ADAN MOHAN Reddy ofBangalore is hard atworkin his 500 sq.ftshop. Bhuvaneshwari Rice Shop is his livelihood. The 21-year-old puts in 17 hours a day to earn Rs 50,000 a month. He is savvy, ambitious and uses a strappingly large smartphone. He is a digital literate, knows about products such as the mobile wallet and is open to cash-on-deliveiy to win new customers.
He’s the kind of guy Amazon has been looking for. Eighteen months ago the $89-billion e-tailing giant began its ‘I Have Space’(IHS) programme using the street comer mom and pop kirana network to deliver products to their consumers. Reddy saw his future, made a phone call and registered as a delivery partner’. All he had to do was provide his PAN card details and he was good to go.
Amazon gave him a Samsung tablet and a palm-sized credit card payment device to connect the payments to Amazon’s seller app and the cloud server on the backend. Reddy hasn’t looked back since.
‘1 got in to this program because Amazon gave me extra reach and more
customers,” he says. His sales increased byRs20,000a month and he made an additional Rs 15,000by delivering products ordered on Amazon at his store. “Customers would come to my store to pick up their orders and ended up buying soups or juices too. When I began delivering Amazon products to the door step ofmy loyal customers on my bike, some ofthem would ask me to deliver groceries too.”
Prashant N. from Bangalore has a similar story to tell about his store called Wave Telecom. The story of Reddy and Prashant has been replicated by around a1,000kirana stores that have joined Amazon India across 47 cities.
The Power Of Unorganised Retail
In 2006, when large conglomerates such as Reliance Industries, Future Group, the Aditya Birla Group and others, committed $10 billion (Rs 40,000 crore) to expand their retail
footprint, there was plenty of chatter about the death of the kiranas. Nine years later RIF | Businessworld finds that kiranas have not just survived, they have blossomed.
Historically, the Indian consumer has always been hyper local, preferring his neighborhood baniya. On the other hand, malls and independent stores found the capital cost of investing inlandandfillingthe godowns a losing proposition. High rentals, between 15 and 20 percent of sales and lowfootfaUs, have killed many a mall. Consumer behavior also revealed that most Indians do not have the appetite to spend on premium retail prices, and their mall spends are mainly at the food courts and the multiplexes.
Further, most retailing outlets do not buy intotheethosofa brand and in turn affect a brand’s value by not communicating the value proposition. “One of the reasons why kiranas thrive is because retailers, barring afew, have not made modem
RIDING WITH AMAZON
Shop: Bhuvaneshwari Rice Owner: Madan Mohan Reddy Founded:2012 Earnings: Rs 85,000 a month Service: Sells food and grocery, loose and branded rice. Mobile and passport services. Also an Amazon delivery associate Education: Graduate retailing a career option,” said B .S. Nagesh, vice-chairman of Shoppers Stop, one ofthe largest retailers in the country, in an earlier interview with B W.
The big retailers underestimated the underlying strength of the kiranas and their importance in the unorganisedj ob market. In a country with high levels of unemployment, they provide sustenance to millions. According to Kronos, the global human resource technology firm, ofthe 450 million workers in this country, only 30 million are in the organised sector, while the rest continue in ‘informal’ employment.
A lot ofthe ‘informal’ work seekers therefore dabble with entrepreneurship and the kirana store offers the lowest-entry barrier. You can start with small finance from friends and family. It is the same ‘kirana’ spirit which Uber and Ola have hooked on to and made the taxi driver their partners. It is no coincidence that some ofthese drivers actually also own small shops and drive taxis for that extra income.
The growingfast moving consumer goods (FMCG) industry feeds the kirana network that has become an endless river. One shuts shop and another opens up with new services. “Indian cities, with their culture of shopping, includingthe psychology of consumers, are tuned to being hyper local. Our goal has always beentobringthat experience of a neighbourhood shop in alarge store, which is convenience and great service,” said
Kishore Biyani, chairman ofthe Future Group, in an earlier interview. He says people will still go to their kirana for their daily shopping and visit larger stores for their monthly needs.
If You Can’t Beat Them, Join Them
It is no wonder then Jeff Bezos, founder ofAmazon, wants to use the Kirana network, earlier seen as competition, to grow retail sales. His target istobringS,000 kiranas under Amazon umbrella within two years. The business model for the kirana owner is simple and profitable: he earns Rs 20 for every package delivered to the customer’s doorstep, and Rs 15 for every packet picked up by the customer from his store.
Similarly, Biyani wants to link10,000kiranas to Future Group’s food parks,which make squashes and short eats, located in Karnataka and Madhya Pradesh. “The food park in Tumkur can serve all the small stores in South India and our plan is to increase our private label (branded merchandise exclusive to the retailer) reach across the country,” says Praveen Dwivedi, president ofFuture Consumer Enterprise.
The rush to connect kiranas does not stop there. Technolog} companies such as SAP, Mahindra Comviva and Infosys are working on boxing “payment and assortment” software for kiranas. They will link data generated from kiranas to FMCG distribution centres on a real-time basis. HUL has connected