How local shops are adopting technology and the challenges they face

For decades, local shops have been at the centre of fulfilling the daily essentials and groceries needs. They would accept payments in cash, place an order for a particular item you that are looking for, and were the go-to neighbourhood place. Throughout the years, they managed to survive the constant onslaught of big retailers, supermarkets, and ecommerce giants.

Last year, a minuscule-sized virus confined us within our concrete boxes, and without these local shops, we would not have made it through the year. Over 10+ million local shops have played a significant role for decades, and this pandemic has nothing but reinforced their importance in our lives.

However, these millions of small shops have now become the next big target of tech firms to integrate technology into our local shopping experiences.

‘Dukan Tech’ is a word coined to describe the flurry of startups that are powering small businesses and shops to create a storefront digitally. While the ‘Dukan Tech’ trend came with full force in 2020, the concept has been a part of the ecosystem for a while now, with multiple companies existing for more than six years.

What is the need of going online? 

With an online presence, a small shopkeeper will not only be capable of reaching out to thousands of target consumers without requiring them to physically visit the shop, but will also retain them through digital means of engagement for greater lengths of time.

Along with the digital presence, merchants have all kinds of technological resources and tools at their disposal that will allow them to automate monotonous tasks and improve their efficiency. This rapidly digitising world has had a significant impact on consumer behaviour towards making online purchases, thereby aiding the onslaught of ecommerce giants onto brick-and-mortar shops.

Unless the local shops go online, there is no way for them to survive the fourth industrial revolution and beyond.

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Why is it difficult to stay persistent on the digital storefront?

Setting up a merchant’s shop online is the first step towards the long digital journey, and the greatest difficulty lies in generating the demand, without which, the engagement and retention on the platform will always be below average.

The shop owners initially faced a lack of response, which eventually led them to rethink their decision to go digital. The thing is, without being able to curate continuous demand to grow their business, long-term value to the merchants is very low, which makes it near impossible to retain them.

A digital storefront’s consistency is directly proportional to the sustained customer side engagement, which is why it is the need of the hour to generate this engagement. At the moment, battles are being fought among online platforms to get more application downloads, while completely side-tracking the retention aspect.

While the digital storefront starts profiting after a certain gestation period, the merchants will only place their faith in technology when the revenue starts coming from their digital presence. 

Focus on solving the real problem

The marketing pitches that are lucrative to customers result in a low cost per install (CPI), and hence, startups plough their funds for a higher number of downloads to show their company’s growth and progress. Instead of trying to get more downloads than the other player, we should focus on finding the product-market fit as retention is the only fruitful way to scale a product, and the most important metric to measure what we provide to users.

According to Lenny Rachitsky, ex-Airbnb Product Lead, good retention for SMBs/SaaS is ~60 percent. However, with the difference in the context of India and the free adoption and availability of ‘Dukaan Tech’, any value >20 percent indicates good health.

Simply crossing milestones and setting higher benchmarks in the number of downloads will not solve the real problem. Instead, the focus should be on improving retention by providing a “sustainable” value to the merchant.

Have we solved the problem yet?

Let alone solving the problem, we have only seen the tip of the iceberg. The commencement of a merchant’s online journey is merely the beginning. To be able to tread onto the digital storefront path will require more than just setting up the online shop. Reaching out to new customers, gaining their trust and faith, forming a bond to enhance the experience for both sellers and buyers, is difficult.

From my experience, without customer retention, the digital storefront’s performance will always be poor. To be able to curate the storefront successfully, one must go to the ground, witness all that is taking place in the physical markets, and carefully strategise plans for one product at a time to be successful.

What is ahead for ‘Dukan Tech’?

The future of ‘Dukan Tech’ lies in solving two major difficulties being faced by merchants and sellers. It begins by converting a merchant's existing customer base into buyers for their digital storefront and tapping a new customer base through various marketing channels.

This is followed by ensuring that they engage and re-engage with their customers, helping build loyal connections between the sellers and the buyers. Introducing consistency into their user engagement will help retain them indefinitely on their online storefronts.

Reports suggest that online food and grocery will expand to an $18 billion industry in our country by 2024. Retail giants like Amazon, Flipkart, and Reliance seem to align their growth plans by teaming up with over 10 million local stores in the country.

The ongoing global crisis has proven to the world that the adoption of technology is not an option anymore. The sellers may not be technologically adept, but they surely know how the business works, and the use of their selling prowess and business know-how will be a turning point for ‘Dukan Tech’.