advertisement
Local neighbourhood stores have found it hard to match the attractive discounts doled out by capitalist-funded online players and this has put them in a spot of bother.
Should they jump onto the online wagon and try to change their business model or continue using the age-old offline channel, and stay true to their limited, but loyal, base of consumers?
This is where a company called NeoMart wants to help the kirana stores narrow the gap with the new-age buyers. The startup wants to make apps for kirana stores through which people can buy goods and get them delivered through the store’s delivery staff.
“We are helping offline retailers reach mobile users. The mobile screen is the most expensive real estate right now and only the big players can afford to pay high acquisition costs for them,” says Ashwini Kharbanda, Founder, NeoMart.
The company is keen on getting local kirana stores onto the digital bandwagon, and this will be done at a minimal subscription cost starting from Rs 890 for one year. Ashwini claims to be using his retail experience gained from working with biggies like Bharti Walmart, and he understands the pain points of these sellers, who’re losing out to the giants.
So how does NeoMart make this happen? The company has made a one-stop app for merchants as well as the buyer.
If there are 50 kirana stores in an area looking to go digital they can try NeoMart as one of the ways to get online. It is like a super-aggregator app, listing all the sellers who sign up for its model.
The app for the seller works like a mobile point of sale (POS) that will digitally record the inventory list, as well as keep track of the finances for running the business.
With so many heavy-funded players like Amazon and Walmart also plying their trade in the ecosystem, what chance does a NeoMart have in trying to compete with them?
And what incentive does a seller have to join NeoMart instead of biggies like Amazon, Flipkart (now Walmart) or even the upcoming JioMart?
“The merchant doesn't have to invest in a regular POS machine. Over 40 million retailers will be keen to jump onto the digital bandwagon if the business is run without anyone's interference or control,” Ashwini explains.
He also suggests that people can buy products through the app and get them home-delivered through the store’s delivery staff faster than a Big Basket or Amazon. While this does sound attractive, analysts are not sure if the model has the legs to run this marathon.
And he’s got a point. After all, the app will facilitate delivery of goods, but if a product is not of the desired quality, who takes the responsibility for the lapse in standard?
Multiple research studies have shown that acquiring a new customer requires heavy investment, and people don’t want to have more than two or three apps to do their shopping, which leaves little room for new players.
Plus, customers have already made up their mind about the platforms they would prefer to shop on. Changing that and asking them to trust new entrants will be a tough ask.
More importantly, how will the sellers react to the adjustment required to operate in a model, which is cashless, transparent and fully controlled. And unless they start getting better returns, Sanchit doesn’t see the seller sticking around after their initial tryst with the model.
Currently, NeoMart has signed up 150 stores located in Gurgaon and by end of this year it plans to enter South Delhi, and have over 500 merchants and 5,000 consumers on board. Now it remains to be seen if these targets are met and if this ambitious model has the nous to rival the heavyweights.
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)