Every festival season, there is usually one much awaited mobile phone launch that is first available only online, after a big build-up.

This season, says Amit Sharma of ShopX, his platform is working with a mobile brand to break this pattern — and launch the phone in synchronised fashion across 50,000 small outlets across the country. This is possible, he says, because the small retailers are getting digitised in a big way, and would be able to handle sales the same way as e-commerce shelves. ShopX is a retail operating system that connects brands, consumers and retailers, and is working with kirana stores across the country to help them source better and sell better.

There is no doubt that the Covid pandemic has accelerated digital habits across the country and e-commerce is gaining thanks to this. But despite its surging growth, the projections are that e-commerce would still only have 10 to 12 per cent share of India’s retail landscape by 2025 (currently it is around 3 per cent). It is the kirana that still dominates overwhelmingly, with modern trade bringing in the third front.

The moves by Reliance Retail powered by Jio may boost modern trade, but e-commerce and kiranas too now have gained firepower, and the three-way retail battle looks interestingly poised.

For his part, Sharma feels post Covid-19, it is the kiranas — or Federated Commerce — that will grow faster than e-commerce. Federated Commerce is a new paradigm, he says.

If e-commerce has a centralised model, a central team, a warehouse, and is screen-based, then federated commerce is fragmented and spread out but powerful in its local neighbourhood.

“Local entitities provide local trust and comfort to people, and they even provide credit.” ShopX’s research showed that 60 per cent of customers get credit from kirana stores.

“There are so many amazing benefits to this local entity. And we believe, with digitisation, this is the turnaround moment for small retailers. There is real opportunity in this space,” he adds.

V S Kannan Sitaram, Venture Partner at Fireside Ventures, tends to agree. However, he lists out the current challenges of the local retailers.

Inventory, the pain point

“They are too inefficient. The kiranas work hard, but work for very little. They hold too much inventory. And end up with a huge amount of damaged products and expired reports,” says Sitaram. Citing a Nielsen report, he points out that the average inventory held by a kirana is 35-40 days. “There is absolutely no need to hold it for so long.” At the other end of the problem is that 10 to 12 per cent of retail outlets are out of stock whenever a customer comes asking for a product. “Even the best-managed small retailer struggles with this,” he says.

This is where platforms like ShopX, Udaan, AnKa SumMor, a Fireside-incubated start-up, and apps like FieldAssist, come in. They are putting tech in the hands of the small retailer, helping retailers with better pricing and distribution.

As Sharma says, on the retailer side, what they need is a platform that can help them buy better, sell better, and get access to latest merchandise conveniently. On the consumer side, what is needed a platform that gives them discoverability of a product in the neighbourhood. So, for example, if you want to buy a tennis racquet, you should be able to surf online and see which store is carrying the product at what price. “Through our platform we will be enabling that, starting with a pilot in Bengaluru,” he says.

The other problem is that only about 10 per cent of retailers in India are well served by official distributors. The remaining rely on unorganised sourcing, such as wholesale markets. ShopX has tied up with 34 leading brands and is deepening relationships every quarter. It has 52 hubs and an extensive network of supply points to fulfil the demands of retailers across several towns. Currently it is networked with 2 lakh kiranas but has an ambitious goal of 1 million kiranas.

AnKa SumMor too is plugging the distribution gap. As Sitaram explains, “The big companies usually have the bandwidth to reach millions of kiranas but smaller brands do not have that.” It costs a brand quite a bit to put its products in a shop. AnKa SumMor offers a shared services model to reduce distribution cost. The service, rolled out in Hyderabad and Chennai, will be expanded to other cities.

With more technology and innovative solutions to back them up, the kiranas certainly can transform. As Sharma sums up, no longer will shopping be e-commerce versus the old way. What will happen is we will have e-commerce and the new digital kirana way!