Are 'acche din' back for kirana shops as local commerce marketplace becomes the new buzz for startups?

23rd Sep 2015
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Usually, local kirana shops do not prefer to spend money on online marketing because either they find it expensive or there is a lack of knowledge about digital platforms. However, the intervention of the technology startups like Hoppr, Niffler, LookUp, Zopper, Crown ItNear.in and more have given a platform to the local shopkeepers to list their products and services and let consumer buy products from local merchants through its app. This helps these stores strengthen their connection with local customers within its vicinity.

Bhartesh Chhibbar, Founder, HeyBiz says, “Local commerce industry is expanding its geographic reach with the advent of hyper local market on the digital platform. This space will see more companies entering into it. Hyper local model is a cost-effective way of solving the problem of getting customers what they need.”

HeyBiz--Team-picture-1
HeyBiz Team

Delhi-based HeyBiz is a marketplace for local businesses which connects small and medium scale enterprises (SMEs) to their customers over chat. It lets customers search for businesses around them and initiate real-time conversation without disclosing personal contact details. HeyBiz has crossed 43,000 user registrations and on-boarded 6000 verified businesses in the month of August.

Deepak Ravindran, CEO and Founder of Lookup, says, “Lookup uses chat to disrupt local commerce in India which is a USD 750 billion industry. The hyperlocal trend will become an integral part of our society and it will create an evolution in the way we interact with local businesses.”

Bengaluru-based Lookup offers a WhatsApp-like interface enabling users to discover and reach out to merchants in their vicinity. Customers can chat with shopkeepers and restaurateurs through the app. The startup has reached one million users mark with over 800,000 downloads in Android in a period of nine months. It has around 55,000 verified businesses across all over India. In January, it has raised USD 382,000 seed fund from three investors.

By 2016, the startup aims to touch 10 million user base, onboard 250,000 verified businesses, target one million transactions, and expand to 15 cities.

Transforming the retail landscape

Hyperlocal marketplace is rapidly transforming the retail landscape by connecting local retailers with consumers through their platform and boost their business. According to Abrar Shaikh, Founder, Squeakee, more than 55 million SMBs are driving 97 per cent of India’s offline trade. Most of these SMBs are not yet online. Digitisation of their products and services in itself is a huge opportunity.

Founded in 2012, Mumbai-based Squeakee is a hyper-local search engine that uses the customers’ location to serve information on deals and discounts on products and services in the location that the customer is accessing the site from. The site provides information across categories like food and beverage, electronics, apparel and accessories and beauty and health among others. Abrar says that a few of its local sellers are now doing 400–500 orders every month. Since inception, it has raised two rounds of funding from Mumbai Angels and Kae Capital. In the next three years, the startup aims to reach top 20 cities and acquire over 25,000 local sellers.

Neeraj Jain, CEO, Zopper, says, “Of the 350 million Internet users in India, less than 10 per cent users have shopped online despite massive discounting, COD (cash on delivery), 30 days return and other policies. Users want instant gratification and much better after sales support that can’t be provided by the current model of e-commerce. Overall, the opportunity with hyperlocal commerce is 10 times than e-commerce.”

Zopper Team
Zopper Team

Founded in 2012, Delhi-based Zopper is an app that allows a customer to choose the retailer with the best price for a product from over 500,000 online and offline retailers. It has scaled its presence from one city to 20 cities in the last quarter and intends to cross 50 cities by the end of this fiscal year. So far, it has witnessed over 1.5 million app installs. The startup is targeting a revenue run rate of $10 million by this fiscal year.

Despite all the opportunities, hyperlocal startups encounter many critical challenges to validate their business model. The challenges include real-time inventory, aggregation of supply side, building last mile distribution network, organising operations, and reluctance of small business in sharing PAN, TAN or registration certificate.

Empowering local shopkeepers

Today, local businesses seem to be able to understand the credibility of connecting with users digitally and have started listing their business on the digital platform. Gradually, they have developed the acumen to use innovative way to do Sales-Marketing-Support (SMS) of business on smartphones.

With the advent of affordable smartphones and low cost data, the usage of internet-enabled mobile phone among local shopkeepers witnessed huge growth. Applications like Facebook and WhatsApp have escalated their personal and business communications. This trend seems to be the inflection point for local shopkeepers who are now opening up their business to such mobile apps. The tech startups are now seen to deploy resources to train and educate the local shopkeepers about their apps.

Abrar says, “Once the shopkeepers see the business benefit by partnering with such tech startups, they will go the extra mile to learn things on their own or through their business associates. Moreover, there has been a significant impact of the large e-commerce players on the offline retail. They have started to believe that the tech startup apps certainly provide them the necessary platform to compete with or compliment the large e-commerce players.”

Bhartesh from Heybiz says, “We have a broadcast feature in our application wherein we do send brief note and guide businesses and users time to time. We are connecting with businesses on call chat and through social platforms. We do spend proper time in the validation of every business which is added on our platform.”

According to Lookup, their team gets a list of all the vendors who have not claimed their business. They then educate them about their app through phone calls, posters, and pamphlets.

Sameer Goyal, Founder and CEO of Crown It, says, “We have a dedicated client servicing team to educate as well as work closely with the merchants. We enable the merchants to create customised deals – which are dynamic, hyperlocal and targeted to specific audiences based on their gender, location, spending and eating habits, etc.”

Founded in July 2014, Gurgaon-based Crown It lets customers collect crowns from local businesses in the form of cashback. And they use the cashback to redeem goodies like online shopping, movie tickets, and talktime. The startup has achieved a user base of 25,000 users and has witnessed 300,000 app downloads. It has over 7000 merchants in Delhi/NCR, Mumbai, and Bangalore under its roof.

According to Sameer, the startup drives a monthly GMV of USD three million and it is targeting to achieve a monthly GMV of $25 million by March 2016 ($300 million annual run rate GMV). Moreover, it is planning to achieve 20 million users by the end of 2015 and drive USD 1.2 billion of annual GMV across 25 cities in India by 2018.

Future ahead

With the India’s retail market set to scale up from USD 650 million to USD one trillion by 2020, there is immense scope for the proliferation of hyperlocal business. According to YourStory research report, hyperlocal startups altogether have raised USD 135 million fund which involves 27 deals.

Globally, m-commerce growth has outpaced traditional e-commerce growth by 200 per cent over the past few years. Abrar adds, “Internet penetration could cross 550 million by 2018. Most of the Internet would get consumed through mobile due to the increasing usage of smartphones. There will be deep integration of banking and innovative payments solutions on mobile. Most of the platforms and products would adopt mobile-first strategy.”

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