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Kirana Stores as a Service — KaaS

The Indian Kirana store treasure chest

The friendly neighborhood Kirana (mom-and-pop) store and its owner. If this was 20 years ago, the Kirana store operator would have known what each family in the neighborhood eats/drinks; how many bars of soap and sachets of shampoo is enough for the family two lanes away; that the uncle from the house adjacent to the fields adds candy to the house bill even though he has diabetes. The person who one would go to if you needed a house on rent in the neighborhood and who better to ask than the Kirana store owner who’s clued into everything that’s happening? The store with accounts that would enable families to buy groceries on credit through the month and pay them in full on salary day.

In short, the kirana store owners are some of the most enterprising people in all of India.

With the advent of the supermarkets and mega marts, and later, the online grocery store, Kirana stores seemed to be a dying breed. They seemed to go out of fashion. The last couple of years, however, tell a completely different (and compelling) story. The Kirana stores are now being courted and by the large e-commerce giants, e-grocers, and also the electric vehicle providers.

Everyone wants in on the Kirana store action. But what do they want?

Photo by Kishore Ragav Ganesh Kumar on Unsplash

India’s hyperlocal battle is a fierce one. Backed by deep pockets, established players, and a large on the ground workforce, players are wooing customers with convenience.

Interestingly, this also underscores the importance of the ~12 million Kirana stores in the country that dot the hyperlocal business landscape of India. The ubiquity of kiranas makes them a valuable last-mile connector for the storage of products, or even the delivery of small items like smartphones, books, or groceries — anything that can be done on foot or a two-wheeler.

Every company with hyperlocal ambitions in India, looking to grow leaps and bounds, sees the Kirana Stores as a vital force multiplier. At present, the utility of a Kirana store is bound by the imagination of the companies. From food-tech players like Swiggy to (soon to be electric) mobility companies like Bounce, kiranas are increasingly being touted as a vital part of the future, rather than something to be replaced. Kirana stores are of strategic importance for the various players.

But what is in it for the owners of the Kirana stores themselves?

This depends on the one who is offering them. The plethora of options ranges from incremental income to increased football at their shops, to customer satisfaction and delight, and a place in India’s digital economy.

At the risk of oversimplification, this concept can be thought of as a Kirana Stores as a Service (KaaS). And we need to thank the numerous hyperlocal players like Swiggy & Dunzo’s who are locked in an interesting hyperlocal battle, might mean that the concept itself is available for a Reliance Jio (RIL)/e-commerce white-label.

Kirana stores account for 75% of FMCG goods that reach Indian consumers. Add the (relatively lower margins but recurring, habit-forming purchases of groceries along with some spicy gossip, and the stores quickly become an indispensable part of the retail ecosystem. They also act as a hub for social interactions. With a little extra storage space and the right location (and reach), Kirana Store owners can act as places to help deliver packages for the established e-commerce players and for the well-networked offline commerce players wanting (and maybe waiting) to go online to catch a slice of the action.

In grocery — seen as the next big opportunity for online businesses looking to lap up India’s retail pie — Kirana stores are an indispensable asset. While the Indian grocery market is worth upwards of $550 billion, according to retail consultancy Technopak Advisors and The Ken, the organized sector is barely a drop in the grocery ocean. Just some $21 billion, according to Technopak. Kirana stores hold sway here and it is easy to witness some action.

Hence, both Swiggy and Dunzo have tied up with the shops and are helping them create a digital storefront (effectively KaaS) that customers can order through. Stores get one or more benefits from the following — new users, no commissions & a free delivery fleet.

Now, why is KaaS lucrative? Depends on whom you ask, there can be different white-labels.

Just like E-commerce players, who want the Kirana Stores to handle their last-mile deliveries and like the E-grocers, who want to stock their inventory there and think about cross-selling, the similar infrastructure could prove to be instrumental for several other players.

Interestingly, Bounce sees them as a store for its Electric Vehicles (EVs) to act as locations for battery swaps while PhonePe wants to use them as an ATM for disseminating cash for its users.

While these are still early days for the last two, KaaS (as a concept) could easily be a channel for producers to reach out to consumers (P2C). Depending upon who the producer here is, products could also be white labels — e-commerce, cloud kitchens, and retails.

Who do you think has an edge? Happy to hear your thoughts in the comments below.

If you want to know who my pick is, I’d want to put my bets on Reliance and RIL (more so after Facebook invested in them). Their 2.5 million offline partners, 388 million Jio customers along with 400 million users of Facebook’s Whatsapp has enormous potential.

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Views expressed here are my own and do not represent those of my employers, present or past.

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Pratyush Choudhury

Pratyush Choudhury

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My not-so-profound thoughts on technology, business and life | IIT (BHU) | All opinions my own