Home >Companies >Start-ups >Polls 2019: As kirana stores make digital switch, cash-rich startups call shots

BENGALURU : Thirty-eight-year-old Meena P., who runs a kirana store in Bengaluru’s startup hub of Koramangala with her husband Palani, never wanted a point of sale (PoS) machine at her store because she hated dealing with connectivity issues and tallying receipts at the end of the day. But she’s is now on a wait list for Jio’s PoS machine, which is being handed out on a pilot basis.

Jio’s new 10-inch touch screen device with an inbuilt barcode reader automatically records daily transactions. Meena was convinced because she’d no longer have to keep daily statements in notebooks and track inventory physically. “We had to pay a one-time fee of 3,000 for the device. We will get a free Jio merchant membership with it," said Meena. Jio is running a limited PoS device pilot in Bengaluru, Hyderabad, Chennai and Pune, and has partnered with Hindustan Unilever Ltd to supply products to kirana stores.

India’s kirana stores are finally benefitting from the wave of digitization. Tech startups such as Jumbotail, ShopKirana and Udaan, are creating systems for easy access to wholesale procurement for these stores. Behemoths like Reliance Jio, Amazon and Walmart are also competing with tech startups to supply wholesale inventory to kirana stores. On the consumer side, hyperlocal delivery startups such as Dunzo and Grofers are bringing in a new channel of business from app users. In the agriculture sector too, a number of new startups such as DeHaat, Agrostar, Intello Labs and others have been attracting funding from venture capitalists and angel investors. Conventional tech investors are backing disruption in agriculture, both as a means to get a jump on a new sector and revolutionize the way business is done on the field, which has not seen much innovation in decades.

“When it comes to farmers, they do not earn high margins on produce. Their returns are low compared to their effort and investment as multiple middlemen are involved. Almost 40% of the margins the farmer could have made is taken away by middlemen," says Anup Jain, managing partner, Orios Ventures, an early stage venture capital fund.

Investors say agri-tech and grocery startups, as well as tech brands that work with kirana stores, will become a focal point for investor activity in 2019. Much of the digital push into kirana stores is led by startups in Bengaluru. Startups in urban mobility, logistics, food tech, and many other segments also see Bengaluru as the place to pilot their next big idea.

“Customers or app users in Bengaluru are generally more open to trying out new products and services," says Ashish Jhina, co-founder of Jumbotail, a startup that works with kirana stores. Startups that work with traditional kiranas will have a “huge role to play in the way that food and grocery will be transacted in the future".

The dairy industry is also seeing a similar disruption. Startups like BigBasket, Doodhwala, Milkbasket and DailyNinja are working alongside dairies to automate the supply chain. Ebrahim Akbari, co-founder, Doodhwala, says dairy industry jobs are a secondary occupation for many urban Indians. “The industry constitutes a fifth of India’s farm output. Yet more than half of the dairy industry in India is unorganized," he said.

Sharad Sharma, co-founder of iSPIRT Foundation, a think-tank, said tech disruption of kirana stores is led by two competing visions. “One vision is that people will go directly to kirana stores, and purchase directly in cash, so some startups are building a stronger supply chain for kirana stores. The other is that people will buy online, and hence aggregation is the way forward," said Sharma.

Either way, for kirana stores, the supply of goods (business-to-business (B2B) wholesale) and direct-to-consumer sales are influenced by cash-rich startups and multinational corporations like Amazon and Walmart.

While experts say foreign direct investment (FDI) regulation will suffice to regulate both B2B and business-to-consumer (B2C) kirana store trade, unemployment may become a problem for farmers and store owners. “When farmers don’t make enough to support the family, one or two members will migrate to the nearest town as a maid or any opportunity that requires little skill," says Jain.

The next government will have to focus on up-skilling and soft-skill training for the unemployed rather than just trying to meet the demand for jobs.

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