A persistent problem is going unaddressed with no one in the ecosystem trying to solve it. That’s the cue for many an entrepreneur to make their entry with startups which would provide the panacea. In early 2015, three young entrepreneurs – Sumit Ghorawat, Deepak Dhanotiya and Tanutejas Saraswat took the unaddressed woes of kirana stores (mom-and-pop stores) as their cue to enter the world of startups with ShopKirana.
Sumit was appalled by the long turnaround time that Fast-moving consumer goods (FMCG) and other brands took while meeting the demands of kirana stores. A graduate from Carnegie Mellon University, Sumit was working with Procter & Gamble when he made the observation that it took a kirana store owner almost 10-15 days to replenish the exhausted stock of branded products. So, for instance, if any brand of soap or shampoo went out of stock at a kirana store, the shopkeeper had to wait for almost a fortnight before fresh stock was made available.
Typically, a sales executive from a FMCG brand would visit every kirana store and take the supplies order on a piece of paper. He would then go back to the brand’s office and enter the orders into the system, against the name of each kirana store. The systems department would update the inventory team of distributors and then they, in turn, would deliver the supplies on behalf of the brand to the stores. The entire process, from placing an order to delivery of the supplies, would take approximately 10 days. To avoid the delay, a kirana storekeeper would, therefore pre-order for goods in advance before the stock got over.
At P&G, Sumit was working with Deepak, whose father owned a kirana store. Deepak knew the agony of managing inventory. In the era of technology and smartphone penetration, it was a surprise that unorganised retail market, which made up for 92% of the $300 Bn market economy, was still following the traditional path. They regularly deliberated on methods of solving this problem by reducing the turnaround time to just 24 hours. Their discussions sowed the seed of a concept, when the duo met Tanutejas, a business graduate from Proton Business School. The concept metamorphised into a startup called ShopKirana.
ShopKirana, a B2B M-distribution platform for merchants and small retailers came to being in early 2015 in Indore.
“In India, retail still follows the traditional route of a supply chain. Around 92% of the retail industry is unorganised that presented a huge opportunity for us. Having watched the retail sector so closely, we could understand the pain points of the sector,” says Sumit.
ShopKirana Is Not About Shopping
ShopKirana is a B2B mobile application tailored for retailers. Using the swipe and select option on the app, the kirana shop owners can select items, feed the quantity required for each item and then place an order to their brands. The order gets simultaneously reflected on the automated systems of the brands and ShopKirana. ShopKirana’s delivery boys pick up the ordered items from the brands and deliver them to the kirana shops, thereby cutting down on the time lapse between demand and supply. Apart from taking orders, the app generates data about top selling brands, monthly usage, order patterns and more.
ShopKirana aims to connect the 9 Mn kirana stores to brands, bringing the traditional retailers and brands on the same digital platform. It is the marriage of online and offline retail models.
Business Model
ShopKirana works on an asset-light model, wherein it follows an on-demand pick and drop model, and doesn’t own any inventory. However, it has established fulfillment centers for material collection, sorting, and packaging. At present, ShopKirana is only targeting the grocery, food and beverages industry that accounts for 60% of the overall market.
Since its inception, ShopKirana has connected over 2000 retailers to 23 brands. During July-August, it made entry into Mumbai. It has three sourcing hubs/fulfillments centers; two in Indore and one in Mumbai. In just five months, it has fulfilled about 12,000 orders, delivering over 4 lakh products. A few of the top brands that ShopKirana has gotten on board include Parle, Fortune, Daawat, Bisleri and Britannia.
ShopKirana’s revenue comes from the commission it takes from the brands for the products sold/delivered to kirana stores. It also provides value-added services like logistics, banking and loan etc.. Apart from this, the founders of are also trying to build alliances with brands to capitalise on Shopkirana’s network of Kirana stores and earn revenue. Any brands, in and around Indore are reaching out to ShopKirana for promotion. A namkeen (salty snacks) brand in Indore that wants to enter the Mumbai market is using the ShopKirana network and platform for product launch and marketing.
The ShopKirana founders are also in talks with Uber for a promotional campaign in Indore. Uber has generated unique codes for some 1000 retailers in Indore. The retailers and ShopKirana would get a commission for every download that comes from the unique codes created for the retailer. “Uber wants to expand in Indore and they are using our network to reach out to the customers. All that the retailers have to do is promote the app to their customer by asking them to download it using the code,” Sumit informed.
Though the larger vision is to touch over 9Mn retailers in long term, for the next few months, they have set the the target to reach out to at least 8000 kirana stores in Mumbai and Indore. The trio is also mulling entry into a third city. On product development side, they look to adding more analytics to the app. The next generation of the app would have dashboards that generate reports on sales, footfall, profit, inventory and more.
Market And Competitive Landscape
The Boston Consulting Group and Retailers Association of India (RAI) in a report, ‘Retail 2020: Retrospect, Reinvent, Rewrite’, stated that retail market is expected to nearly double in five years, touching $1 Tn by 2020 from $600 Bn as of today. Another report by Euro Monitor highlighted that in 2014, grocery retail business grew by over 11%.
While there are no competitors in the market among the startups in the same space of B2B connect, ShopKirana faces competition from major software giants like SAP, Oracle and other order management and retail CRM/ERP software that hold sway over the brands. The FMCG majors, on the other hand, are seeking to cut down on the turnaround time by providing tablets to the mobile sales team, who visit kirana stores to take the orders, so that they could feed it to the company’s systems in real-time.
However, there are many players in the B2C space like Bigbasket, Zopper, Jiffstore that connect the kirana stores to the end-customers.
Editor’s Note:
While ShopKirana is not a full-fledged distributor, since it does not stock and sell, the startup still weigh heavy on many the large regional distributors.
ShopKirana holds promise of huge growth in the niche area and also has a scope for good acquisition, for FMCG brands. But the basic premise for the success of this model is mobile and Internet. In a country where 236 Mn people use internet on mobile and with internet penetration of just 19%, we are only considering the big retailers in urban areas. This limits the reach and potential of the model. In the past, many tech firms tried piloting SMS-based order solution for their FMCG clients, but failed. How ShopKirana overcomes this hurdle remains to be seen.
