Grocery retailing and e-tailing, hand-in-hand

In keeping with the competition, when most of the retailers are racing a tad too much to buy a spacious retail location, investing high volumes on store designs, training the staff and shouldering high maintenance cost to present lucrative stores for shoppers, there is a silent trend that has remained un-noticed in the rush for big format stores.

Have you ever noticed that you and your neighbourhood mom and pop stores still exist even though Food Bazaar, Big Bazaar, Reliance are catching the limelight.  Formats like Walmart are making its presence in an aggressive way to give competition to the existing vegetable and grocery set-ups.

If I’m not wrong, an average Indian family needs 2-3 hours a week for grocery shopping. Have you ever noticed that you and your neighbours have started getting home deliveries for some basic grocery requirements—milk, eggs, bread, vegetables, fruits etc from the store department of the society?

This trend has been increasing due to two main reasons

• High fuel price: Indian families are not interested in spending time on these products
• Families want more leisure time for themselves: Since both the partners are working, shoppers find this activity as waste of time to collect groceries in weekends

When most of the big retailers are fighting for larger space, opportunities can be foreseen where you do not have compact space and can still run successfully through Etailing the Grocery model.

The solution could be a mix of website, mobile, IVR so that partners do not have to be TECH savvy and better they don’t need to have a computer so my 60 year old meethaiwala who knows how to use the mobile and thinks computers are "Ravans of Kalyug" can also increase his customer base and thus improve his quality of life.

Steps required

High rental costs have made the retail business cumbersome for the independent players.  As told by Ragib Hussain, VP, Vice President Strategy at e.Soft Technologies,  “This type of model does not need much of investments. Etailing models (having virtual shop) can help retailers in expanding the business thus by covering larger area & reap good volumes.”

You need to increase your customer base: Online services and then home deliveries would fetch revenues only when you have large customer base. Margins are the rewards which an investor gets and this is what he has to work on to have with minimum liable cost.

Develop tie-ups/partners: Developing partnership agreements with the kirana shopkeepers and others nearby shops in the area that would reach the consumers through home delivery systems. This should  be the initial step of building a strong network in the areas concerned you want to cover.

Also, it would decrease the liability on the retailer—warehouse cost, maintenance cost, procurement cost, etc.

Develop your own site and make a strong viable back-end system for smooth functioning of the business model: Now to make a consolidated website would require minimum of Rs 5 lakhs and above—which has all the applications and security options to run a retail business.

Instead, you can opt for cloud services like SaaS to build up your own site in just $14 to $ 50 rental charges. Cloud services would play a vital role to make updated connections with your suppliers, logistics suppliers, CRM updates and drop shipping suppliers. Because time is a critical factor, efficient distribution is of utmost importance. Technology plays a key role in enabling an efficient dairy distribution model.

This is the back bone of the whole concept when the business starts working and it is the most challenging part of the business to make real-time connectivity with them.

Home delivery services: By tying up with the partners in the local areas, investor can direct the orders to those shops and through delivery boys; the task can be executed smoothly. This would even increase the revenue prospects of the local partners.

If the business model is churning profits, there is no harm in having your own warehouses and company owned shops in the localities. This could be the way to expand your business model and make it stronger.

Each small outlet should be centrally connected to the warehouse to record the sale and updates are on real time basis. This would help to replenish the goods which are going out of stock.

Delivery system: Tempos and other mini trucks can be used to provide deliveries in the located areas if orders come in bulk in particular area.