Digital matchmaking: What India’s Kirana stores need to weed out intermediaries in buying, stocking goods

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Published: August 19, 2019 7:16:26 PM

The way food and grocery segment is structured in India is that there are multiple intermediaries without any direct way for kiranas to access products directly from brands.

Kiranas have to ensure they have enough stock in the store.

India’s food and grocery, which is around $350 billion worth market, is dominated by around 12 million micro and small kirana or neighbourhood stores — 95 per cent of the market. About 60 per cent of the kirana stores focus on staples, that is, rice or vegetables etc. and the remaining 40 per cent caters to FMCG products. However, the way food and grocery segment is structured in India is that there are multiple intermediaries without any direct way for kiranas to access products directly from brands. “The way it works for those catering to staples involves the owner going to the mandi, which now because of big cities is 2.5-3 hours away. They spend hours hopping from merchant to merchant, buying one commodity after other without much choice in items to buy because there are only so many options in a mandi and they have to buy it then only,” Ashish Jhina, Co-founder Jumbotail – an online wholesale marketplace for food and grocery products told Financial Express Online. These owners also have to arrange transportation, pay in cash because one can’t get credit everywhere.

Seamless Connect

Moreover, kiranas have to ensure they have enough stock in the store as the value proposition of a kirana is the convenience for customer to get everything he/she wants. Also, stocking goods for up to 30 days may get spoiled. Solutions such as Jumbotail helps solve these intricacies through a mobile ordering app connecting them with food and grocery brands and producers along with an integrated supply chain network and last-mile storefront delivery service along with payment and credit solutions to kiranas and PoS integration with omnichannel access.

“In the app, you (kirana) can see the prices, what products are available and you can decide whether you want it next week or asap. You don’t have to go anywhere or even solve for credit problem etc,” said Jhina. Kiranas usually rely on distributors coming to them, once in a week or two weeks. It depends on what products they (distributors) want to hold and the bigger the brand the faster selling products are. So the brand has more power and wants kiranas to hold the stock that they really don’t want to. “So what we do is give them the choice of what they want to buy, how much they want to buy and when with next day delivery instead of stocking up goods for a long time,” he added.

“Jumbotail’s full-stack approach to modernizing general trade via the tech-driven supply chain, data-driven merchandising and credit is the most scalable way to revolutionise India’s grocery retail. Their platform allows them to power the online-to-offline new retail rollouts in the country over the next few years,” Sameer Brij Verma – Managing Director, Nexus Venture Partners that has backed Jumbotail told Financial Express Online.

Jumbotail currently stock around 3,000 SKUs of staples and FMCG products on the platform and works with 20 FMCG brands in the country. The startup works with around 20,000 kiranas in Bengaluru. It also lends credit from Rs 10k to ‘multiple’ lakhs of rupees to kiranas based on the size of the business. The underwriting is done by the lender — about five financial institutions that it works with.

Beyond Bengaluru, Jumbotail is running a pilot in Hyderabad and will be expanding to cities in South India in the next 12-18 months. It did around 2 million shipment units in July this year even as it does over 10,000 tonnes of deliveries in a month. “Each city is different and has its own complex procurement value chain as well as its own city-wide supply chain for connecting the buyers to the brands and sellers. Jumbotail’s team will need to master taming this complexity as they expand to other locations. We see them expanding to the four-five large cities,” said Verma.

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