Hiren Tambe, who owns a 500-sqft store in Navi Mumbai, has at least 800 stock keeping units (SKU). Having run the store for over 15 years, he has always understood his typical customer’s requirements. Or so he thought. But with modern retail arriving in his vicinity, Hiren realised that many of his customers were going to his store for convenience. It was then that he realised that he had to invest in consumer behaviour, which meant that he had to figure out that a customer who liked packed juices would also like to buy cheese or soups. That’s when he ran into a startup called SnapBizz, in 2012. The Founder of SnapBizz Prem Kumar walked into the kirana store and explained to Hiren about technology that could connect kirana stores with real time promotions of consumer goods companies.
Hiren was sold on the idea that this technology could not just provide insight into consumer behaviour. “This platform helps me strike better deals with consumer goods companies, and four years later the platform has kept consumers loyal to my store,” says Hiren. He says that his gross earnings have gone up from Rs 1,00,000 a month to Rs 1,50,000 a month. While Hiren was pleased with the money he was earning, Prem realised the psychology of these small business owners.
“I realised that the owner is worried about paying the school fees of his children and running his household on a daily basis. The average Indian looks at family first and his business is built around how we can expenses on a daily basis,” says Prem. He says technology implementations fail because they do not understand culture. He snapped up 50 kiranas in 2012 with the same narrative in the vicinity. This learning has helped SnapBizz become a multi-million dollar business (the company does not want to divulge revenues) that works with more than 1,400 kirana stores across the country.
What SnapBizz got right while others failed?
Startups and large corporates failed when it came to addressing a solution for kiranas or mom and pop stores because they were technology focussed and not driven by the attitude of a kirana retailer. Even the mighty Infosys had experimented – in Mysore – to implement technology with these traditional businesses and failed. Also, SAP had a programme called “Ganges”, which was shelved because the kirana stores did not take to technology. Then came several startups which said they could provide real time delivery from kiranas and some also said they could connect kiranas to consumers. Even payment or fintech companies are trying to make kiranas work on apps and accept digital payments. Even Reliance Jio is piloting a wallet that connects kirana to consumer. However, the kirana store folks piloted with every startup out there - for the lucrative incentives provided - and once the incentives stopped they stopped using any form of technology. So what was going wrong? These were some of the many questions asked by Prem. He wondered what was wrong with the narrative – about the benefits of technology – or did these retailers not care at all. After working with over 50 kiranas in Navi Mumbai, back in 2012-13, he realised that the problem was not the technology; it was in understanding the social structures of kirana families that influenced his business model.
How does the business work?
Their business model makes money out of the entire consumer goods business chain and includes four components, three of which are paid modules. It comprises a consumer app that allows the consumer to transact with the kirana (which is offered free to the customer). The second module includes software that helps the kiranas capture data of stock that is sold in the store, which then allows them to stock goods based on consumer behaviour. The third module is to help distributors understand what sells in catchments and distributors pay for this data. The final model helps consumer goods companies promote their products in each kirana through a cloud-based promotion-placement model. The final module is the crux of the business. This is how it works?
SnapBizz sells a TV, a scanner, an internet connection and a tablet to the kirana, which the kirana store owner buys for Rs 35,000. The TV is strategically placed in the store for the consumer to view all the promotions of at least 15 consumer goods companies. These consumer goods companies pay SnapBizz to host their promotions on the TV and the kirana gets an added benefit - of discounts - on the product when he stocks these promoted products in the store. The promotions can be changed dynamically and SnapBizz manages the dashboards of consumer goods companies. These consumer goods companies are able to measure an increase in sales because of cross-promotions of their product through visual presentation.
“TV connects with customers at the store and analytics can kick if the entire chain is connected on the web platform,” says R. Natarajan, CFO of Helion Ventures.
Some of the big names that work with SnapBizz include Rekitt and Benckiser, P&G, Marico and Kelloggs. A total of 15 consumer goods companies use this real time promotions platform of SnapBizz.
The business began in the most unlikely of ways in 2011. Global corporate Qualcomm was experimenting with the future of long tail business in Navi Mumbai – where they were working with mobile devices that capture information on consumer behaviour and stock movements. They suddenly realised that this was a business worth exploring and began to scout for entrepreneurs who could turn this into a business idea. As luck would have it Prem – who was respected veteran of the consumer goods industry in India and abroad – was living in London at the time and wanted to do something in India.
He had been quiet a successful entrepreneur between 2001 and 2010. Prem sold CISLINK.com, a B2B portal that connected business services in Eastern Europe, and also managed the distribution of a consumer goods company in Russia. In 2009, he founded FLY Mobiles, a Micromax equivalent in Eastern Europe.
“Through common connections Qualcomm reached out to me. They saw the kirana business as a billion dollar potential and I quickly prepared a business plan and flew down to the USA to win the idea,” says Prem.
Prem immediately told the global company that to crack this business one must work with the distribution muscle of the consumer goods industry in India.
“This was the only way to scale up,” says Prem.
Qualcomm conceded that Prem knew his business and helped him to own the idea by putting in seed money. There, the idea of SnapBizz was born and Prem started the company in Mumbai. He solved the distribution problem to get kiranas by working with a P&G distributor, who gave him access to the likes of Hiren. He convinced distributors and kiranas to work with him because of the narrative that he had prepared. “I told them that today everyone was shooting promotions through print ads and posters. Companies were shooting in the blind and I told them that a TV-based visual in the store was far more powerful than a poster in the kirana,” says Prem.
“These businesses are built on scale, the more kiranas they convince to come on the platform the more data they have to work with to sign on consumer goods companies,” says V. Balakrishnan, Co-founder of Exfinity Ventures.
The company has raised close to $8.9 million from a clutch of investors including Jungle Ventures.
Today after 1,400 kiranas, SnapBizz plans to capture 10 percent of kirana stores in each large city in India. In Mumbai alone there are 55,000 kiranas. In India there are around eight million kirana stores, and based on different reports the size of the market could be as big as 12 million mom and pop stores. SnapBizz wants to go after this market. Along with him there are folks like Xlogix, SuperZop and StockWise. These business models are similar. The management teams of these companies do not have distribution experience, but they have technology and analytics experience. SuperZop has reached 50 kiranas, Xlogix works with a corporate retailer and have reached about four kiranas. So far, StockWise has signed up with 10 kiranas and four corporate retailers. None of these businesses have crossed Rs 1 crore in revenues.
SnapBizz has managed to sign large consumer goods companies to convince their ecosystem to work with their kirana ecosystem. There are more than 200 small, medium and large FMCG companies in India and each of them works with 1,000 distributors on an average.
According to Ernst and Young, the retail market is $550 billion in size and only 10 percent is organised. With companies like SnapBizz even the traditional retailer can become organised.