AaramShop: Kiranas Go High Tech

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AaramShop PRO and its brand engagement center for consumer analytics, and real-time data on their brand’s performance, and customer feedback, collected by AaramShop based on the website monitoring and social media feedback

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How an online retail platform helped combine mobility, the cloud, and analytics to bridge the gap between kiranas and their tech-savvy customersEarly 2005, the emergence of large format retail stores—the Indian equivalent of Walmart—marked the beginning of a two-month blitz of pink paper articles forecasting the demise of local kiranas or neighborhood stores. Then, a contrarian view, backed by research, denied that kiranas would go out of business. And the media went to town again.More recently, however, the pendulum has swung back. The urban middle class with its disposable income and lack of time has begun to break age-old ties with its local kiranas, preferring the convenience that large deep-pocketed retailers can afford. “Kiranawalas are marred by a lack of capital and physical space constraints for expansion. And most of us are not highly-educated or tech-savvy. From where do we gather the resources to match these large business houses?” asks Sreekanth, a grocery store owner in Bangalore’s posh Indiranagar neighborhood.One company wants to give kiranawalas that muscle. It insists that the strength of kiranas—their deeply-entrenched distribution channels—only needs to be tweaked with IT for them to take on large retailers. David Vs. Goliath In 2008, the Indian Council for Research on International Economic Relations (ICRIER) ran a study which forecast that large retail formats would grow at 40-45 percent a year—and would leave their unorganized cousins far behind.Despite the rapid expansion (and contraction) of large retailers, some believe that kiranawalas have a distinct advantage. “Independent retailers have a detailed understanding of consumers’ shopping preference and habits. Given a fair chance, the independent retail sector is the best bet for investment and innovation as they possess a comparative advantage of knowing our eco-system,” says Dharmendra Kumar, director, India FDI Watch, an organization that’s fighting against FDI in India’s retail sector.Vijay Singh, CEO and founder of AaramShop, agrees with that assessment of a kirana’s strength. He says the company realized that local neighborhood retailers didn’t have an online storefront—and that’s where today’s consumers are. “That’s why we are leveraging technology and the kiranawala’s existing inventory and distribution channels to connect them to a set of consumers who are low on time and high on stress.”That’s exactly the business model AaramShop has introduced, to great effect. It uses SMS and the cloud to bridge the gap between kiranawalas and tech-savvy consumers. Kiranawalas can register on the AaramShop website for free and after a vetting process, are listed on the AaramShop website as retailers, giving them an online store front for the first time. The AaramShop website allows customers to choose grocery products from 141 categories and hundreds of brands. Customers add to a shopping basket, after which they can choose from a list of AaramShop kiranas for the one closest to their residence. They can also indicate a preferred time for delivery. “The retailer is informed about the order via an SMS, and is then sent an e-mail with the details of the order. The retailer delivers goods and collects cash from the customer,” says Ritesh Raj Gupta, VP-technology, AaramShop. It’s a business model that fits well with the mental make-up of the Indian online consumer. According to the Internet and Mobile Association of India, e-tailing constitutes only 8 percent of the Indian e-commerce market. That low number can be explained by their distrust of e-commerce, especially where it concerns goods that need shipping, or whose quality can be questioned. By ensuring that customers can pay kiranawalas directly—and after they have checked their purchase—AaramShop gets around that online hesitancy. Importantly, it’s a payment model that works primarily because of the proximity of kiranawalas to their customers, making it fairly easy to get an item replaced or exchanged. That’s an advantage that few large retailers can match.AaramShop started in April 2011 with 162 kiranas in Delhi and NCR. It has since added 31 kiranas in Bangalore and has plans to move into Mumbai by September. By the end of 2011, it wants to expand it’s presence to the top 15 cities with 2,000 kiranas.That’s the sort of growth that technology typically finds hard to keep pace with. Which is why Gupta turned to the cloud. “We are extensively using the scalability and flexibility of the cloud to achieve such a tremendous growth rate,” says Gupta. The cloud meets another requirement of the experimental new business model: Constant tweaking. “A cloud-based environment and incessant in-house app development based on stakeholder feedback constantly modifies AaramShop systems to be capable and scalable,” says Gupta.Tripping on Technology  One of the beauties of Singh’s new model is that it avoids some of the conventional challenges that his other online brethren face. Take for example, what Mukesh Bansal, CEO of online retail store Myntra.com, says: “Inventory needs to be carefully ordered and managed. Delivery time plays an important role to ensure that the consumer comes back to your website to shop.” Most e-tailers start as small entrepreneurial initiatives with tight budgets. So, over-provisioning inventory, stock-outs, or unmanaged deliveries can be body blows to the business. “However, the brilliance of the AaramShop business model lies in the fact that it leverages smart technology and the already existing inventory and delivery mechanism of the kiranawalas,” says Gupta. “This helps us extend our services at absolutely zero cost to the consumers and to the kiranawalas.”Not having to worry about warehousing or distribution means that AaramShop can focus solely on expansion. And using a mobile to ramp up its business quickly is a no-brainer in a country where almost everyone has a mobile phone. But AaramShop’s original ‘mobile-only’ plan, didn’t pan out the way they wanted. Gupta says their first idea was to design a mobile app that would help kiranawalas receive orders from AaramShop and update AaramShop once the order was delivered.“The plan was ‘wow’ but we realized that kiranawalas were uneasy handling a complex application.  Many kiranawalas are conventional in their approach towards business and they might take time to adopt an application-based transaction system, no matter how simple it is,” says Gupta.Their next best alternative was to use SMS. But Gupta quickly realized that would be a problem too. “A long order would have to be sent in two or three SMSes which was not very feasible,” says Gupta, referring to the *some text missing* error that occurs when texts get too long. That forced Gupta and his team to take a hybrid approach: An SMS that alerts kiranawalas of an order, followed by an e-mail with a complete order. The fact that not every kiranawala has access to e-mail has not escaped Gupta. “Even the cheapest of phones nowadays allows one to access e-mail if one has a GPRS connection,” he says. But though IT forms the backbone of the entire business model and registration is free, kiranawalas have to be trained to use the system. In fact, the website ensures that kiranawalas pass a ‘dummy test order’ before they can be listed. “We have to constantly ensure that every retailer who enters the system is vetted for the minimal technical acumen required to keep the show going,” says Gupta. “Providing training and support for each and every retailer across the country is extremely challenging.”Another challenge is payments. Although they wanted to offer an online-payment mechanism, it has problems. “If a customer orders for 20 items and the retailer has only 19 of them, refunds for so many transactions can become troublesome with an online payment model,” explains Singh. “However, we are planning to add online payment options soon, in view of customer convenience.”The FMCG Angle  After using the cloud and mobility, Gupta quickly turned to analytics and forecasting. AaramShop’s revenue model is designed to ensure that neither consumers nor kiranawalas have to pay. Instead, AaramShop makes its revenues from ads, special offers, programs—and information. “Since we generate a lot of data around what products are selling, in which part of the country, we wanted to share the intelligence with FMCG companies,” says Gupta.FMCG companies can bank on AaramShop PRO and its brand engagement center for consumer analytics, and real-time data on their brand’s performance, and customer feedback, collected by AaramShop based on the website monitoring and social media feedback. (Yes, AaramShop’s on Facebook).Today, Gupta is working on a solution that can elevate analytics to a level where the AaramShop systems can warn an FMCG company—in real-time—when a retailer is stocked out of a certain item. “Companies can then immediately alert their distributors in the area to replenish stock at a given store,” he says.  

Since we generate a lot of data around what products are selling, in which part of the country, we wanted to share the intelligence with FMCG companies