In 2014, Amazon India started alternative supply chain initiative with Kirana stores — I Have Space (IHS) Programme to enhance last-mile fulfilment. In January-March, the share of Amazon’s total shipments fulfilled by IHS jumped to 28%, according to a report by RedSeer Consulting. In the first half of 2016, 15% of the total deliveries were fulfilled by kirana store with a network of 4,000 stores across India. Amazon IHS has reported a steady rise from 1% deliveries with 400 stores in H1 2014 to 5% with 1,100 stores in HI 2015.
Based on the number of pick-ups processed by the store Amazon pays about Rs 20-25 per delivery attempt and fixed minimum guarantee of R2,000-8,000 every month. On an average, this allows the store to earn an additional revenue of R25,000 per month. Meanwhile, it has reduced the last-mile delivery cost for Amazon by 10% year-on-year, per packet. To counter Amazon’s IHS programme, Flipkart also launched a similar service in May 2016 where it tapped the neighbourhood kirana stores for last-mile delivery.