Arzooo, a B2B retail-tech platform, is on a mission to empower retailers to take on large retail chains and e-commerce majors such as Amazon and Flipkart by offering a wide selection of consumer durables and electronic products at best prices. Besides providing access to a huge inventory without the attendant hassle of locking up precious working capital, Arzoo also offers retailers access to credit at a competitive rate and express delivery. In a chat with businessline, Khushnud Khan, Co-founder and CEO of Arzooo, shared his vision for the company and insights on the industry landscape. Excerpts.
We’ve come across some interesting data points on demand for white goods from retailers as evidenced by transactions on your platform and how tier-2 and -3 cities are driving this huge surge in demand. Can you put these numbers in perspective?
Our sale of white goods increased by 400 per cent during the festive season. The top categories which contributed to this growth are TVs (540 per cent), washing machines (330 per cent) and refrigerators (300 per cent), and we saw a massive rise in demand from the tier-2 and below cities.
This was the first festive season post the pandemic, without any restrictions. We were expecting an uptick in the overall demand for white goods, especially in tier-2 and -3 cities owing to the pent-up demand and gradual normalisation to pre-Covid days. There is a huge untapped potential in these markets and significant consumer lifestyle changes. Consumers in tier-2 and -3 cities of India are very aspirational and have an increased appetite for electronic goods like smart TVs, washing machines, and refrigerators. We came across some interesting trends on our platform translated from the sales of the goods. One of the trends indicates that while the consumers from metro cities are upgrading their TV screen sizes, consumers from the non-metro cities are doing away with small screens and purchasing smart TVs.
However, offline retailers in these cities lack inventory space and credit for better, more varied selection of white goods. This pent-up demand was an opportunity to partner with offline retailers across India by giving them access to the largest virtual inventory without having them to stock up. They could also offer better pricing, comparable to online players, and at-door delivery. This increased adoption of our platform from offline retailers justifies the 67-per cent total sales volume that came from non-metro markets alone.
Experts have been saying that omni-channel presence probably is the only way forward and plurality of marketplaces is a given. So, how do you see the landscape evolving, both from an end-customer point of view and B2B businesses?
For any digital business, providing an omni-channel experience to customers is a priority. There have been several innovations in the retailer ecosystem to provide customers a seamless end-to-end experience. For us, retailers are our customers and we are working towards providing a complete solution that solves all their challenges. Our diverse product portfolio encompasses access to better inventory with expanded product category, logistics efficiency with express delivery and, now, access to credit.
Moreover, at any given point, there are multiple players in any industry. This plurality enables businesses to innovate and benefits the end-users. For instance, we began our journey by identifying the gap in the consumer electronics space and worked towards solving the same with our solution. I believe that plurality only enables growth through healthy competition and help businesses evolve over time and create a win-win situation for customers as well as businesses.
We are seeing many e-commerce platforms moving away from deep discounts. How does this change the dynamics of the industry?
Deep discounts have been a great strategy for the competitive consumer electronics space to acquire customers. However, it was never a sustainable business model. The recent trends suggest that e-commerce platforms are doing away with deep discounts as it is creating consumer demand at the cost of reduced profitability. This will reduce price disparity in consumer goods and increase transparency while bringing both online and offline space at par.
The local retailers that faced major challenges due to the entry of e-commerce giants can now compete in terms of price offering. As Indian consumers like to try and feel the products before purchasing any consumer durable, we are expecting to see an uptick in the white goods purchases made through retailers, since consumers see no significant difference in the online and offline prices. Customer experience and product availability will be two major factors which will influence buying decision. That is exactly where our brand comes in. By digitising the offline retail stores, we are expanding their product catalogues and through logistics platform, Arzooo Express, we ensure swift delivery of products once orders are placed.
Talking about the credit gap that retailers face, how acute is the problem?
The retail industry in India shows immense promise of growth to support India’s vision to be $5-trillion economy by 2025. However, offline retailers, especially those in rural India, have been late-adopters of digital technology. We realised credit has always been an issue for these small and mid-sized retailers, given the transformation that merchant credit is undergoing. Arzooo took cognisance of this liquidity gap and decided to provide our partner stores with working capital cushion. We’ve tied up with NBFCs and reputed banks to bridge the credit gap and give them enough headroom for scaling up. This festive season, as consumers’ in-store shopping gained traction, we disbursed ₹100 crore worth credit and witnessed an 800 per cent increase in retailers seeking credit from our fintech arm Arzooo Credit.