Will E-commerce Shake Hands With Small Retailers and Kirana Stores?

Indian government urges e-Commerce players to make small retailers and Kirana stores part of their growth.

India is among the fastest-growing e-commerce economies in the world. The industry is growing at an annual rate of 51% and is expected to jump to US$ 120 billion in 2020. Unmatched Foreign Direct Investment and uniform implementation of Goods and Services Tax has contributed majorly to this growth story of e-commerce in India.

Furthermore, smartphone usage and internet penetration in India’s semi-urban and rural areas have largely influenced consumers’ buying behaviors, boosting e-Commerce sales remarkably all over the country. Online shopping offers customers numerous choices at competitive prices across a wide array of products and the convenience to shop anything, at any time and from anywhere with just a few clicks on their computers, tablets, or mobile phones.

India’s E-Commerce growth threat to traditional retail stores?

While it has spoiled the Indian customer for choice, the tremendous growth of e-Commerce is a major threat to traditional mom-and-pop stores. Many retail enterprises are stepping up by opening online stores and adopting tech solutions to offer e-payment options, quicker deliveries, and better customer experiences. However, small-scale brick-and-mortar stores with limited capital and infrastructure accessibilities are struggling to keep up.

The participation of niche industries like FMCG in online trading is choking a large number of small Kirana shops and retail outlets to death, owing to tremendous online discounting and significant loss of business.

Government urges E-Commerce enterprises to team up with small retailers

The Department for Promotion of Industry and Internal Trade (DPIIT) has approached e-commerce companies asking them to send plans to work with small retailers, indicating that a policy may be implemented in this interest. With this initiative, the government is trying to address the concerns of India’s unorganized retail industry.

Cooperation from e-tail businesses will help the government in creating a standard framework empowering small retailers to catch up to the rapidly growing e-commerce sector. Such collaborations will also strengthen India’s e-commerce landscape in the years to come. Fulfillment companies in the 3PL sector, tech logistics, inventory management, customer support, etc. will also play a major role in putting the two pieces together.

Locus is working towards this vision in association with one of India’s leading fashion e-commerce players. The company was seeking greater last-mile efficiencies, especially in locations where several packages are delivered on a daily basis.

Locus devised a business model that involves local retail stores that offer home delivery services in dropping off the company’s packages in neighboring areas. Partnering with such local Kirana stores in heavy-density areas helps save a significant amount of time and effort otherwise taken by delivery agents to find correct addresses.

In conclusion:

Will e-commerce team up with small retailers and Kirana stores making room for mutual growth? Let us wait and watch! However, e-commerce giants like Flipkart, Amazon, Zomato, and Swiggy haven’t yet responded to DPIIT’s query.

We at Locus are looking to work with E-Commerce companies to drive synergies across the retail ecosystem in India by bringing e-commerce companies and retail stores together and would be happy to participate in this discussion.