JULY 7, 2020 THE HINDU: Meenakshi Senthamizh is a third-generation owner of New Mahalakshmi Stores in Dasanaickenpatti, a village in Salem, Tamil Nadu. When her grandfather started the shop about 60 years ago, she says, it was one of the district’s biggest shops. “Supermarkets didn’t exist back then. So, even the people from the town used to come to our village for groceries.”
The store — thanks to its reputation and goodwill earned over half a century — does steady business. But there was a blip from March to May because of the pandemic-induced lockdown. Many regular customers could not access the store. And, most transactions happened in person. Credit accounts were stored using pens and papers. The store until then had not deviated much from the ways of doing business since Meenakshi’s grandfather’s time.
“SnapBizz, too, is making its app available in more languages. It launched with English, Hindi and Tamil. It has added Telugu, Kannada and Bengali now.”
Last month, however, Meenakshi saw an article in a local daily about duNow, an app that digitises billing, credit management and customer communication among other operations of a local store. “Business has been better ever since,” says Meenakshi. “We get orders from the town via the app. And, in the village, we are asking our regular customers to install it and teaching them how to use it.”
The growth of retail-tech
Launched in Chennai in 2019, duNow is among the latest e-commerce startups that focus on kirana stores. Not too long ago, shopkeepers saw an imminent danger of being swallowed by the e-commerce wave that brought new players such as Flipkart and Amazon. Some even took to the streets to protest what they thought was a threatening, new-fangled model.
Abhishek Chauhan, an associate partner at RedSeer Consulting reckons the ‘kiranas versus e-commerce’ battle barely exists. “E-commerce companies want to co-exist with kiranas, not bypass them,” he says. This is because India’s nearly $500 billion grocery market is mostly dominated by the 13 million small shops (according to RedSeer) — the share of online grocers, admittedly in their infancy, is less than 0.5%.
“There are millions of small businesses operating in India; our potential for growth is enormous,” says Srivathsan Krishnamurthy, duNow’s founder. He is targeting to get 20,000 of them on board in the next two years. It is not an unlikely goal; he has already managed to get 500 retailers across India. And, there are other retail-tech companies that have managed to get thousands of customers within a few years.
Khatabook, a free book-keeping app launched in 2018, has over 10 million downloads on the Google Play Store. The Bengaluru-based startup serves over 80,000 customers across the country.
SnapBizz, another Bengaluru-based retail-tech company launched in 2013, provides hardware and software support to over 10,000 shops. According to founder Prem Kumar, it has seen a 40-50% increase in its consumer base in the last two years.
The emergence of these e-commerce entities is perhaps due to a fast increasing demand for digitisation. According to RedSeer, less than 3.5 million of 13 million kirana stores are using “some sort of a tech platform”. And, the Internet’s rapid penetration even in low-income states will encourage the rest to adopt digital tools that will increase their ease of doing business.
Abhishek says this pandemic, despite largely wreaking havoc in many spheres of business, has increased the pace of digitisation among kiranas.
The COVID-19 effect
There has been a significant rise among kiranas in adopting digital tools. According to a RedSeer survey conducted this May, their willingness to work with retail tech providers increased from 7% (pre-COVID days) to about 60% now. There is also a surge (45% to 60%) in mobile-based transactions at points of sale among kiranas that have been using digital payment methods.
SnapBizz founder Prem says his company acquired 1,000 new customers in May and June. “We are expecting to add 10,000 more in the next three months. [If that happens], we will be doubling the number of customers we gathered over the last few years.”
Meanwhile, KhataBook CEO Ravish Naresh and duNow’s Srivathsan also observe this post-pandemic rush among shop owners to digitise their businesses.
“The last three months, we have been observing a behavioural change among customers as well as kirana shop owners,” says Srivathsan, “People don’t want or cannot step out for groceries. So, these shops don’t get enough footfall. This has forced previously reluctant owners to adapt technology now. We had a 30% growth during the lockdown.”
Online retailers’ arrival created two factions: tech companies like Amazon and Flipkart that fell under e-commerce and the neighbourhood mom-and-pop stores that continued traditional commerce. That line of division is blurring. E-commerce now encompasses our neighbourhood grocery stores too.
Meanwhile, even online retailers are embracing kiranas. Amazon India, in April, launched the ‘Local Shop on Amazon’ programme that added over 5,000 local shops and retailers from more than 100 cities. “We will use our technology, training and enablement capabilities to power local shops across India to sell online,” it said.
The launch of Reliance-owned JioMart is likely to be a game-changer, according to Abhishek. Facebook, which owns WhatsApp, signed a $5.7 billion deal with Jio in April. This will allow JioMart to reach millions of local vendors via WhatsApp, which has over 400 million Indian subscribers. “The launch of JioMart has certainly got kiranas to the centre-stage. We anticipate them reaching about 1,00,000 stores by the end of this year,” says Abhishek. “Kiranas are a critical part of the JioMart value chain as it would leverage them to serve consumers at a hyper-local level.”
The entry of JioMart, however, will not wipe out the competition, he adds. “On the whole, their entry will benefit other players too, as kiranas in Tier-2 areas will be more aware of the benefits of eB2B and will be open to try more digital platforms.”
Soon, millions of shops in India will receive orders on apps, maintain a digital ledger and send special offers via push notifications like New Mahalakshmi Store in Salem.