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India’s retail scene has been abuzz in recent weeks, with Reliance being at the centre of it. Its acquisition of Future Group gave it the lion’s share of organized retail, that is, hypermarkets and supermarkets. The online arm of Reliance Retail, JioMart, has started a programme to deliver products to consumers via local kirana stores.

A speculative report last week, quoting an unnamed source, since denied by Reliance, even floated the possibility of Reliance Retail selling a 40% stake to Amazon for $20 billion, which would bring together India’s leaders in brick-and-mortar retail and ecommerce.

Whether that materializes or not, it draws attention to the need for an India-specific online-to-offline strategy to go beyond the top tier of consumers that e-commerce mainly serves.

Kirana stores, accounting for 90% of retail in India, remain a crucial link. This is even more so in the post-pandemic scenario where footfalls have dwindled in malls. Hence, the recent launch of Flipkart Whole, by the Walmart-owned e-commerce company, for kirana stores to order supplies.

But B2B e-commerce has proved a tough nut to crack in India where a large section has been highly resistant to digital transactions. As a result, a number of startups have folded up or failed to scale in this space.

One startup that did scale superfast is Udaan, which has raised $900 million to date in VC funding. But it is yet to show evidence of a sustainable business model. A recent report citing unnamed sources puts its monthly cash burn at $15 million.

Scaling profitably

Another B2B e-commerce startup with a presence in nearly 500 towns and cities, serving over 200,000 retail outlets and 550 brands, is ShopX. But unlike those “pursuing scale by throwing fundamentals out of the window," ShopX claims to be making money on every transaction instead of burning capital. “We have a positive contribution margin and our B2B engine turned profitable in June this year," says Amit Sharma, co-founder and CEO.

From the outset in 2015, ShopX targeted the peculiar needs of Bharat and today more than half the retailers on its platform come from tier-2+ towns. The app is available in seven languages. More recently, it integrated an assistive tool to guide users that talks with users in their preferred language. It’s a tool developed by another Bengaluru-based startup, Jiny.

AI/ML technology at the backend personalizes the interface for a retailer based on geography, preferences and behaviour. The merchandise that a shopkeeper in Hassan sees would be different from what his counterpart in Meerut would.

The localization and personalization efforts pay off in drastically cutting down the physical touch points required to onboard retailers. “We first send a salesperson or a local partner who gives a quick demo. After that, the system takes over and we don’t need repeated visits," says Sharma.

All this is giving brands access to markets they would have struggled to reach with traditional distribution channels. Karbonn Mobiles, for instance, nearly doubled the number of pincodes where its new products could reach. As Sudhir Hasija, chairperson of Karbonn Mobiles, said in a recent press statement: “We needed the right partner in an extremely competitive phone market that could enable us in reaching the true drivers of retail in the country, the small-scale retailers that sell to Bharat."

The reason a startup like ShopX can engage with kirana stores though biggies like Amazon have also been wooing them comes down to a question of focus. Amazon excels at serving the needs of consumers, but has struggled to make a similar headway with its B2B play, Amazon Business, at least in India so far.

Focus on details

“The tech platform has to nail down every single minute detail like how a customer views a catalogue and what features are needed for a businessman whose expectations are different from those of a consumer," says Sharma. “A typical consumer will lean back on the sofa and buy things in a leisurely way. A typical retailer will lean forward because they just don’t have time. A business user will tap the screen 10 times more than a consumer." These are the behavioural differences they’ve accounted for too.

There are two kinds of consumers in India: the tech-savvy crowd, mostly in the metros, that prefers self-help, and the rest who prefer some human assistance. It’s the latter, which is the vast majority, that kirana stores have been serving. But who serves the kirana stores best is an unfolding story.

A platform like ShopX that focuses on their needs has its selling points. Then there is an entity like Reliance Retail which could potentially leverage its sheer size to arm-twist FMCG brands into making compelling offers.

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