“During the lockdown, local residents used to inform their requirements either over phone or Whatsapp. My helper and I used to deliver the items to their houses. In order to avoid contact, most of the customers used to pay through PhonePe or GooglePay. Now, though the lockdown has been relaxed, many continue to pay me digitally. Now people come to my store to get their groceries but many requests for a door-step delivery,” a grocery store-owner from Kasba, south Kolkata said to BE. This instance indicates towards the digital transformation undergone by the local grocery stores in order to sustain their business during the pandemic. There have been repeated debates and discussions that e-commerce platforms will absolve the businesses of the brick and mortar shops. However, instances from the pandemic suggest that there can be inter-dependence of online and offline platforms.
Bigbasket, India’s largest online food and grocery store market, has grown over the years because of its network of grocery stores that ensure quicker deliveries. An article titled ‘How Bigbasket Works With Kirana Stores for Hyperlocal Delivery’ by Bhumika Khatri, published in inc42.com states that the Bengaluru-based company looks to find synergies in corner shops to ensure faster and timely delivery to its customers, especially for speciality items, such as cakes, bakery items, meat, poultry and fish, flowers, body care, Ayurveda products, confectioneries and snacks. Over the last few years, the company has been enabling deliveries through its warehouses after procuring products from farmers and stores. Establishing warehouses allows greater flexibility and inventory control for delivery companies. However, kirana stores also proved to be a viable and cheap alternative. Apart from procuring items from kirana stores, Bigbasket also sells products from its marketplace to over 1,000 kirana stores, hotels and restaurants.
The online presence helps in increasing the geographic reach of the retailer's customer base. An ETRetail.com report cites the example of a local Banarsi silk saree-seller from a small market in Banaras who started selling the sarees online at Amazon. Today he is selling these sarees all over the country - crossing local borders. While this may not apply to retailers of perishable goods like fresh food items such as vegetables and meat, it is certainly possible for retailers of other goods. Online platform presence will allow retailers to reduce costs by offloading various business expenses through such partnerships.
A report by thehindubusinessline.com stated that MaxWholesale, a B2B e-commerce platform for 22,000 kirana stores to source inventory online, has grown its average order value from `3,000 in the pre-Covid phase to `10,000 in the post-Covid phase and expects a 20-40% demand spike around festival sales driven by purchases of snacks, dry fruits, pulses, juices, chocolates, beverages etc.
Samarth Agrawal, CEO and co-founder, MaxWholesale said, “Consumers have shifted from unbranded loose groceries to branded and packaged groceries during the pandemic. From a `25-crore revenue last fiscal, we are on track to achieve `300 crore this fiscal and are already at `125 crore.”
Safeguarding the small businesses and retailers
In order to utilise the online facility as well as to look after the welfare of local businesses, the Confederation of All India Traders (CAIT) has tied up with the Department for Promotion of Industry and Internal Trade (DPIIT), Government of India, to link millions of small retail outlets to digital commerce through its e-commerce portal - Bharatmarket. A press release by CAIT stated, “The Indian e-commerce ecosystem has been greatly vitiated by large e-commerce companies and in the wake of steep rise of e-commerce share in Indian domestic trade, it is all the more necessary to have a robust and well-defined e-commerce policy so that small businesses should not suffer at the hands of large e-commerce companies having deep pockets and enormous resources.”
CAIT further stated that the e-commerce business which was about 6% in pre-Covid period has grown to 24%. This is the reason behind CAIT’s demand for the formation of a regulatory authority for regulating and monitoring e-commerce business and having adequate powers to penalise the offenders of its e-commerce policy.
Praveen Khandelwal, Secretary General, CAIT, in an earlier interaction with BE said, “The mission of the portal is digitising the end-to-end supply chain for India’s traditional self-organised chain of traders. The fundamentals of our portal are one of its kind in the world which makes our portal different from others. Therefore, this approach will be liked by the Indian consumers and since we are giving them both options – visiting physical stores, as well as door-step delivery, this will be attractive.”
The ETRetail.com report suggests the growth in digital and telecom infrastructure allows continuous connectivity around the nation. The number of internet users in India increased from 500 million in 2018, to approximately 630 million by the end of 2019. Moreover, much of that growth was propelled by rural users which grew by 35% in that time period. This internet penetration has also fuelled the growth of e-commerce business, especially during the lockdown.
A report titled, ‘E-Commerce Trend Report’ by Unicommerce, an e-commerce software platform, stated that the e-commerce industry in India registered a 17% increase in order volume as of June 2020, compared to the pre-lockdown period. Though traditional metro cities have seen higher growth than the rest of India in volume of orders, this trend has reversed in the post Covid-19 situation. The rest of India witnessed a growth of over 31% - which was primarily contributed by growth in tier III regions. The report further stated that sectors such as electronics and home appliances, fashion and accessories, health and pharmaceuticals and fast-moving consumer goods (FMCG) witnessed an average growth of 133% in sales. The report added that online delivery platforms such as Jiomart, Swiggy, Zomato and others were able to meet consumer demands at a faster pace by making hyperlocal deliveries after tying up with local grocery stores.
Industry insiders suggest that if the offline retailers start using online platforms along with their offline setups, it will provide a scope for their expansion. There has been a boom of digitalisation in the world as well as in India. In such a situation, online platforms provide new means of human interaction. An emerging e-commerce market does not necessarily mean destruction of the brick and mortar stores. An interconnected network between the offline and online platforms can be instrumental in exploring new opportunities.