Kaushal Dugar is the founder and CEO of Teabox, an e-commerce company that is disrupting a $30 billion tea industry with its innovations in technology and the supply chain. Teabox has also been rated as one of the hottest start-ups in the Food+ tech category. Kaushal is a featured entrepreneur in leading publications such as New York Times, CNN, Forbes and The Economic Times, among others.More From The Author >>
The Teabox Story: Tea Estate to becoming a Connoisseur
The tea industry is steeped in tradition; literally, the ways of doing things have not changed much in the last 150 years. Most of the decision makers don't believe that tea is a product that can be sold online.
People often assume that living in Darjeeling makes one a tea connoisseur. This can’t be farther from the truth. Yes, we do look forward to the year’s first flush, probably have a favorite estate who’s teas can be found in our kitchens, and perhaps even be picky about how a proper Darjeeling is made. But it’s more likely that our daily cup of choice is chai made with CTC tea, blended with a home brand of spices, milky and sweet. And that when it comes to tasting a Darjeeling, we can be as ignorant as the next person.
Developing a palate to recognize the finesse of the Darjeeling teas doesn’t happen overnight. Growing up in a Marwari family with a father whose business was in tea machinery, I went to the estates often enough. And that didn’t make me an expert. Sure, it gave me an insight into the workings of the gardens, and I heard and saw a lot. But it was only as an adult, when I chose to work in the tea industry, that I actually turned to look closely at the Darjeeling tea.
The Indian tea industry is the world's second largest producer and the fourth largest exporter of tea. And despite having been around for such a long time, the industry continues to follow the practices set up in the times of the Raj (British Raj). The entire value chain consists of scores of middle men, including brokers, importers, wholesalers, distributors, etc. And due to the large value chain, it takes an inordinately large amount of time for teas, once produced to reach the end consumer. It takes anywhere between 3-6 months for teas, once produced to hit the shelves of retail stores. By then, they would have lost their aroma, flavor and taste and the cost has increased x times. You see, it is the freshness of the tea that really determines the quality of the tea.
We at Teabox are enabling tea drinkers around the world to experience the taste and quality of fresh teas. This is fundamental to our approach and everything we do revolves around this. We work with over 150 tea estates across India & Nepal to source fresh teas, within hours after production. Our tea tasters who have over 100 years of collective experience in tea tasting help us select the finest varieties. And after an intensive quality checking and cleaning process, we vacuum package them and ship them to customers across the world within a week's’ time. This is our business model, but what we are doing is much more than that.
Mindset and location were the major challenges which we faced apart from other startup challenges such as lack of cash, being a single founder, etc. The tea industry is steeped in tradition; literally, the ways of doing things have not changed much in the last 150 years. Most of the decision makers don't believe that tea is a product that can be sold online. Getting producers to even give us access to some of the best teas was a challenge in the initial days. The second aspect was the location - starting up in Siliguri which is best known for being 15 kms away from Naxalbari (the birthplace of Naxalism in India which is deemed the biggest security threat by the Indian government). And in a place like Siliguri, there is hardly any talent and a crippling infrastructure. In spite of that, we were able to run a global eCommerce company and went on to raise successful funds from major venture capitalists (the first in the Indian tea industry).
The initial investment was made by me. Later, Teabox received seed funding by Accel Partners and Horizen Ventures (Singapore-based early stage fund) participating in this investment round of $1million. Prashant Prakash, from Accel joined the board as an advisor. The company later raised $6 million in Series A round of funding led by JAFCO Asia, with participation from Accel Partners, Keystone Group LP and Dragoneer Investment Group. Robert M. Bass, President of Keystone, who is a customer turned investor in Teabox. We also raised an undisclosed funding from Mr. Ratan Tata. In 2016, another customer Mr. Cameron Jones, invested in Teabox.
Last year, when we moved into our new office, one of the first things that came up on the wall was a large map of the world. Little pins starting going up on it to mark the countries we were shipping to. And we set ourselves the 100-country milestone.
The United States, India, the UK, Russia, Australia, Singapore, Hong Kong… the usual suspects were all there. Neighbors Pakistan, Bangladesh, Sri Lanka were quickly added. The old Soviet countries, known for their love of smoky black teas, were also added. The Middle East too became part of the Teabox network of countries, no surprise given that Dubai is a major center for tea.
It became a ritual of sorts – every time we added a new country, we stopped to celebrate by marking it on the map. And sometimes, it was truly deserving of a celebration. Like the time we got an email from Peter, a regular customer from the UK. He was writing to say he’d now moved to Iraq and wanted to order his usual Assam and Darjeeling blacks. Could we ship to Kalar in the Kurdistan province, he asked. There was so much political unrest in Iraq and it looked like a fairly complicated undertaking. First, we said we’d leave nothing to chance and got the requisite government clearances and paperwork before shipping the order. Peter had probably not expected his tea to arrive – or arrive quickly and without hassle – and when it did, he was thrilled. And so were we.
Some brought a lesson in Geography. Like Kiribati. The pin went up on a dot in the middle of the Pacific. How would we ship to Kiribati, we wondered. Fedex initially refused to take one small package all the way from India to Kiribati but we managed to convince them otherwise.
The challenge is not merely in shipping to a far-flung country, but in getting it done in the shortest possible time. Quite like Santa and his logistical nightmare of taking a toy to kids all over the world in one night, if you ask me. The Teabox brand promises the world’s freshest tea. We get our teas from gardens within 72 hours of production, often sooner. So the logistics of maintaining this freshness is critical for us. Shipping to Russia by Airmail takes 25-30 days. Today, our teas reach Moscow and St Petersburg in six.
At the heart of this logistical efficiency is a nimble and proactive team that is regularly working with shipping partners and customs departments to remove roadblocks at every step. So, when Spain and Italy began returning tea and coffee because they were conduits for drugs, we worked on getting our clearances in order. When orders come from small island countries like Malta, Moldova, or Micronesia we attach a self-use declaration form so that our customers are spared of extra duty fees. And so, we’ve learnt to make this experience pain free for the customer, no matter where in the world they live.
The pins on the map have been fast adding up. Europe is looking very crowded with a pin on nearly every country there, both the western and eastern sides. Asia too has a mass of pins. South America was a pleasant addition and we’ve shipped to Columbia (where you have to hire a broker to collect your parcel from Customs), Argentina, Brazil, Chile and Peru there. Africa too has a few pins, as do a handful of islands in the Indian Ocean.
Recently, we hit our first milestone – 100 countries. As it turns out, we’d been too busy to count, but at the end of last year, when we decided to stop and check, there were 109 pins on the map!
There seems to be a renewed interest in the tea category. But having said that, most of the new tea brands seem to be just putting a new spin on the last mile delivery. When we started up, we decided to take the difficult road of turning things on its head – by setting up our presence at the source, by creating a genuine set of benefits for our consumers, by choosing to use technology to reach more consumers as opposed to a traditional brick and mortar set up. This meant owning and operating the entire value chain ground-up, starting from farm to cup. This approach, we believe gives us the advantage of greater control over consumer experience, and hence will be very beneficial in the long run. On a tangible level, we at Teabox map our success by the pace of our growth, which we have achieved. However, I think, Teabox will be truly successful after it would have established itself as the only premium brand of tea from India that is recognized globally.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house
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