Making mom-and-pop stores stock wise
After 20 years of working in the corporate world, one gains a lot of knowledge about sales, marketing, and closing deals with prospective customers. In that time, one also comes to understand that technology should be built based on observation. A technologist at heart, Srinibas Behera, Founder of Retigence Technologies, always observed how retailers stocked and replenished their goods. In January 2015, he quit working and began to plunge himself into building technology for the Indian retail industry.
Four years ago, he realised he could put his knowledge of databases to use in making trading in India efficient by building a scalable platform for small retail businesses. "I spent six months observing how small stores work and how the owners of the stores think," says Srinibas. He says that the kirana experience was the genesis behind his company's platform StockWise, which was created to empower kiranas with data and to allow them to make the right decisions while ordering products.
Since last year Srinibas has taken the technology of his company to corporate and kirana.
How does the kirana ecosystem work?
There are 10 million kiranas in India and each of them works with distributors of FMCG companies to stock products. Most of the time the kiranas do not have a say in buying products because the distributor claims to know the catchment and the offers available to increase kirana margins. Little does the kirana know that the distributor is making better margins because he is pushing products that make margins for him. The distributor dumps them on to the kirana, and if the item is not bought by the consumer, the working capital gets stuck. Imagine a store of 1000 sqft, where the owner may have over 800 stock keeping units. He cannot keep tabs on what sells best for him and he may not able to tell the mix of products that could increase his margins. So what does he do? He sticks to a formula and is happy with the margins. "The technology is simple and it scans every bar coded item. It allows them to input items without bar codes too," says Srinibas.
So how does Retigence help the kirana?
The kirana pays Rs 8,000 to Retigence for the provision of an internet connection, scanner, and tablet. The tablet, where the StockWise app sits, helps the kirana owner understand his inventory and sales. When the goods come in, he scans them to know what has come in and when the consumer buys the product, the scanned item becomes part of data set in a dashboard, which provides graphs on what should be replaced and how particular products sold well when combined with others.
With this data, the owner can tell the wholesaler or distributor that only a particular kind of product sells well in the catchment and that he need not buy products that remained unsold in the store.
StockWise began to be distributed to retailers in 2013, and there are now over 10 family-owned department stores using the product in Bengaluru.
For Retigence, the big surprise came when large retailers began to take this product designed for kirana owners seriously. They did so because of the robust dashboards being created on the StockWise platform. Spar, Heritage, Apollo Pharmacy, and Sangeetha Mobiles are some of the corporate names that have used StockWise.
"Such a product makes retailing efficient and increases the revenue per sqft for small and large retailers. It brings costs down," says Kishore Biyani, Founder of the Future Group.
According to Ernst & Young, food and grocery retailing is $350 billion in size and more than half of the $600 billion retail market in India. About 90 percent of this market is dominated by kirana retailers, and they fall in the unorganised market. They have no technology helping them make managing inventory efficient..
The competition for StockWise comes from SnapBizz, Xlogix, and SuperZop. These companies have similar business models. The technology spend on the retail industry is a dismal 1 percent, which is around $6 billion, and most of that money is spent by 30-odd large retailers in India.
Retigence’s business model is to collect data and work with FMCG companies to streamline their supply chain for kiranas. The company will also make money with corporate retailers on annual maintenance contracts. The business has kicked in revenues, but the company shys away from disclosing revenues. "However, my heart is with the kirana ecosystem and we are figuring out distribution strategies to expand our kirana operations," says Srinibas.
"Any business that has anchor customers wins in the long run," says V Ganapathy, CEO of Axilor Ventures.
However, the problem is that the kirana ecosystem deliberately stays away from technology. It is a matter of mindset; kirana owners believe technology cannot help solve their real problem, which is the availability of ready cash to reinvest or save. But this is exactly what StockWise hopes to solve. Srinibas and his company are at the centre of this revolution by making the ecosystem efficient through data capture and analytics.
