India's Richest Man Battles Amazon, Walmart to Work With Mom-and-Pop Shops
By Corinne Abrams
MUMBAI -- India's ubiquitous mom-and-pop stores are being
weaponized in e-commerce wars, as Walmart Inc. and Amazon.com Inc.
square off against India's richest man in the country's nascent
online retail market.
The millions of tiny stores and stands across the country have
proven tough to beat for e-commerce giants and supermarket chains
looking to capture a slice of the spending of India's middle
Almost every neighborhood in India relies on the stores, known
as kiranas, for groceries and staples. Kiranas are often smaller
than a one-car garage, their shelves packed with everything from
toothpaste and soft drinks to lentils and spices. Owners typically
have known their customers for years, and will often extend credit
and deliver even the smallest items swiftly for no extra
Big retailers have found it hard to compete with that winning
formula. But now, Amazon, Walmart-backed Flipkart, Reliance
Industries -- run by India's richest man, Mukesh Ambani -- and
others are hoping to capture new business by capitalizing on the
stores' close ties with customers rather than trying to break
Modern chains make up just 10% of India's grocery market,
according to Bank of America Merrill Lynch, and big players hoping
to create a supermarket habit for customers have found space in
cities is scarce and expensive.
E-commerce sales in India are expected to reach $160 billion in
India by 2026, according to Morgan Stanley. While millions of
Indians are getting online through smartphones and cheap data
plans, they have yet to fully embrace ordering online.
Reliance is trying to do with retail what it did with phones --
offer cheap data and hardware to attract first-time users, then use
that access to rope them into its ecosystem. For the kirana stores,
Reliance has developed an affordable point-of-sale machine that
will bring store owners online for the first time.
Store owners can keep track of their inventory and see what is
selling on the machine. Reliance hopes that eventually owners will
rely on them for the delivery of stock and to take orders through
Reliance plans to help small stores compete with the steep
discounts offered by e-commerce companies and big supermarkets by
providing them with offers negotiated on their behalf with
consumer-goods companies such as Unilever or Pepsi.
"These highly energetic and self-motivated entrepreneurs have
suffered in recent years because of their inability to invest in
technology and infrastructure," Mr. Ambani told shareholders in
August. "We are working towards enriching and empowering them with
our end-to-end digital and physical distribution stack."
Nikul Desai, owner of Nilgiri Tea Supply, a kirana store in
Mumbai, has been selling tea, coffee and milk powder for over five
decades. Mr. Desai, who has been using Reliance's billing
point-of-sale software for over a year, said the machine allowed
him to digitize.
"Now I can accept any kind of card payment. I don't need to make
manual bills anymore. It becomes chaotic when the store gets busy,"
he said. The company also charges him less on card transactions;
the Reliance machine charges 1.3% per transaction compared with
2.5% for other providers of point-of-sale machines, he said.
Amazon has pledged to spend $5 billion in India to capture a
part of the country's $36 billion e-commerce market. Amazon is
trying to harness the power of the kirana stores' relationships
with their customers by persuading owners in some of India's
smaller towns to guide them through purchases on devices at the
stores. The company says thousands of stores have signed up to help
it reach customers who either don't know how to order online or
don't want to do it through their phone.
V. Shankar, 46 years old, owner of the Shree Swastik General
Store in eastern New Delhi, acts as a delivery hub for Amazon.
He said he gets around 14 rupees per package, and during the
Diwali festival season when it is auspicious to make new purchases,
he receives up to 50 packages a day to be sent out for delivery or
picked up by customers.
"Both Amazon and the customers from the area trust the
shopkeepers like us," Mr. Shankar said.
In a country where making the last-mile delivery can be a
headache, Walmart's Flipkart says it has signed up around 27,000
kirana stores to help it deliver stock to customers. It says it has
trained the kirana owners to deal with customer requests and
"Kiranas are the oldest and most widely spread retail format in
India," said Kalyan Krishnamurthy, CEO of Flipkart Group. "Our
approach to inclusivity for last-mile partners is guided by the
synergies we share."
--Vibhuti Agarwal and Krishna Pokharel contributed to this
Write to Corinne Abrams at firstname.lastname@example.org
(END) Dow Jones Newswires
October 12, 2019 09:14 ET (13:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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