Empowering Neighborhood Retail: The Rise of Digital Transformation

Attention India
9 Min Read

Every neighbourhood kirana shop and food and grocery store should have a website or mobile app by now, and loyal consumers should be able to make purchases online without worrying about the quality of the products. This is how a digitally first world should work. Because of the trust that has been established over time, buyers may choose not to visit physical stores at all, as is common in O2O (online to offline) commerce. Instead, doorstep delivery will be handled by hyperlocal quick-commerce operators.

The Reality Check

Even though Covid-19 accelerated the implementation of digital technology across all industries and enterprises, this is still not the case. Retail MSMEs may not have been able to join the digital rush due to operational constraints, low budgets, and a lack of computer awareness. Nonetheless, 90% of Indian businesses still generate more than half of their revenue offline, and 54% of consumers prefer in-store purchasing because of the certainty of authenticity, according to a NeoGrowth Study report. More significantly, only 18% of merchants agree that the rise of offline retail has been impacted by ecommerce.

Addressing the Gap: Streetz

Among them is Monish Shah, the creator of Streetz, a hyperlocal delivery network and marketplace focused on retail stores. He still remembers how internet merchants began to take business from his uncle’s clothing and flower stores, and he is well aware of the potential losses that physical retailers may experience. However, according to Mordor Intelligence, e-retail is predicted to overtake all other channels as the world’s largest, accounting for 14% of retail sales. According to a Deloitte India analysis, the online retail business in India is expected to reach $325 billion by 2030, while the global market is projected to reach $8.5 trillion by 2029. Given that these figures point to a significant possibility for offline retailers, Shah developed an app to give Ahmedabad-based brick and mortar stores a much-needed digital interface.

Streetz: Bridging the Gap

When Streetz launched in May 2023, it onboarded local offline businesses, listed and sold their goods online to expand their customer base, and guaranteed two-hour delivery inside Ahmedabad. The app offers a variety of things, such as toys, clothes, shoes, cosmetics, toiletries, and groceries along with other everyday necessities. Because of its zero-inventory marketplace, the company has few assets.Customers can use the shopper interface to browse products by category or store (stores within 20 km), place orders immediately, and make payments using PhonePe, a flexible digital wallet system. Through the seller interface, businesses can receive these orders, facilitating smooth transactions and increasing income.

Unique Identity for Every Store

“Moreover, we aim to give every local store a unique identity when they list their products on our platform,” said Shah. To enable deliveries within the stipulated time, Streetz has set up an in-house fleet that collects orders from partner stores and home-delivers the same.

The Road Ahead

The startup claims to have boarded 150 local stores, with 12K products listed on the app. It has made 7.7K deliveries to a B2C user base of 7.5K. Streetz’s disruptive model – a platform helping offline retailers sell online and leverage a cost-efficient rapid delivery mode (not yet comparable with the 10-30 minute delivery done by typical quick-commerce players) – seems to have resonated well with local businesses and consumers. Hence, it has raised pre-seed funding of INR 1.89 Cr from renowned angel investors, including Sagar Shah, vice-president at American Express; Hitesh Jobalia, MD at Shree Parshwanath Group; Atin Tomar, founder & CEO of Yapan Bio and others. The B2B2C startup hopes to clock INR 1 Cr in revenue in the current financial year ending March 2024, just 11 months after starting operations.

Strategic Operations & Technology for Empowering Local Merchants

Despite the digital boom, the startup’s initial journey was challenging. But Shah told us entrepreneurship was his forte, which kept him going. Initially, he launched an FMCG startup called Mother’s Magic Food in 2013, which was eventually sold to Rasna International in 2016 for an undisclosed amount. After that, he worked with Swiggy, Shuttl and Flipkart in various roles. But the entrepreneurial bug proved too strong and Shah finally went ahead with Streetz.

As the newest kid on the block, winning trust was an issue, and Streetz found it difficult to onboard local store owners and grow its consumer base. Things came to a head in October 2023, when the startup offered festive discounts to ensure a surge in demand, but the hurried move put the business under severe financial strain. The funding raised at the launch also ran out, leaving Shah to pay INR 30 Lakh to vendors from his pocket. With too few retailers and product listings, supplies were low, and business dwindled at the B2C level, putting Streetz’s revenue model (commission per order) at stake.

Nevertheless, the platform took strategic measures to onboard prominent physical stores across the city. Changing sellers’ perceptions was not easy, though, Streetz did it through consistent marketing, direct communications with target stores, and complimentary cataloguing services. Timely payments further cemented the trust factor, helping the platform onboard 50 sellers and then more. Shah said, “We follow a seven-day payout cycle for sellers, irrespective of their payment module as payments are sent to their bank accounts directly after deducting 5 % commission.”

To help sellers with onboarding, Streetz has a dedicated team that provides hands-on support and addresses technological concerns. It also provides tutorials in various formats, including video guides and personalised training sessions for not-so-tech-savvy users.

Technology-Driven Efficiency

The tech-driven platform further offers automated product categorization, efficient inventory management, order processing, and business integration with messaging apps like WhatsApp for seamless communication. Additionally, its support team helps with catalogue creation (product photography and editing) and catalogue management, all done digitally.

From browsing and purchasing to order processing, the feature-filled digital journey and smooth order flow between buyers and sellers deliver a quick, convenient and well-integrated experience every time. Additionally, the Zorp software, an AI-driven operations management platform, automatically assigns deliveries to Streetz’s in-house delivery personnel based on a partner store’s location, thus optimising routes and logistics costs.

Buyers and sellers can view the order status in real-time on their respective dashboards, complete with order logs and every step documented, right from the time Streetz receives an order confirmation from a customer to the time when the order is home-delivered.

Sustainability Amidst Competition

Revenue comes from the commission charged for each order. Until December 2023, Streetz charged sellers a 5% commission on order value. However, the rate has been revised since January this year and merchants have to pay an average of 12%, which may vary depending on product categories. Sellers can also pay more to increase their visibility on the app. Users, too, have to pay a delivery fee of INR 5-7 per km to cover operational costs.

– Bhumi Rathore

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