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How This Saas Based Startup Is Connecting Kirana Stores With Brands Via Enterprise Solutions

How This Saas Based Startup Is Connecting Kirana Stores With Brands Via Enterprise Solutions

[Note: This article is part of The Junction Series. We will be covering the EnterpriseTech sector in detail at The Junction 2017 in Jaipur. Learn more about The Junction here!]

Mom and pop, local kirana stores are the first thing to be found on any Indian street, along with a chemist for the most part. The smell of wheat, rice, and pulses mixed together, the place one nips into to buy a packet of Oreos or break a 500 buck note by buying the cheapest bar of chocolate, calling the shop owner Uncle and Aunty – every 80s-90s kid has grown up with these experiences.

And the strangest, most fascinating thing about these stores is the way the inventory is stacked – Maggi noodles packets jostling with Kissan fruit jam and chips packets. The different varieties of bread laid out on a neat table and the different bottles behind the counter that could contain anything – from dry fruits to spices to condiments.

And yet, unerringly when the customer walks into the store to ask for half a kilo of jaggery, that is exactly what he’ll get, within two minutes or less. Even if the small space is crowded early in the mornings or late in the evenings, the store persons can still somehow locate every single item required by every single customer, every single time.

The way they keep it all straight in their head is a marvel.

But, what about stocking this inventory? Many a time, when a store owner is juggling to maintain books, recalcitrant customers, and persistent vendors who keep coming back for re-orders, they can keep track of the fast-moving stock, the staples that everyone buys. But what about ALL of the inventory that is kept in a single, small local grocery story?

“Did you know that 80% of all items in the grocery category is routed through mom and pop stores, About 10 Mn of them?” asks Sachin Chhabra, co-founder of enterprise retail solutions platform for local grocery stores, Peel-Works – a Mumbai-based company that is working to connect local grocery stores with brands via technology that can manage sales force beyond distributors through SaaS and big data analytics.

The Problem: Stock Versus Inventory

He then goes on to explain the problem of stock versus inventory that is happening pan India in almost all of these stores and ends with, “This is the reason why most of these businesses are inefficient in their processes. And, if you think about it, this inefficiency gets passed up and down the value chain – right from where the wholesaler sends the stock to the retailer who sends it to the local store owner who sells it to the customer and the whole process is repeated without anyone understanding the sheer wastage taking place with regards to not-so-fast moving stock. Or indeed ALL the stock.”

sachin-chabbra

This problem is glocal, to say the least, and with approximately 10 Mn small business and stores up for grabs, Peel-Works has its hands full trying to automate the supply-chain management processes of these businesses.

“The Grocery Market Is Highly Fragmented And Automation Free”

Expanding further on the existing market, Sachin says, “The grocery market in India is one of the oldest enterprise sectors, supported largely by small businesses. But this market is definitely fragmented and, for the most part, automation. By fragmented, I mean, there is no one universal system, no one-size-fits-all to the way things are done. There is no clear way to know what works in one shop, one area, one city could have a chance of working in another. Business just goes on the way it always has.”

And then there is automation. Rather, the lack of it.

“None of the local stores are online in any capacity – not with PoS systems, they don’t have options to pay by credit card/debit card,” says Sachin. “And not with inventory, the bread-and-butter (literally) of the business,” he adds.

Peel-Works aims to bridge this gap between retailers, their inventories and tech in order to create efficient business processes that will eventually lead to profits for their clients. This idea, though not entirely novel, could only have been birthed in Digital India which has embraced tech adoption wholeheartedly.

“The idea is to turn the business cost-efficient at the grassroots level. And doing this with one or two businesses won’t suffice, it has to happen on a large scale among all grocery retailers all over,” says Sachin enthusiastically.

He brings up Grofers and BigBasket, who are, actually solving two problems facing the average Indian grocery consumer.

“With Grofers, the problem of convenience-buying gets solved,” he says. “You’re feeling lazy on a Sunday morning. You find shopping for groceries a chore and voila! There is an app that can help you to click-n-buy anything you want within minutes. But bear in mind that Grofers is just an aggregator of local stores and not a direct retailer itself,” he adds.

BigBasket, on the other hand, is a retailer in and of itself. It carries inventory in its dark stores and warehouses from where the produce and other items are shipped off to the customers and delivered on time. BigBasket solves the problem of convenience and takes it a step further by eliminating the middleman – the retailer by becoming the retailer themselves.

While these two businesses, among many, have come up with a tech-first solution and thus deploying it makes it easy, the notion of using tech from the grassroots level is something that still needs to be explained, over and over again to the businesses.

“Every store typically stacks about 4K-5K items of inventory. The first thing we do is digitise this entirely,” says Sachin. “The next thing is to sort the inventory into different categories – fast-moving, staple, every day requirement etc. Then, based on the analysis we can help the business figure out why certain items are moving fast, others aren’t, where they are overstocking and where they need to be more vigilant.”

He adds, “In essence, we automate the process and analyse it in real-time to give the business an overall view of what is happening in terms of stock at all times, which helps them run their day-to-day operations more efficiently.”

On-boarding Kirana Stores One Store At A Time

Peel-Works was founded in September 2010 in the cities of Delhi and Jaipur by Sachin and Nidhi Ramachandran who also runs 1SF – the first product launched by the startup. Sunil Natraj handles product and engineering while Ashu is in charge of keeping track of the stores coming onto the platform.

peel-works_founders

1SF is the inventory-taker product that helps to organise stocks, analyse it according to usage/movement and then makes recommendations based on the analysis via a simple system – Into the Store.

The 100-odd team is based out of Mumbai, while the product team sits in Pune. One of the basic functions and, indeed, a challenge that the startup faces is to explain the value proposition of the product to stores and help them enroll on the Peel-Works platform – Ashu and Nidhi work together on this front to ensure the platform is running smoothly and that it is ready to scale.

So far, it claims to have on-boarded 2,000+ stores online to the 1SF system from Delhi, Mumbai, Pune, Chennai, Kolkata, Jaipur, Bengaluru, and Hyderabad. Its most recent launch was in Mumbai in August 2016.

“You’d think people would immediately get the intrinsic value of what we are doing by automating a very large part of the value-chain in the largest market in India,” says Sachin. “But we have met with a lot of resistance, even though we are a B2B business.”

Monetisation, Funding, Competition

Once the onboarding has been completed on the store level, it moves to the next platform – Into The Basket. As the term suggests, the thinking behind this move is to increase sale of the product and the platform itself so that it appears in more and more baskets, thereby achieving scale.

“It is all about marketing at this level,” says Sachin. “We have to do a lot of activities to penetrate the market and create a kind of disruption in order to scale at the pace which we see ourselves going.”

The startup does not charge the participants at the In The Store level, i.e. the kirana stores who will use the actual technology. Instead, once the automation moves up the value chain, it has customers from “Fortune 500 companies” which utilise the platform to move their inventory into more and more stores, and thus, increase their profit margins too.

This works on a SaaS model and is a subscription service where the customers are charged on a per player/per month basis.

The company boasts of clients such as HUL, Airtel, Tata Sky, Reckitt Benckiser, Bunger and Glaxo Smith Kline – across the spectrum of FMCG, pharma, and entertainment.

It also raised Seed funding from IAN of about $1 Mn according to Sachin and IDG Ventures and Inventus Capital have invested $2 Mn in the company. “We are not hurting for cash at the moment, but we are always looking to build our presence in the market in order to get “In The Basket” up and running and for that the money comes in handy.”

Peel-Works counts Stockin, ShopKirana and others of its ilk as competitors. And Sachin is interested in making the market more digital than in the way other businesses are operating in the space. He says, “We compete with players in the value chain, with non-digital/services approach. If the approach of these multiple players, interacting with the grocery channel, got a little more digital than it is today, a massive opportunity presents itself to us.”

When asked about growth metrics of the company, he is cagey about revealing actual numbers as the company is too young to start with. “We have onboarded close to 2,000 stores since starting up. There is still a long, long way to go. But I will say this,” he shares. “Based on what I hear from the VCs, our current growth percent is the top quartile on growth, in the segment we operate in.”

As an answer it is cryptic, but considering the company’s future plans of “looking to acquire the top segment on mom and pop stores across the top 20 cities in India, as it’s the discovery of digitisation that makes us formidable and a force to reckon with” – it’s fair to think that Peel-Works’ has its work cut out to get to the top.

Editor’s Note

Tech is changing the way industries and verticals talk to each other – conduct business as well as easing up in order to create more efficient, cost-saving processes. As per a Boston Consulting Group and Retailers Association of India (RAI) report, titled ‘Retail 2020: Retrospect, Reinvent, Rewrite’, the retail market is expected to nearly double in five years, touching $1 Tn by 2020 from $600 Bn as of today. The grocery industry has several players such as BigBasket, Grofers, Zopper catering to the end goal needs of the consumer – these startups work very well in the hyperlocal delivery space they have captured for themselves.

And when it comes to solving the deeper issue of supply chain and inventory-taking along with salesforce management it is platforms like Peel-Works’ 1SF that has a slight edge in onboarding the little store around the corner and adapting to tech, one step at a time. Whether this business model will work long-term and have the desired impact that the startup aims to have on the fragmented grocery industry remains to be.

Author

Aarti loves to read, write and take naps and not necessarily in that order. She is also an Amazon India bestselling author with three romances and is an aspiring young adult urban fantasy writer. Journalism and tech are her parallel passions and she loves to talk about trends and issues in the Indian and global startup ecosystem.

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