Ravi Singhal owns two kirana stores called Home Buddy in the National Capital Region (NCR) - one in Noida and the other in neighboring Vaishali. (A kirana store is a small neighborhood store.) Twenty-four years after opening its first store, it has now become online to sell groceries. At present, it serves customers within a one kilometer range, with offers such as loyalty program, cash delivery and delivery within 30 to 90 minutes.
"The response to our online entry has not been so great, but we see it as a means of the future," says Singhal, enjoying a short break in the afternoon at his residence.
Singhal is not the sole owner of the neighborhood kirana store that makes a transition to electronic retailing in addition to running brick-and-mortar stores. SRG Retail, which owns stores in Anupshahr and Ghaziabad in Uttar Pradesh, recently launched Delhisix.com, which is advertised as a retail store. It has a physical store in Indirapuram near Vaishali and serves customers in neighboring locations.
Even though the government is concerned about the impact of online sales growth on traditional stores, kirana store owners, even in places like Patna, Jaipur and Indore, are gearing up to ride the e-commerce boom. "I see this trend of large stores located in affluent areas making their important online presence near the country," says Arvind Singhal, president and managing director of the retail consultancy Technopak.
Experts say such neighborhood stores have advantages such as the ability to adapt quickly to changes, small catchment areas to serve and enjoy goodwill among locals. For them, converting online is like adding another platform to reach local customers. They, at least the smallest, continue to insist on cash as their preferred mode of payment. Very few have made provisions for online payments. They are trying to attract customers online through additional discounts and other gifts. Delhisix.com, for example, offers a 10 percent discount on all products, and for any order above Rs 3,000 that gives movie tickets for two.
Another notable trend in the segment are the small businesses that started as online grocery delivery stores in selected locations have begun to open physical stores.
One such company is Rashanwale.com based in Patna. Starting in 2013 as an online supermarket that supplies products in selected Patna locations, it now plans to add physical stores to increase its online sales. The first store is scheduled to open in four months. Co-founder Manish Vats told Business Standard that more stores would be launched in the coming months.
"You need physical presence to have credibility in the neighborhood," says Sandeep Agrawal, founder of the Japanese company pinkcitykirana.com, which has a warehouse that doubles as a retail store. Agrawal claims sales of Rs 1 lakh per day and a customer base of nearly 1,000. The online store not only caters to the needs of the customers, but also supplies groceries to small kirana stores in and around Jaipur, adds Agrawal.
It is estimated that the grocery segment is a market of Rs 21-lakh-crore in the country, dominated by 12-14 million kirana stores. The online grocery retail, which is growing at 25-30 percent a year, is expected to capture two percent of this market by 2020.
Apart from large e-retailers such as LocalBanya and Big Basket, several new companies have emerged. ShopRation.com is one such operation outside of Noida. Started by a software engineer with a godown and a few thousand rupees, he now claims to have reached a monthly sales figure of Rs 5 lakh. With five children delivering on their payroll now, ShopRation claims to have a customer base of 1,000.
"For the first two months, we got a single order, it was very discouraging, but we persist, now the growth rate is satisfactory," says company founder Amit Kumar. ShopRation offers multiple payment options: cash on delivery, credit and debit card scanners and online payment.
There are many small grocery stores online, such as ShopRation across the country. Business Standard spoke with many of them in Patna and Indore, but declined to disclose details about sales, areas of operation, payment options, growth, etc.
"Many of them are waiting for the opportunity to be acquired by large companies and some of them are not serious companies.