There are several startups that serve the retail industry. And only the ones that survive understand the problems faced by the retailers and the pains of the consumers. Some of the well-known starups like SnapBizz and StockWise are working with retailers to help them understand the sales cycles and buying patterns. They have been able to advice retailers to stock smart and work with the consumer goods supply chain to manufacture products that matter to the consumer. All this is going to change the lives of retailers. But what about the consumer? When a consumer walks into the store, he/she is stuck in long and time-consuming queues. Xlogix, a company founded by Deepak Kaushik and Amar Revadi, are busting those long lines and are helping retailers churn out their stock better.
After 20 years in the corporate world - in sales and marketing - Deepak and Amar shared a common problem with retailing. Amar was surprised that the local store that he would visit frequently could not capture his habits and neither could they understand what products could be stocked better to improve margins. For Deepak it was a different problem, every Saturday he and his wife would waste at least 30 minutes in long queues at retail stores in order to make payments at the cash till. "Retailing in India is yet to understand easy check out for consumers and also stream line the supply chain to suit behaviour habits of the region," says Amar, Director at Xlogix Technolytics Private Limited.
The two of them being common friends discussed this hypothesis casually over a coffee and realised that this was a business opportunity that they could go after. Having no immediate family commitments, they decided to plunge into building a product for the retail industry in January 2015.
According to CRISIL, there are 10 to 12 million kirana stores in the country. About 10 percent of them have some form of data capture through computers. About 100,000 of them have point-of-sale systems and own at least 4000 square feet of retail space. Then there are organsied retailers who use the latest software and ERP and own at least 20,000 stores in the country. That said there is a problem. None of them have been built to figure out consumer shopping habits. The loyalty systems and customer relationship management tools do not talk to each other too. "We decided to change all that. Technology should make the customer the centre of shopping and the retail chain needs data to streamline its stocking," says Amar.
Here is how the technology works
The customer walks into the store and downloads the app of the retailer. The app connects through the local LAN and opens up the shopping aisle on the app. The customer can then use the app to swipe the QR code or the bar code - of the item - to make the purchase. This data gets captured at the cash till. The customer can either chose to go to the self-checkout till to make the payment or can use a payment gateway to complete the sale.
"The app works only in the store and not at the consumer's home," says Deepak, Director at Xlogix.
The retail IT market is a $2.5 billion market and the organised consumption market - according to Ernst and Young - is $65 billion (Rs 4,30,000 crore).
"There are not many technologies that have connected the long tail of mom and pop stores," says Srinibas Behera, CEO of Retigence Technologies.
Amar and Deepak have signed up four large department stores and a large corporate chain. They have signed an MoU with Health&Glow - a national retailer - in Bengaluru, which will be part of the customer acquisition strategy for both Xlogix and the retailer.
The business model and the competition
The company’s business model is based on annual maintenance contracts and outcome-driven business. The software manages loyalty programmes of retailers and provides them an analytics engine to create dashboards to understand their business cycles. This can make the retailers bargain for better terms with distributors and consumer goods companies.
Amar and Deepak have to contend with several companies they compete in this space. Some of the well-known names are SnapBizz, GoFrugal, and StockWise.
These companies have signed in more than 2,000 retailers and work with over 10 corporates. Xlogix revenues are less than Rs 1 crore today. SnapBizz and GoFrugal would have revenues upwards of more than $1 million. However, the opportunity exists for Xlogix because the retail universe in India is large. The two founders have invested close to Rs 50 lakhs. But if they crack it, the business can hit revenues and valuations that can run into millions.