In an industry often dominated by complex supply chains and numerous intermediaries, the establishment of tools like the Direct Trade Foundation by Rgand can be a pivotal shift towards efficiency and transparency.
With a visionary approach to revolutionising the food service industry, the Foundation addresses the critical challenges faced by producers, particularly those from new technology sectors and startups. These producers, brimming with potential yet hindered by a lack of experience, funding, and market access, now have a transformative ally.
Rovshan Rasulov, CEO and founder of Rgand talked to The Future in an exclusive interview. Rasulov explained how the Direct Trade Foundation aims to dismantle the traditional barriers to market entry by providing an integrated suite of support, including strategic mentorship, cutting-edge technology, and robust logistics infrastructure.
This can be possible by equipping producers with these essential tools, and the Foundation not only enhances their ability to compete but also promotes a more sustainable and cost-effective supply chain. This initiative is poised to create a paradigm shift, ensuring that both producers and the restaurant-hotel businesses benefit from reduced costs, increased profitability, and a direct line of communication.
At the heart of this transformation is the Rgand Online B2B Marketplace, featuring innovative solutions like the Sample Box Marathon (SBM) and Rgand Prime Fulfilment (RPF). These technologies automate product promotion and streamline logistics, enabling producers to reach a vast network of potential buyers efficiently. By facilitating direct trade, the Foundation helps producers gain valuable market insights and customer feedback, ultimately fostering a more dynamic and responsive food service sector. In December 2023, the Sample Box Marathon (SBM) project won the prestigious Forbes Cyprus Innovation Awards in the “Innovation in Sales Technology” category.
The Foundation’s commitment to sustainability further distinguishes it from other initiatives. Producers are encouraged to adopt eco-friendly practices, from sustainable sourcing to reducing food waste and utilising biodegradable packaging. This focus not only aligns with global environmental goals but also enhances the appeal of producers’ offerings in an increasingly conscientious marketplace.
With the Foundation’s support, producers can navigate the complexities of direct sales, eliminate costly intermediaries, and establish a strong presence in the competitive U.S. market. As Rgand scales its operations to include a diverse array of producers from the United States, Canada, Latin America, Europe, Ukraine, and Turkey, it underscores a commitment to fostering innovation and excellence in the global food service industry.
The success stories emerging from this initiative, including the remarkable journey of a Turkish confectionery producer breaking into the U.S. market, exemplify the transformative potential of the Direct Trade Foundation. As the Foundation continues to expand its reach, it promises to redefine industry standards, paving the way for a more efficient, transparent, and sustainable food service ecosystem.
The Genesis
What inspired you to establish the Direct Trade Foundation, and what challenges did you observe in the Foodservice Industry that prompted the creation of this Foundation?
Many producers have great potential for direct sales and competition, but they often lack the experience, funding, and mostly the tools to enter the market. This is especially true for new technology producers and startups that need easy access and visibility in the restaurant industry marketplace.
We created the Direct Trade Foundation to provide producers with our experience, technology, tools and funding to help them achieve their direct sales goals without intermediaries. The skills and technology they gain from our foundation will allow them to promote their brand, increase their brand value, and provide the restaurant industry with new, healthy products at a better price than the middlemen. As a result, both producers and the restaurant industry win.
How does the Direct Trade Foundation facilitate direct trade between producers and restaurant-hotel businesses?
I believe that every result is based on understanding the issue, knowledge and action. Our team of direct sales experts educates producers on important criteria and processes such as selling directly without intermediaries, preparing for market entry, increasing visibility and recognition, and selling effectively.
We then move into practical steps, utilizing the necessary technology and tools we provide, so that producers can go through the entire cycle of the direct selling process and achieve concrete results. Producers receive important tools such as automated sales promotion, logistics solutions, financing and more.
To help producers achieve sales with increased profits, we provide unique solutions and technologies from Rgand Online B2B Marketplace. These include the fully automated Sample Box Marathon (SBM) product promotion platform and Rgand Prime Fulfilment (RPF) logistics infrastructure.
We created the Direct Trade Foundation to provide producers with our experience, technology, tools, and funding to help them achieve their direct sales goals without intermediaries.
Could you explain the role of automated product promotion technology and how it benefits both producers and buyers?
In direct selling, several important criteria must be met to achieve sales, and one of the key criteria is product promotion. The most effective promotion is when your product has already been tested by customers and received feedback. We call this process the “trial criterion.” If you can provide samples in sufficient quantities to customers, you will achieve sales success. However, this process can require significant finances, resources, and time from producers.
To minimize cost and effort, we offer a unique fully automated product promotion technology called Sample Box Marathon (SBM), which is part of the Rgand Marketplace functionality. This Sample Box Marathon (SBM) fulfills the all-important “sample criterion.”
Using this technology, producers select some customers (restaurants, hotels, etc.) from the Rgand Marketplace list and automatically send them product samples. For example, 1,000 restaurants receive samples with the option to leave feedback. This allows restaurants to test the product and producers to improve the product based on the feedback they receive.
As a result, the producers get new customers from among those who have tested the product. This technology allows for effective entry into a new market, expanding the list of direct buyers and outlets. The restaurant industry, in turn, gets the opportunity to test previously unfamiliar products and brands, making informed purchases directly at a better price.
The most effective promotion is when your product has already been tested by customers and received feedback. We call this process the ‘trial criterion’.
An industry transforming
How do you envision the Direct Trade Foundation transforming the Foodservice Industry?
The Direct Trade Foundation primarily helps producers by equipping them with the strategies, technologies and tools to successfully trade directly with the restaurant industry. This will lead to supply chain transformation with minimal intermediaries. Transforming the supply chain into an efficient, cost-effective and transparent supply chain can be accomplished through robust logistics, networking and technology infrastructures. We believe that through an integrated approach, our fund will make a meaningful contribution to the catering industry’s supply chain, making it sustainable, stable and diversified.
How does the elimination of intermediaries impact the profitability of producers and the cost for restaurant-hotel businesses?
Let’s note that eliminating middlemen significantly increases producers’ profitability and reduces restaurant and hospitality business costs by optimizing the supply chain. For producers, it eliminates distributor and wholesaler commissions, allowing them to retain a larger share of revenue, and increase brand value and profits. Direct access to the restaurant industry allows producers to respond faster to demands and trends, build closer relationships with customers and customize products.
For restaurants and hotels, buying directly from producers reduces purchasing costs by avoiding middleman markups. This results in significant savings that can be reinvested or passed on to customers in the form of lower prices. Direct trade also provides access to a wider range of quality and innovative products, improving menu choices and appeal to customers. All of this improves the efficiency and sustainability of the food service industry.
What specific benefits can producers expect from participating in this program, and what sets the Direct Trade Foundation apart from other similar initiatives in the market?
The Direct Trade Fund is designed to help producers learn how to sell directly and eliminate inefficient supply chains in the food service industry. This is not a profit-making business model; the goal of the fund is to teach producers how to sell their products directly. The most important thing about this program is the results: in 90 days, participants go through the entire cycle and get concrete sales. This is the main difference in our foundation.
Here’s how it works:
- Training and Mentorship: the foundation provides strategic mentorship and direct sales training to help producers understand how to effectively sell their products.
- Market Access: Participants gain access to the Rgand Marketplace, giving them direct access to buyers.
- Tools and Technology: The Foundation provides producers with important tools such as an order fulfillment center, marketplace, and automated promotion technologies.
- Support and Logistics: A robust logistics infrastructure helps producers efficiently deliver their products to end consumers.
These end-to-end solutions enable producers to reach new markets and generate real sales in the shortest possible time in the largest market – the U.S. restaurant industry. As a result, they can increase their brand value and expand their customer base. This initiative is helping to create a more sustainable and efficient food service sector that benefits both producers and customers by increasing efficiency and reducing costs.
Eliminating middlemen significantly increases producers’ profitability and reduces restaurant and hospitality business costs by optimizing the supply chain.
How does the program support producers in digitizing and automating their marketing, sales, and logistics processes?
The foundation provides participants with access to all the necessary tools for digital marketing, sales and logistics and finances these operations. Through access to the Rgand Marketplace infrastructure, participants can benefit from online catalogues, logistics services, automated tools for product promotion and order fulfillment, and digital order management. This enables producers to significantly optimize production costs and improve all business operations.
Can you share some insights on the diversity of the producers selected in terms of their countries and product categories?
We focus on producers and startups creating innovative products that can saturate the market. Many promising producers are emerging in the US and Europe who need access to the market. From them, we will select the most worthy ones annually according to certain criteria of the Fund. We also consider large producers from Turkey and Ukraine that can successfully transform the U.S. restaurant industry by offering competitive prices without intermediaries and meeting the necessary criteria.
On the Rgand Marketplace platform, these producers will be able to supply a wide range of products including food and beverages, home textiles, glassware, glassware, industrial kitchen products, kitchen appliances and equipment. This wide range of products ensures that shoppers have access to everything they need from one efficient source.
Innovative and sustainable
Are there any specific initiatives or guidelines the Foundation follows to promote sustainable trade?
The Direct Trade Foundation seeks to promote sustainable trade through a range of initiatives and guidelines aimed at minimizing environmental impact and supporting green practices. One key aspect of our program is that producers who join must meet certain sustainability criteria by the end of their participation. We prioritize working with producers with the lowest CO2 emissions, ensuring that our supply chain is environmentally responsible.
We encourage practices such as sustainable sourcing, which involves choosing ingredients and materials that have the lowest environmental impact. Reducing food waste is another important component; we support initiatives to minimize waste throughout the supply chain. Sustainable packaging is also a priority, with a focus on biodegradable, recyclable or compostable materials to reduce plastic waste and pollution.
How does the Rgand Direct-to-Buyer Marketplace enhance the buying experience for restaurant-hotel businesses?
The Rgand Direct-to-Buyer Marketplace significantly improves purchasing efficiency for the restaurant and hospitality industry by streamlining the procurement process. Through this platform, restaurants and hotels can browse, compare and purchase products directly from producers, benefiting from competitive pricing, detailed product information and one-click purchasing. This direct access eliminates middlemen, reducing costs and increasing efficiency.
The platform also includes a fully automated product promotion solution that allows restaurants and hotels to receive and evaluate product samples before making large purchases. This allows customers to verify quality and features, make informed decisions based on detailed feedback, and discover unique, high-quality products that cannot be found through traditional purchasing channels. The ability to sample products reduces the risk of costly buying mistakes, ensuring that only the best products are chosen. By integrating these features, Rgand Marketplace enables businesses to optimize their purchasing strategy and improve operational efficiency.
What innovations does the Rgand Prime Fulfilment service bring to the table in terms of storage and delivery?
Rgand Prime Fulfilment offers state-of-the-art storage and delivery services including integrated warehouses and same-day order fulfillment. The fulfillment center receives, picks, packs and delivers orders to the customer’s doorstep. This service provides the necessary logistics infrastructure for direct sales, especially when combined with the Sample Box marathon, which allows restaurants and hotels to sample products before major purchases. The sampling process is important for sales in the food service industry.
Rgand Prime Fulfilment‘s logistics network is similar to the distribution network that made Coca-Cola successful. Normally this distribution level requires a large investment, but with Rgand, producers have access to a strong infrastructure at minimal cost. Rgand eliminates dependence on traditional distributors by offering a comprehensive infrastructure, significantly reducing warehousing, logistics and distribution costs. Producers pay only for the products sold, freeing them from high trade and logistics costs.
This solution gives producers a major advantage in their sales, as competing without delivering goods efficiently is impossible.
Becoming better sellers
And now something for you. How will your 25 years of expertise in the industry be integrated into the coaching and support provided to the program participants?
I went from the smallest wholesaler to the largest wholesaler in the region in 30 years. I have worked with many producers and distributors, buying from them and selling up the chain to other, smaller wholesalers. I’ve noticed that there can be as many as 20 middlemen between the producer and the final point of purchase, such as restaurants and hotels, ranging from large wholesalers and distributors to end buyers. Each of them, including me, added their markups.
That’s when I had an idea: how a producer could sell directly to restaurants by reducing or eliminating the number of middlemen. That idea turned into Rgand Marketplace. On my journey from wholesaler to creating a marketplace without middlemen, I gained valuable knowledge and experience. This knowledge and experience I will pass on and train with my team to all the producers participating in our foundation.
These skills will help quickly transform producers to become better sellers of their goods. The tools and technology we will provide to our participants will transform producers into “sales producers”.
We created the Direct Trade Foundation to provide producers with our expertise, technology, tools and funding for their go-to-market operation, helping them achieve their direct sales goals without intermediaries. This will allow them to promote their brand, increase their brand value, and provide restaurants with healthy new products at a better price than middlemen. In the end, both producers and the restaurant industry benefit.
The ability to work directly with customers and build relationships has resulted in a sustainable and profitable business model.
Are there any specific success stories or testimonials from early participants that you can share?
I can give you many examples. One was a small Turkish confectionery producer that had never sold in the US market due to the high costs of market entry and marketing. They decided to participate in the first automated product promotion called Sample Box Marathon, hosted by Rgand Marketplace.
With minimal cost, they sent samples to 1,000 hotels and restaurants in the US. This allowed them to customize their offerings to market needs and make the products more competitive.
This strategy increased product recognition, built trust and created a positive reputation. As a result, nearly 100 restaurants and hotels have ordered their products, many of which have become repeat customers. The business has grown significantly in the US, increasing profits. The ability to work directly with customers and build relationships has resulted in a sustainable and profitable business model.
This success story highlights the transformative impact Rgand Solutions has had on small producers looking to optimize operations and expand their market presence.
However, I want to point out that not only small producers, but several large Fortune 500 producers have signed up for the Rgand Marketplace to further expand direct sales, even though they already have an established infrastructure and are represented on many platforms and shelves of virtually all wholesalers and retailers.
Looking forward
How do you plan to scale the Foundation’s operations to accommodate more producers and buyers in the future?
Each year we will accept 50 new producers into the program. Our main goal is to support more companies to switch to direct sales and eliminate intermediaries, thereby optimizing the food supply chain.
Our main focus will be on identifying and contacting producers of innovative technologies, as well as providing them with sales support and practical measures to effectively market their products. Through this integrated approach, the fund will not only help producers but also ensure that restaurants have access to excellent products without intermediaries, contributing to the development of a more resilient, sustainable and diverse food service sector.
Our goal is to support more companies to switch to direct sales and eliminate intermediaries, thereby optimizing the food supply chain.
Which countries are a priority for you? In the conversation you mentioned that you plan to help Ukraine, how, and in what way?
Selection is based on the potential contribution of new producers in terms of technology and innovation, rather than being country-specific. Our goal is to identify and support innovative tech-based producers, startups, and existing producers, enabling them to gain direct access to the US market. These producers will be equipped with the necessary knowledge, technological tools, and funding to succeed and increase profits. We will begin with producers from the United States, Canada, Latin American countries, Europe, Ukraine, and Turkey.
