe that small and medium-sized businesses have very good potential for implementing digital solutions. Because many creators of such businesses are ambitious, they are still interested in growing and expanding their businesses. At the same time, they are still flexible and quick in decision-making, unlike large companies with ossified business processes and bureaucracy built around them.

Another thing is that businesses of different sizes need to sell different things.

Small businesses are willing to buy only what can bring them new customers. But often they can’t get new customers because they sell some junk — so helping them in this regard is unlikely to work 😉

Big businesses want to buy savings because every percentage of savings at their turnovers can translate into nice sums. But you won’t sell them new customers — because they have already combed through the entire market themselves.

Running around with a soapy back, trying to find new customers for companies selling all sorts of junk, is not an easy task. Moreover, over time, it will become harder and harder to do so because the number of potential customers is not infinite, and the cream will be skimmed off quite quickly.

Therefore, selling savings is more reliable. Moreover, after you implement your economical solution into the client’s business processes, they will be lazy and difficult to pull it out from there 😉

Taking into account these reasons, Catalog decided to sell its customers not new customers but the modernization of the sales business process — so that companies could save on the number of employees required to handle their sales volumes.

Where to Run

The general direction is to create platforms that help small and medium-sized businesses save on something.

Naturally, the target audience for such platforms are companies that have grown to a certain level to start thinking about saving. It won’t be possible to sell savings to very small companies.

Why is this topic relevant now? Because AI has emerged — through which business processes that were previously impossible to automate can now be automated.

So the task is formulated simply — we need to find normal-level business processes in small and medium-sized businesses that can be optimized by implementing AI. After that, create a platform to automate these business processes.

What kind of companies in which areas have business processes that currently involve a lot of manual work? What are companies not able to do now, although they could and would like to — because it requires too much time from employees?

About the Company

Catalog

Website: startcatalog.com

Last round: €3M, 04.03.2024

Total investments: €3M, rounds: 1