Reliance will change the way you buy things; digitise 5 million kirana shops by 2023: Report3 min read . Updated: 12 May 2019, 12:07 PM IST
- Almost 90% of India's $700 billion retail market is unorganised
- Reliance is working to create the world's largest online-to-offline e-commerce platform in the country
New Delhi: Richest Indian Mukesh Ambani-led Reliance Industries' entry into online retailing will help expand the current 15,000 digitised retail stores to over 5 million by 2023, a study of Bank of America Merrill Lynch said.
As much as 90 per cent of India's $700 billion retail market is unorganised, made up mostly of neighbourhood kirana stores selling groceries and other sundries.
These kirana stores are keen to upgrade their tech and this is driving a wave of modernization, the study said.
"This is on the back of growing competition from modern trade and e-commerce," it said. "GST implementation has also acted as a catalyst, creating further modernization pressure as GST compliant bills have to be generated."
Reliance, with a deep footprint in over 10,000 Reliance Retail outlets pan-India, is working to create the world's largest online-to-offline e-commerce platform in the country.
Reliance is looking at installing its Jio MPoS (mobile point-of-sale) device at kirana stores to connect neighbourhood suppliers to its high-speed 4G network that can be used by its customers to order supplies.
It will take on SnapBizz, Nukkad Shops and GoFrugal in this fragmented MPoS space.
While Jio MPoS is available at a one-time investment of ₹3,000, SnapBiz offers the same machine at a one-time cost of ₹50,000, the report said.
One-time charge on Nukkad Shops is ₹30,000 to ₹55,000 while GoFrugal offers POS software at a one-time investment of ₹15,000 to ₹1 lakh.
Jio MPoS has no merchant discount rate (MDR) on any charge and offers a loyalty programme, it said, adding its monetization strategy include merchandise delivery, advertising and supply-side aggregation.
"We believe, with RIL's entry, we could see an increase in merchant adaptability, as the price points will likely come down (RIL's current one time deposit is ₹3,000) and reach should expand.
"Consolidation is also a possibility; as a big player, RIL is entering an otherwise scattered market. Overall, we expect RIL to help expand the current 15,000 digitized store base to 5 million-plus stores by 2023," it said.
The brokerage said it met with SnapBizz management at their office in Bengaluru. It has 4,500-plus devices installed over seven cities in India or over 30 per cent of the digitised store base.
"The Merchant PoS by SnapBizz is a point of sale platform where merchants can keep a digital record of their inventory, generate GST compliant bills and keep a track of consumer's buying patterns, in addition to making payments," the report said.
For a one-time payment of ₹50,000, the merchant gets a PoS device with Snapbizz software, a screen space to display ads and a personal app to interact with users.
SnapBizz is working with Israeli start-up Stamp.ee to design targeted couponing/promotions for customers.
SnapBizz has a contractual agreement with retailers to share aggregate level data with third parties; however personal consumer data is not shared, it said.
The brokerage said it visited 15 stores in Mumbai and Navi-Mumbai to get feedback on general MPoS.
"Most retailers we visited were happy with the merchant PoS and believe the return on investment is good," the report said. "Kirana stores liked the ease of billing/generating GST complaint bills the best. The PoS system provides an option of adding in-built discounts and also push offers to the entire customer database via SMS."
Majority of shops visited are not synching inventory in PoS and mainly are using it as a billing device.
Kiranas either found it difficult to enter new inventory items or were reluctant to enter with a fear of sharing data to POS firms.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.