How tech firms are helping build robust local supply chains amid Covid-19


April 19, 2020

Written By Anchita Ghosh

Now that many areas are out of bounds for big retailers for various reasons, is there an opportunity for local kiranas?

People queueing up outside a a kirana store

Tom Abraham, who runs a grocery retail outlet at HSR Layout in Bengaluru, thought of shutting it down as his shop attendants went back to their native place in Bihar after the lockdown was first announced. Plus he was facing problems in sourcing inventory.

Samir Wagadwala, who owns a kirana shop in the Mumbai suburbs of Andheri (East), didn’t find it viable to deliver just one or two orders at the doorstep of customers even as fewer people turned up at his store. Plus getting around the locality freely was a problem.

On her part, 77-year-old Mohana Kumari, who stays alone in an apartment in Noida’s Sector 50, which has been declared a Covid hotspot, has to regularly walk at least half a km to get her vegetables and milk from the nearest Mother Dairy booth.

Let us join the dots. What if there was a platform, which not only solved the inventory issue of the hyper-local businesses, but also provided the facility of delivering the products at the customers’ doorstep like the big e-commerce firms do? Now that many areas are out of bounds for big retailers for various reasons, is there an opportunity for local kiranas?

Well, the answer is yes. A host of business-to-business (B2B) e-commerce platforms have stepped forward to solve the problems of local kirana stores by supplying products and providing manpower, besides bridging the last mile in some cases by delivering products directly to the customer.

Indeed, after the first announcement of a nationwide lockdown on March 24 in the wake of Covid-19 outbreak, the kirana stores — that control 98 per cent of India’s $360-400 bn grocery retail market — were the ones to be hit the hardest. Their distributors couldn’t reach them, while their loyal customers stayed away. Within days, some shut shop. Some smart ones turned to B2B e-commerce platforms like Near.Store, Jumbotail, ShopX, Ninjacart and MaxWholesale. Though most of these B2B players have been around for some time, they have now become the lifeline for many hyper-local business owners.

So while Bengaluru-based Jumbotail solved the problems faced by Abraham by filling up his stock and providing staff support, Wagadwala’s concerns were addressed by Mumbai-based Near.Store, which has tied up many kirana shops with residential societies.

Wagadwala thanks his stars for being approached by Near.Store — a plug-and-play hyper-local tech platform. “I couldn’t go to Vashi, from where I procure food grains. Besides, there was a limit on the amount of grocery I could purchase. Near.Store helped me out with procurement to begin with. It is even taking bulk orders from the housing societies on my behalf and helping me with the delivery,” says Wagadwala.

Aashis Kumar, founder of Near.Store — which was launched just three months back — says the lockdown forced many mom-and-pop stores to down the shutters temporarily. “So we tied up with housing societies and brands. We aggregate orders from these societies online. Say a housing society with 100 people generates Rs 20,000-Rs 40,000 worth of orders in 12 hours. We give all the orders to a nearby kirana store,” he says. His firm also offers them the option of credit like the monthly credits given to customers by local shops.

Last week, MaxWholesale launched an app, Radius The Neighborhood, that streamlines communication between retailers and consumers and ensures contactless delivery. Samarth Agrawal, founder and CEO of MaxWholesale, says the idea is to empower the retailers with technology. “Every retailer serves 100-200 families in its neighbourhood. They don’t have the wherewithal to develop their own apps. So we decided to provide them with a system that will give their customers the experience of big business-to-consumer (B2C) e-commerce platforms.”

He adds his firm was working with some 13,000 kirana stores even before the lockdown. MaxWholesale’s Radius and Near.Store also help build catalogues based on the kinds of products stocked by these stores and the catchment area. This information is stored in the cloud.

Near.Store’s Kumar says the aim is to help small stores and chemists go online. “We have a database of over 200,000 products. We attach a small dongle to the stores’ billing system, which uploads everything they sell offline automatically. This helps list the products, besides creating websites for the stores.”

In 99 per cent of the cases, local shops leverage the supply chain facility offered by these platforms. Manohar Reddy, who runs one of Jumbotail’s J24 stores at Hadosiddapura in Bengaluru, says due to the lockdown, other vendors have stopped distribution. “But I got 100 per cent of my inventory via Jumbotail.”

This unbroken chain of supply has much to thank technology. Near.Store’s Kumar says often he comes to know when a store would run out of stock even before the owner does. ShopX CEO and co-founder Amit Sharma says a lot of brands have also been approaching these platforms to reach a store if their own supply chain is broken at some point.

ShopX and MaxWholesale are in direct touch with millers and mandis. “Models like these are emerging as an alternative to the traditional supply chain,” says Sharma, adding they are also working with the local APMC and police to find a solution to the problem of spoilage of fresh produce.

Most of these small retailers who have tied up with the B2B platforms say their businesses have grown by leaps and bounds since the lockdown was announced. Abraham, who has been working with Jumbotail for the last two years, says the value of his orders grew from Rs 20,000-Rs 30,000 per day to Rs 70,000-Rs 1 lakh per day now. Mohan Baby of C K Stores in Bengaluru says his store sales have grown to Rs 4-5 lakh per day in the last month.

That said, Devangshu Dutta, chief executive of management consultant Third Eyesight, says while retailers have been able to expand their businesses with logistics support form these platforms, they should be watchful the balance of power doesn’t shift to the digital partners.

“Over time, the customer relationship may shift to the platform. If you buy a product from a particular store or brand on the platform, Amazon for instance, you are still shopping on it. Over a period of time, if the platform sees a particular product is doing well, it may promote a directly-sourced competing product.”

Pinakiranjan Mishra, partner and leader in consumer products and retail, EY, cautions it is too early to rejoice, both for the platform and the kirana owner.

The supply chain issue is temporary, so tomorrow “if the fast-moving consumer goods companies offer the products without additional cost, why would the retailers take help of the B2B firms,” he asks.

The other side of the coin is the new store and stock management knowledge that the kirana store owner is acquiring. “Now the kiranas know what it would take to ensure 50-100 per cent growth,” says Mishra.

Source: business-standard