Monday, August 20, 2012

The changing profile of Indian retailers & AaramShop.

A typical Indian Neighborhood Grocer
Kamal Desai is the 2nd generation grocery retailer based out of Andheri West, in Mumbai. He took over day-to-day management and operations of his family-owned grocery store about 9 years ago.

The 9 years of running his store 1st hand and assisting his father since early childhood enables Kamal to reflect on changing trends in Indian retail and its opportunities and challenges over the last 4 decades with a level of expertise.

The changes have been happening over the years, but the last 7 to 8 years have been the most exciting and challenging. Based on what he saw around, he started off by doing minor modifications to the store layout since he took over – starting with creating self-service isles, better product displays and accessibility, in-store lighting and then going on to air-condition the store.

While the neighborhood that Kamal services has seen a steady population growth and income levels, it has also seen a change in consumers’ tastes – prompting Kamal to move away from commodities to brands. And while Kamal has a strong one on one relationship with a lot of consumers and almost a legendary service level efficiency for loyal consumers – he is facing an increasing challenge with the changing lifestyle of a number of his consumers and of course from the increasing competition from the modern trade outlets.

With most couples leading a very hectic lifestyle, most transactions happen in the morning and evening on the phone and thus the order values have been going down and putting pressure on the three delivery boys that he has. He has also noticed that a lot of consumers end up doing their bulk shopping from the modern stores over the weekends.

Based on how his consumers use the mobile phone and the way they seem to be stuck to the internet, including Kamal’s own son, Kamal had been contemplating usage of technology to engage his customers better, however, his limited knowledge of the domain and lack of time, meant that the thought had not progressed till he partnered with AaramShop.   

When we created AaramShop it was built basis the need-gap which we saw between millions retailers like Kamal Desai and their consumers. AaramShop’s core proposition is that it helps retailers marry their core advantages of physical proximity to consumers and their strong relationship of trust with the consumers with the fact that they can now use the internet to be accessible to them in a meaningful manner.

AaramShop is a hybrid retail platform that enables retailers like Kamal Desai to have a transaction oriented web-front to their store, so that when a consumer from within his neighborhood visits to shop for groceries, he/she can choose a preferred retailer to do ordering with. AaramShop’s unique business model removes the “faceless” commerce associated with most ecommerce sites, and rather gives every retailer a web-front to their physical business.     

Thus far the two ways that a shopper could do business with neighborhood retailers, were either to walk over (wherein the shopping experience is normally not too great, as most stores are cluttered and small) or to order on the phone (wherein while this is significant part of the retailers’ business; the order sizes are normally small). AaramShop has enabled a third way – which is that one could order online and have it delivered to your doorstep from your preferred retailer in a matter of hours.

We have observed that the value of orders placed online are about 6x the normal phone based orders, primarily because shopping online is not just convenient, but is able to suggest appropriate options to shoppers. This significant increase in order size represents a huge benefit to the retailers.

The retailers also gets time to service the order, as against the urgency involved in phone based orders – and hence is able to plan / utilize resources better.

We have created AaramShop to help retailers make their businesses more competitive, relevant and responsive to consumers’ changing needs – and all of it for free. When a retailer partners with us we give him a unique online identity, put together a micro-site with terms specific to each retailer, placed on virtual maps, plug-in the presence into a comprehensive database of grocery products and make the store’s online presence transaction ready. Once on AaramShop, the retailers’ stores are also available via mobile apps and on the unique AaramShop’s Facebook presence. As AaramShop is an open platform, any retailer who has a home delivery mechanism in place can opt to have a free online storefront. 

We started our operations about 9 months back and today we power over 3000 stores, just like that of Kamal Desai, across 27 cities in the country.

At AaramShop, we believe that the FMCG / CPG (grocery) vertical is not friendly towards a classical ecommerce set-ups, predominantly on account of factors like low margins on brands, extremely complex distribution logistics, short-shelf life, varying nature of goods, a very robust existing supply chain and hence easy availability, etc. And it is to effectively address these factors and based on Indian ground realities that we have created our disruptive eco-system based solution.

Also at AaramShop, we want to focus all our energies on effective marketing using high-end technology interfaces, and have no ambitions of trying to get into the stocking and distribution logistics of FMCG / Grocery products – we believe that aspect is best taken care of by seasoned retailers like Kamal Desai who have decades of experience in managing the transactions.

In order to ensure that AaramShop can function effectively as a free platform, its business model is not dependent on taking a commission from the retailers like Kamal, but is rather based on premium services that we offer to FMCG / CPG brands so that they can more effectively engage with the shoppers on & off the platform. Our premium services include highly targeted advertising & analytics supported marketing. AaramShop also offers a number of in-store and store-led neighborhood marketing solutions for brands.

While it is still early days, however, we are seeing consumers of retailers like Kamal Desai switching on to the ease and convenience of online ordering or using their mobile apps, something that not only brings Kamal additional revenues but also a lot of aaram in executing those orders. 
This article was authored by me & was carried in the Retailer Magazine in July 2012. Reproduced with their permission. 


Mathew Pillai said...

Nice Article Vijay. I am sure the AaramShop initiative is going to have a big impact on Indian retailers over time.

Watching this space closely.

Vijay Singh said...

Thanks Mathew.

It is early days, but yes, I am sure it will have a huge impact and we are starting to see early results.

Nidhi Sharma said...

This is a wonderful initiative and thanks for sharing the article.

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