With 1M customers and transactions worth Rs 160cr, Tarnea is empowering the kirana shop next to you
The year was 1989 and the National Dairy Development Board (NDDB) was piloting Project Safal, its fruit and vegetable business. Suresh Satyamurthy joined the project as part of the engineering team, which created the country’s first frozen storage technology.
Suresh recalls his biggest challenge at the time being the unavailability of information with regard to distribution. No one had data on how much inventory was being pushed to a particular distributor or retailer, and how much did they had in stock.
It’s been nearly three decades but the situation today is not very different. Today, according to the 48-year-old entrepreneur, 95 percent of consumers still shop through unorganised retailers (kirana stores) as opposed to supermarkets, and the world’s fifth largest retail economy lacks clear visibility of the supply chain.
This led him to search for a solution to offer these retailers.
His inspiration? Walmart’s proprietary Retail Link, which keeps every player in the ecosystem aware when a unit is sold, right from the supplier to the distributor.
Thinking on the same lines, Suresh co-founded Bengaluru-based Tarnea with his friends Madhav Sitaraman (38) and Senthil Rajagopalan (43) in 2013 and brought unorganised retailers onto SmartMile – their technology platform.
Making retailers smart
With almost 200 retailers on the platform, SmartMile helps retailers both upstream by finding the right Distributors and Principal Suppliers, and downstream by helping them manage customers.
Choosing pharmaceuticals as their first vertical, the platform also aims to help retailers in four areas:
- Inventory management: For drug stores, the biggest problem is keeping track of expired inventory. With multiple batches coming in with different medicines, it becomes difficult for drug retailers to track inventory, which has limited shelf life, making it a manual process. SmartMile helps stores keep a track of their inventory, alerting store managers about perishable products that are likely to expire, thereby automating the process.
This also saves retailers from losses as they are able to return the products to distributors or companies directly, in due time, if not sold.
The platform also helps store staff respond to customers faster by equipping each salesman with the billing system. According to Suresh, retailers using SmartMile claim that they’ve reduced their customer wait time by almost 80 percent. Additionally, in case the internet breaks down, shop data is stored locally transmitting it to the cloud server when the connection is revived.
- Ability to optimise buying: Retailers usually lack price transparency and choice when sourcing goods for their shops. With more than 15 large-scale distributors on the platform, the retailers are empowered to choose the best price and trusted deliveries.
- Mega retailers vs retailers: Suresh tells us that the biggest attraction mega retailers and stores offer is their loyalty card, which can be availed through points, discounts or gifts, leaving normal retailers behind in the race. The platform helps normal retailers or kirana stores to extend benefits of the loyalty programme to customers, while integrating it with their buying profiles. This lets stores set offers and even issue loyalty cards.
- Integration with e-commerce and hyperlocal: The firm also helps offline retailers extend their digital presence by putting them on the map with hyperlocal and e-commerce companies. The platform has also opened its API to hyperlocal startups as well as distribution aggregators to integrate with it and be a part of the ecosystem. This in turn helps hyperlocal startups source products faster from offline retailers.
Kicking up a storm – traction and pricing
As of now, Tarnea claims to have 1.1 million customers who have transacted through their platform as of January 2016 with 1.6 million transactions between 2015-16.
Claiming to have doubled their numbers every quarter, the co-founders tell us that the value of the transactions are as large as Rs 160 crore.
The firm plans to notch up their retailer count to 5,000 by November 2016. As of now, Tarnea has operations in Tamil Nadu and Andhra Pradesh. Tarnea gets 90 percent of their users from Tier 2 cities.
In the future, Tarnea is aiming to set up shop in 15 states and 100 cities, with Hyderabad, New Delhi and Mumbai next on the anvil. The startup also tells us that there is a possibility to also take the solution to markets like the US, Europe, and Africa, which surprisingly face similar challenges.
While divulging no information about their revenue, Suresh says that the platform is free for the lightweight version offering billing, financial transactions, and auto management. Trying to match costs to an average telecom bill, the medium version of the product is priced at Rs 500, which offers internal inventory management capabilities as well.
The company is working to launch the premium version of the product by July 2016, with the features and pricing yet to be decided.
While already having raised funds from angel investors, the firm is looking to raise a Series A round this year, and has been incubated in this year’s batch of the Microsoft accelerator programme.
Tarnea’s unique case
Tarnea is an open architecture SaaS-based retail solution.
According to a recent report by Google and early-stage investor Accel Partners, Indian SaaS companies are expected to reach the $10 billion revenue mark in 2025. At present, according to the same report, India has over 500 SaaS startups currently, collectively earning $600 million in revenue.
What makes India a lucrative market is the cost advantage that India-based SaaS companies offer, as seen in Tarnea’s case.
However, what makes Tarnea an interesting solution is the open architecture, which if successful, will get the hyperlocal biggies onto one ecosystem, instead of letting them work in their silos. Additionally, payment solutions and Fintech companies can also integrate with this ecosystem building exciting solutions for the supply chain.
Suresh feels that their unique position in the industry is as a B2B2C platform. However, what needs to be seen is how adoptability pans out for this platform, for it to reach its potential.
