Retail is still being disrupted
The recent spate of headlines and announcements are signaling a paradigm shift in the retail industry as quick commerce companies redefine the boundaries of convenience and speed for the discerning urban consumer.
In a story titled Quick, quicker, quickest: The impatient Indian fires up an Industry published on May 29th Business Standard reported that “Quick Commerce companies’ 10-minute delivery promise, hitherto limited to groceries and essentials has expanded to high-value consumer durables”. The same report quotes Somdutta Singh founder and CEO of Assiduus Global an e-commerce solution firm out of the USA as saying “Apart from metropolitans the quick commerce model is also gaining momentum in cities such as Vizag, Nagpur, Kochi, Jaipur and Lucknow”
Recent Quick Commerce Moves
Reliance e-commerce firm Jiomart announced 30-minute deliveries in eight cities. Tata-owned Big Basket the fourth largest Quick commerce player shortened BB Now delivery time to 10 minutes.
Meanwhile, Tata-owned ePharmacy 1mg in a communication to its customers announced the introduction of a 30-minute rapid delivery service of medicine and healthcare products
The Quick Commerce Zeitgeist
D2C brands have increasingly started looking at Quick commerce as a preferred channel for profitable growth. As Business Standard reported on June 9th brands such as Mamaearth, BoAT, and Nice are witnessing faster and more profitable growth in quick commerce as compared to traditional e-commerce with Mamaearth reporting a 5x faster growth on the channel
With experts predicting 50% Y-o-Y growth Quick Commerce seems to be the Zeitgeist and there is real momentum behind Quick Commerce. Financial analysis of Quick Commerce companies will be instructive to draw some insights into the disruptive potential of these companies
The Existential Threat to Kiranas
While most quick commerce companies rely on dark stores Jiomart is planning on leveraging its store network for the purpose. Quick commerce companies have not tended to partner with local Kiranas and instead are seeking to replace them
The challenge that Kiranas face is urgent and existential (Backgrounder) not to mention the larger threat of “cloud proledom” which a majority of gig workers face and “cloud serfdom” for the rest of us. The human part of the economic story is increasingly iniquitous but is it ineluctable?
The Response
How can Kiranas respond? Mr. Praveen Khandelwal Delhi MP from Chandni Chowk, who’s also the founder and general secretary, of the Confederation of All India Traders, ONDC advisor and is also associated with Bharat-e-market a CAIT initiative to compete with incumbents Amazon India and Walmart-backed Flipkart should know
In an interview with Business Standard Mr. Khandelwal talks about a new e-commerce policy in work that according to him “will end the malpractices of foreign e-commerce companies, such as predatory pricing, loss funding, deep discounting, and owning inventory” and will create fair competition
On being asked about threat being faced by Kiranas from quick commerce companies he states that “Kirana stores may also adopt quick commerce as one of their business verticals, and I am confident they are competent enough to face any challenge.”
He goes on to emphasize that self-organizing (his choice of word for unorganized) retailers should adopt digitization and modern business tools and endeavor to understand consumer purchasing behavior
In our earlier post, the author alluded to a study by Grant Thornton Bharat where they found that quick commerce efforts by Kiranas have yielded revenue upsides of 7%
We at Kiranamitr believe that existing stores do need to look at competing aggressively with the quick commerce companies but then the constraints on their capabilities and resources are real. Kiranas are against massively funded, profit-optional companies that are ontologically inclined to dominate. Policy support is necessary but not sufficient and so is traditional resilience. We believe the other enablers may include
- Collaborative effort across the supply chain including distributors, wholesalers, and retails
- Easy access to financial resources either as low-interest loans or tax incentives. Another initiative that may require Govt support
- Access to easy, cost-effective technology solutions and access to technology expertise. Startup ecosystem and incentives can provide the necessary resources
- Analytic and marketing expertise that can help Kiranas understand
Are hyper-local Kirana cooperatives the answer? These cooperatives can act as lobby groups that can work with the Government, help in rolling out technology initiatives, and facilitate collaborations among ecosystem participants
Kiranamitr is planning localized ground experiments to evolve possible options. This will be the subject of subsequent posts here
We value your feedback and suggestions as we continue our research and exploration of sustainable solutions for kiranas. Please add your comments or hare your ideas and perspectives with us at info@kiranamitr.in or through our website’s feedback form. Your input will help shape our future initiatives and ensure that we address the most pressing needs of the kirana community.