ShopTap brings the convenience of online shopping to the trusted neighbourhood store
It was seven in the morning. As usual, Krishna Bollaram took his dog out for a walk and, just like every morning, stopped at his trusted neighboured kirana to buy milk. This time he was greeted by an unusual sight: there was a kiosk and a device that had a display of different gadgets, products and, something that he was desperately looking for, the latest model of iPhone.
Krishna's neighbourhood kirana was one of the first successful runs by ShopTap, a Hyderabad-based startup. Simply put, Shoptap is a smart sales platform that helps bridge the gap between sellers and buyers who are present in the online and offline space. What ShopTap essentially does is connect offline traditional stores with the online world.
Bringing in the element of trust
With a Point-of-sale (PoS) platform, the customer can look at a whole range of inventory. Apart from that, the web and mobile dashboards help organisations’ engagement, conversations, and sales. There are close to 14 categories from which the customer chooses the product, the salesman places the order, and the product is delivered with the payment done via cash on delivery (COD).
On his choosing a product off ShopTap's kiosk, Krishna said he didn’t know or care what ShopTap was. He trusted the shopkeeper who he has seen every day for seven years, and when the phone that he wanted was available there, it was natural for him to go ahead.
ShopTap Founder Manikanta Racharla explains why this works for his company. “That is what ShopTap aims to capture. We, as Indians, place strong trust in our neighbourhood stores, and we have a system of credit that follows a verbal record. The neighbourhood store guy knows your family and is even invited to family functions. You don’t get that trust even with big brands,” adds the 24 year old.
Starting with Payfix
Manikanta’s journey with Shoptap is strongly moulded by his earlier venture, Payfix. In 2012, when Manikanta was doing his course at ICFAI, he got a month-long internship opportunity at Moscow.
While the internship was for just one month, after landing in Moscow, Manikanta found that the city was a thriving work and business base, so decided to extend his internship for another 30 days. “I had written to the college a few times, explaining how big the opportunity would actually be, but they didn’t agree, so I took the chance and was suspended for a semester,” says Manikanta.
After 60 days, Manikanta found that he had time on his hands, while his friends were off to college. This is when he came up with the idea of Payfix.
In 2012, Manikanta saw that local kirana and general stores had to struggle with different modes of managing payments. Citing an example of a prepaid mobile recharge service, Manikanta adds that in neighbourhood stores, the retailer is stuck with multiple devices for each service provider and they need to make several initial payments as well.
“The small retailers found it difficult to track the income. So we created one single software and product, where with one single wallet you can make any kind of payment for any service provider,” adds Manikanta.
The team had tied up with Moscow-based Qiwi’s server architecture, for a commission-based service. Payfix started with one retail store and soon expanded to 589 stores in Hyderabad and Secunderabad, and made sales of Rs 8.79 crore.
Setting up ShopTap
However, by 2014, they saw that the problem was easily being solved by better players, and there no longer existed a pain point. But during their store visits, the team saw that there was another problem in the market that wasn’t being addressed – the problem of physical inventory and stock management in the retail outlets.
In a traditional retail setup, the owner usually gets his inventory from the wholesaler, and, in most cases, only stocks that are generally fast moving are picked. However, the number of walk-ins for these retail outlets is high, albeit floating. “They are the ones who generally ask for items that are not present in the store and the customer in most cases will be sent to another store,” adds Manikanta.
The retailer finds it difficult to stock all the different brands that every customer needs. Having already fixed a strong backing with the retail owners through Payfix, Manikanta and his team were able to pitch the idea of ShopTap to store owners.
Using the technical force of the Payfix team, he built the first prototype for ShopTap. However, the challenge was on-boarding the different brands and wholesalers. So the team decided to take time to build network and support. They got the help of an angel investor who invested a seed amount of Rs 10 lakh in the company and helped them with the network and tech support. ShopTap started operations in November last year.
Workings and future plans
The team installs a ShopTap kiosk at stores for an initial and lifetime payment of Rs 15,000. All the walk-ins can browse the inventory in their local language. There are nine languages available on ShopTap. The order is placed via an Android app installed in the store owner’s or manager’s phone. The ShopTap team then processes the delivery of the product.
After spending four months in research and with feet on the street across several areas of Telengana and Andhra Pradesh, the team built a mapping mechanism in the PoS device that tracks the inventory available only from wholesalers in the regions nearby. This ensures consumers gets the product within a day.
By the end of this year, the team intends to expand across Hyderabad, and is also intent on expanding to Tier II and III cities. The team is also looking actively to raise its next round of funding.
With increasing smartphone penetration, more use of online modes of shopping and communication, omni-channel shopping is picking up in India. Estimates suggest that India is home to close to 12 million mom-and-pop or kirana stores, which are believed to control close to $600 billion of India’s retailing business.
A report published on the subject by Deloitte last year suggests that while mobile shopping is big and picking up, mobile shoppers as such aren’t excluding the in-store experience, nor are the traditional brick-and-mortar store patrons neglecting online channels to aid purchase decisions.
The report went ahead to state that Sweden, which has seen close to 25 per cent growth in e-commerce from 2014 to 2015, has also increased its spends on omni-channel marketing efforts.
The web’s influence on retail is increasing every day, impacting both offline and online sales. According to a Deloitte–Forrester research report, 36 per cent of US retail sales today is influenced by the web and this is poised to increase to 70 per cent by 2017.
India isn't far behind in the rush for omni-channel segment; ShopTap competes with big brands like Snapdeal and Flipkart. In October 2015, Snapdeal launched its omni-channel platform which integrates offline and online retail channels, to provide a seamless and differentiated shopping experience to customers.
Players like Zivame, Pepperfry and Lenskart also have offline presence to help consumers get a touch-and-feel experience.
However, most brick-and-mortar retailers have also created silos in the organisations, as there are clear lines which demarcate each channel, and processes, people and roles are defined to handle these channels independently to avoid any channel conflict.
Currently, ShopTap is looking at a very floating consumer space. The people who walk into a regular mom-and-pop store for leisurely browsing is limited. The advantage it has is the fact that it has tie-ups with stores within Hyderabad and is purely looking at mom-and-pop stores. But it nevertheless has to compete with biggies which have deeper pockets and larger reach.