10 Minute Danger - Quick Commerce

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💀10 Minute Danger in the form of Quick Commerce

This was a thought that came to my mind when I went to
nearby XXXX offline ( Intensely not mentioning the name) store
of Quick-Commerce Startup in Jaipur. I was passing through that
area, suddenly got a call from wife, she asked me to bring some groceries while
coming back home. I saw a store nearby and visited in, went inside with a
predetermined mindset of what I wanted to buy. I noticed, there were 8 or 10
floor staff standing, perhaps they were in a hurry, all were running towards
the shelves to get the goods off according to the list they were spontaneously
watching.

It was amazing to see them working like robots, for a
while I thought they were all in a hurry, so all were in fast forwarding mode.
It seems like the machine is working. Curiously asked a man who was standing
over the counter. Whether he was a manager or a cashier, I don't know but asked
them what was going on and why they all seem like robots and are in such a
hurry. He said, our company pivoted the model to Quick-Commerce model with a
promise of delivering the consumer's order within 15 minutes. Hence, the time
slot is working as per the order & our IT system is helping to prepare it
and hand over the goods to the delivery man.

I have not seen this kind of energy even in factories in
China, where people also work like robots. Since I am from retail so my
curiosity was high and want to know more about this concept. So, requested him
if he can explain to me the model and how it works. It was high time for him so
he asked me to come in the evening or he would meet me outside the shop and
then explain another day.

After a few days, I called him (he requested, don't give
his name) and we decided to meet at a nearby coffee shop.

Now, we were in a coffee shop and it's like "Chai
par Charcha". I asked him why they changed their business model and what
new evolved Quick commerce model is all about. He added that Startup is
a completely customer centric brand promising to deliver the goods within 10-15
minutes of the ordering by the consumers. They explained to me how they work
and managed to deliver the goods within the promised time. A Mumbai-based
startup is also working on this model, and many others are working on
quick delivery, he added. Hence they are now known as quick-commerce players
who mainly cater to B2C delivery in grocery and pharma. OK, we ended our
discussion but I asked him that I will come down to his store and want to
see the operations physically. So, the next day I went to a store, trying to
find out the working style of the people involved in the process.

I have seen that a order of Rs. 40 , two small bottle of
Thumps cold drink, and one pcs of amul butter in another order valued Rs.
125/-. Even one order was one packet of Eno. This store was getting 1500 daily
orders of MOQ hardly Rs.150/-. On an average the said startup was getting more
than 15000 orders daily basis. Now, if I talk about the opex of one store, it
was amazing to discuss. One Store Manager, 4 Floor Staff, 3 Billing clerk, 2
security Guard, 4-5 Packing staff and 15-20 logistics i.e. Bikers. Appx 1000
sq.feet store area comprising monthly rent : 40000/-, electricity consumption
more than 20000/- and investment on shelf and other capex is all about 30-40
Lakh. I am not going to sum it and matching the ROI but apparently can say that
financial viability of such model is a big question in front of retail
professionals. even, I am not concerning about it.

further, I saw that, more than 20 motor bikes and their
riders were waiting outside the shop. They were all attentive like a soldier patrolling
the border post and waiting for their turn to collect the package which they
would deliver within 10 minutes.

Everyone was in a hurry as enemies are coming towards
them and they have to run to save their lives. A man came running from inside
the shop and handed over the package to a rider. Here every second of time
matters. He took it and put it in his hanging bag, scroll his phone for
delivery status to pick up the order. Within 10 seconds he was out of the
parking area and disappeared. I spent 45 minutes watching the whole process.

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I was curious to see how the list of 5-10 SKUs is
selected from the shelves, packed in a polythene packing, sealed, status
updated on the IT application, handed out for delivery i.e. to the rider and
finally 10 or is delivered to the customer within a maximum of Rs. 15 minutes.
This store was catering within a radius of 3-4 kms.

Though things were clear to me but again I have to ask
why such services are needed in India. Do they really need it?

I am not even asking about the business model or the
companies involved in this process, but my concern is who is looking after the
delivery people who are delivering the goods in the promised time. I have seen
them driving the packages in a big hurry. They were driving rush at a top speed
of 60/KM or even more without thinking about their safety. One can see that
what top speed is needed while driving in the narrow and congested lane of
Jaipur city.👎

When I inquired about it, the data was shocking that
every day 10-12 delivery people met with some minor or major accidents, not
because of the fault of others but because of their speedy driving. Why are
they doing this? We have to think on this.

All such delivery services which are claiming to reach
the customer in 10 minutes will pose a severe challenge to traffic safety in
the coming months or years. These companies are putting the lives of the
delivery riders at stake.

Just imagine, stretch out the need and think whether such
services are really needed by the consumer or whether the consumer is not
concerned about the safety of the delivery boys who are risking their lives to
get the goods delivered as fast as they should be.

Companies will do their business and they will do it
without taking any humanity or human concern but after all end consumers have
to think that whether they really need merchandise in 10-15 minute or it can be
delayed to thirty minutes. I am okay with 30 minute delivery
time.  

I can smell the danger so raising a flag that soon it
will be a big issue of law & order specially from Traffic Police prospects
and they will take action against such riders or finally if safety norms is not
followed they may send notice to these companies and ask clarification from
them that why they are putting lives of their delivery staff in danger.

Worker's Safety:

Just think on this guys. Disruptions should be
positive

I am concern with such companies because they are cutting
throats of millions of Kirana retailers, giving tough competition, snatching
impulsive buying opportunities from them and on the other side they are putting
lives of delivery staff in danger. Is this kind of Disruption is really
needed in India?  

Please do write to me on

parjakalyanm@gmail.com and comment and share among your
circle and spread as much as you can do and aware the end consumer that such
services will snatch live of someone who is coming to delivery your order in 10
minute time. Risking lives of other for own benefit is also a Sin. 👽

Note: Picture is taken from google and accordingly cut
and paste just to give a feel

Writer: Balwant Singh Rana,

किराना दुकान की बिक्री बढ़ाना है तो रीटेल थैरेपी को अपनाना है।

भारत मे 1.5 करोड़ से ज्यादा छोटी बड़ी रीटेल दुकाने है जिसमे सभी तरह के साजो सामान आते है जो हमारे रोजमर्रा  मे काम आते है। इसमे 60%+ दुकाने किराने की है।  अमेरिका मे किराना दुकान को मॉम और पॉप शॉप कहते है और कुछ ब्रिकक्स और मोटर स्टोर।  किराना की दुकान सब के लिए बहुत जरूरी है क्योंकि ये हमारे घर पे पास होती है और हमारी हर छोटी बड़ी जरूरत को पूरा करती है। भारत का रीटेल मार्केट बहुत बड़ा है। अभी तक 800 बिलियन डॉलर का मार्केट है जिसमे से 600 बिलियन डॉलर का तो केवल किराना ही है। और ये बड़ी तेजी से बढ़ रहा है, अगले दो सालों मे ये मार्केट 1000 बिलियन डॉलर का हो जाएगा। भारत मे रीटेल का  सकल घरेलू उत्पाद मे 11% तक का योगदान है और साथ ही 6% तक रोजगार का सृजन भी करता है। इतना बड़ा और महत्वपूर्ण सेक्टर होने के बावजूद सरकार की तरफ से कोई रचनात्मक पहल नहीं है। अभी कुछ महीनों पहले ही रीटेल को मिनिस्ट्री ऑफ सूक्ष्म, लघु,और माध्यम उद्यम  मे सूचीबत किया है। 

पिछले 10 सालों से भारत मे मॉडर्न रीटेल नए नए रूप मे आया है और आ रहा है। जिसमे ऐमज़ान, फ्लिपकर्त, पुराने खिलाड़ी है और आज बहुत से स्टार्टउप बहुआयामी तरीकों से ग्राहकों को सेवा देने का कार्य कर रहे है। मॉडर्न रीटेल के आविर्भाव से ग्राहकों को जरूर फायदा हो रहा है पर कभी आपने सोचा, इन सब से हमारे रीटेल सिस्टम मे कोन प्रभावित हो रहा है। जी , ये है हमारे किराने व्यापारी। 

पहले ही ये तबका अव्यवस्थित था। अभी भी 90% रीटेल अव्यवस्थित और असंगठित है। और शहरों मे तो मॉडर्न रीटेल तेजी से पनप रहा है। आज बिग बाजार, डिमार्ट, विशालमार्ट, जिओमार्ट जैसे बड़े खिलाड़ी है और स्टार्टउप मे ग्रोफ़र , बिगबास्केट जो देश स्तर पर है, साथ ही नीलगिरी जैसे क्षेत्रीय रीटैलर भी है।  और आने वाले समय मे कम समय मे ग्राहक को घर पर डेलीवेरी करने वाले बहुत से स्टार्टउप आने वाले है 

साथ ही आजकल नया कान्सेप्ट कुछ स्टार्टअप्स जैसे मामाअर्थ, बेअर्डों ने डायरेक्ट टू  कन्सूमर यानि बीच के डिस्ट्रब्यूशन चैनल को लिए बीना सीधे ग्राहकों को ऑनलीन प्लेटफॉर्म जैसे ऐमज़ान, फ्लिपकार्ट या खुद की वेबसाईट ओर ऐप्लकैशन के द्वारा बिक्री कर रहे है। 

जब सभी ई -कॉमर्स सीधे ग्राहक को सेवाये देंगे तो बीच मे जो रीटैलर आता है उसका धन्दा दो प्रभावित होगा ही ना ।  पिछले 2 साल मे एक अनुमान के मुतावीक 30% तक रीटैलर का व्यापार कम हुआ है।  और हर साल 10% किराने की दुकाने बंद होती है और इतनी ही नई खुलती है। अगर यही चलता रहा तो ये और भी बेकार होगा।  इन सब की बहुत वजहे भी है जिसमे रीटैलर खुद भी जिम्मेवार है। आजतक ज्यादातर दुकानदारों ने ये सोचा ही नहीं की ग्राहकों को बेहतर सेवाये कैसे दी जाय।  पिछले 5 सालों मे लोगों ने नई मॉडर्न दुकाने बनानी  चालू करी है और उसको ईजीडे (easyday stores) जैसे बनाने की कोशिश की। मिनी सूपर्मार्किट जो  30-50 लाख तक लगाने के बावजूद भी वे अपनी दुकान की सेल नहीं बढ़ा पाए। 

पिछले कई सालों से किराना दुकानदारों के लिए  बहुत से नवीन तरीकों पर काम कर रहा हूँ,  जिससे इन सब का धंदा  बढ़ सके और ये आने वाली चुनोतीयों से अपने आप को बचाए पाए।  लेकिन इन सब से पहले दुकानदार  को अपने आप को सकारात्मक करना होगा और मेहनत करनी होगी अपने ग्राहकों पर। साथ ही मॉडर्न तरीकों को अपना कर साथ साथ चलना होगा। 

कुछ तरीके है  जिनको अपना कर किराना ब्यापारी हो या अन्य रीटैलर हो उनको इन सब तरीकों को अपना कर मॉडर्न बनना  पड़ेगा, तभी अपनी दुकान पर ग्राहकों को ला सकेंगे। 

• दुकान का खुलने और बढ़ाने का समय निर्धारित होना जरूरी है। इससे ग्राहक को ये
  मालूम रहता है की दुकानदार समय का पाबंद  है और वह उस समय पर आ कर खरीदारी कर सकता
  है। (Close
  & open timing of shop)

• दुकान को महीने मे 30 दिन खुला रखे, अगर कोई सरकारी छुट्टी या उस जगह की
  व्यापार संघ के अनुसार साप्ताहिक अवकाश  है तो उनको छोड़ कर और दिन मे दुकान बंद न रखे। ये
  अनुसाशन अगर दुकानदर ने अपना लिया तो व्यापार अपने आप बढ़ जाएगा। (24x7x30days)

• दुकान साफ सुथरी होनी चाहिए और दुकान पर बढ़िया क्वालिटी की लाइटिंग (lights) से अच्छी रोशनी होने पर ग्राहक आकर्षित होते है।
  ( Clean & Proper Lighting)

• दुकान पर लगा बोर्ड अगर लाइट वाला हो तो उसकी लाइट रात को 11 बजे तक जला कर
  रखे। और अगर लाइट वाला (GSB) नहीं है तो उस पर फोकस लाइट से प्रकाश
  करना चाहिए। बोर्ड चमचमाता हुआ होना जरूरी है। (Glow sign
  Board)

• दुकान पूरी तरह से सामान से भरी होनी चाहिए जिससे ग्राहक को लगता है की उसको
  जो चाहिए वह मिल जाएगा और एक अनुमान ये भी रहता है की दुकानदारी अच्छी है तो सामान
  किफायती होगा। ये ग्राहक का पर्सेप्शन रहता है।
  (Proper Stock of goods)

• रोजमर्रा का सामान जैसे चावल, तेल, चीनी, आटा को दुकान मे पीछे की रैक (Endcap display) में  रखना
  चाहिए जिससे ग्राहक उस तक पहुचने मे पूरी दुकान मे घूम सके। जब ग्राहक दुकान के
  अंदर जाएगा तो उन्हे और भी सामान नजर आएगा जिसे वो खरीद सकते है (Impulsive Buying)।

• महीने मे कुछ जरूरी सामान जैसे ब्यूटी प्रोडक्ट,
  स्नैक्स, बिस्किट्स, साबुन का प्लानोग्राम परिवर्तित करते रहे। इससे दुकान हर
  महीने अंदर से नई नजर आएगी। ( change in merchandising)

• दुकान मे आगे वाली रैकस (Front display rack) मे वो सामान लगाए जिस पर ऑफर हो या जो आप जल्दी से
  बेचना चाहते हो।

• गर्मियों में दुकान मे बढ़िया ठंडक बनाए रखे। ग्राहक
  को आराम मिलना चाहिए। और हो सके तो ग्राहकों के लिए पानी की व्यवस्था रखे ( Basic Amenities)

• ग्राहकों से ज्यादा से ज्यादा बातें करते रहें, और उनके साथ अच्छे संबंध
  स्थापित करें। ये जरूरी है। अपने सभी ग्राहकों का फोन नंबर और अड्रेस अपने पास लिख
  कर रखे और साथ ही उनकी जन्मदिन और शादीकी सालगृह की तारीख नोट कर के रखे, और उनको
  एक फूल का गूलदस्ता जरूर भेज कर उनको मुबारक बात दें। वे अपना जन्मदिन भूल सकते है
  पर आप को नहीं भूलना। (Personal relationship and
  engagement with customer)

• लोग सामान पर अधिक ध्यान
  तब देते हैं जब उन्हें लगता है कि यह उनके लिए प्रासंगिक है। उदाहरण के लिए, हमारा नाम मस्तिष्क के
  लिए एक जादुई शब्द के रूप में काम करता है, जो एक ही बार में विभिन्न वर्गों को सक्रिय करता है। अपने ग्राहकों को उनके नाम
  से भुलाये। (Personalize, Personalize) ये
  ऐसा होना चाहिए जैसे अपने ग्राहकों की भाषा की नकल करना।

• आश्चर्य पुरस्कार (Surprise reward) एक आकर्षण की
  तरह काम करते हैं: वे लोगों को आपके प्रति अधिक खुश और अधिक सकारात्मक बना सकते
  हैं। हालांकि, अपेक्षित
  पुरस्कार उतने प्रभावी नहीं हैं, और यहां तक कि खुशी के निम्न स्तर तक ले जा सकते हैं। अपने
  ग्राहकों को खुश करने के लिए, उन्हें सरप्राइज कूपन या डील भेजें। (Marketing ट्रिक्स)

• सैम्पल मुफ्त मे दे। मुफ्त में कुछ प्राप्त करने से लोगों को विशेष महसूस होता
  है, और वे एहसान वापस करना
  चाहते हैं। आप के पास कंपनी से फ्री सैम्पल
  आते है तो उन्हे अपने विशेष ग्राहकों को फ्री मे दें।

• विशिष्टता की भावना : लोग
  चीजों को अलग तरह से महत्व देते हैं, इस आधार पर कि वे उन्हें कितना सामान्य मानते हैं। कोई
  उत्पाद, सेवा या अवसर
  जितना दुर्लभ होता है, वह उतना ही अधिक
  मूल्यवान प्रतीत होता है: आपके पास अगर
  कोई ऐसा प्रोडक्ट है जिसकी ज्यादा डिमांड है और वह और दुकानों पर नहीं मिल रही तो
  आप उस प्रोडक्ट पर ये फार्मूला लागू कर सकते है।

• कोई ग्राहक घर पर सामान माँगता है तो आप बिना लाभ हानि  के उसके द्वारा दिया ऑर्डर 10-15 मिनट मे
  पहुचने की व्यवस्था करें। आने वाले समय मे यही एक रामबाण तरीका होगा ग्राहकों को
  बाँधे रखने का। (Quick service of home delivery irrespective of order value)

• प्रमोशन के कॉम्बो पैक बनाए और उसको ग्राहकों को
  व्हाटसपप पर भेजें। (Promote combo back and
  offers)

• कोई ग्राहक अगर बहुत दिनों मे दुकान पर आता है तो उनसे हाल चल पूछे। और उन्हे बढ़िया
  सेवा को भरोषा दें। (Caring)

• कुछ आइटम ऐसे होते है जिन पर लाभ हानि नहीं देख सकते जैसे, चीनी और तेल।  हो सके तो उन पर कम प्रॉफ़िट रख कर ग्राहकों को
  आकर्षित करे। ( Sale driver and customer engager)

• अपने सभी ग्राहकों का एक व्हाट्सप्प ब्रोडकास्ट (Whatsapp broadcast) ग्रुप बनाए। ध्यान दे, व्हाट्सप्प ग्रुप नहीं बनाए, इससे ग्राहकों को गोपनीयता
  भंग होती है और ग्रुप पर फालतू के संदेश आते है और वो बेकार हो जाता है, इसका नकारात्मक असर होगा। हमेशा ब्रोडकास्ट (broadcast) ग्रुप बनाए। और उस पर अपने ऑफर, प्रमोशन रोज भेजते
  रहे। (Proper use
  social media for product offer information to customers)

• रोज रैक पर रखे सभी सामानों की एक्स्पाइरी (Expiry) जांच करें और
  
  
  
  
  एक्सपाईर हुए प्रोडक्ट को तुरंत रैक से
  उतार  कर दुकान से हटा लें। क्योंकि ग्राहक
  अगर उस आइटम को खरीद के ले गया और बाद मे उसे मालूम हुआ  की ये एक्सपाईर प्रोडक्ट आपसे खरीदा है तो वो
  ग्राहक आपका टूट सकता है या आपके लिखाफ कानूनी कार्यवाही कर सकता है। ये बहुत ही
  महत्वपूर्ण बात है।
  ( Expiry management)

• जो भी प्रोडक्ट एक्सपाईर होने वाले हो उन पर कुछ
  स्कीम लगा के, डिस्काउंट लगा के तुरंत बेचने की कोशिश करें। एक्सपाईर होने से पहले
  कोई दिक्कत नहीं है और ग्राहक को लेने मे कोई दिक्कत नहीं होती अगर वो कम कीमत पर
  मिल रही हो। (
  Near expiry management)

• आप महीने का राशन से ग्राहकों को लुभा सकते है की
  महीने का राशन हरहित स्टोर से लेने पर लॉयल्टी पॉइंट मिलेंगे या कैश डिस्काउंट या
  कोई स्कीम मिलेगी।
  ( Emotion connect for bigger wallet share)

• कम से कम 50 ग्राहक ऐसे बनाए जो महीने मे 5000 रुपये से
  ज्यादा का आपसे सामान खरीद सके। वो तभी बन पाएंगे जब आप उनको और से कुछ अलग से
  ट्रीट करे और उनको ज्यादा सेवा दे, ध्यान दे। ( Value Driver)

• दुकान पर काम करने वाले स्टाफ को सही ट्रैनिंग दे कर
  उन्हे ये सिखाए की ग्राहकों से कैसे बात करनी है और ग्राहक की कोई शिकायत हो तो उस
  को कैसे हैन्डल करें। कोई भी स्टाफ ग्राहक से किसी भी प्रकार की बत्तमीजी न करें।
  ये बहुत ही जरूरी बिन्दु है। ( Staff training )

• बिलिंग के समय सभी प्रोडक्टस को चेक करके और ग्राहक से सामने गिन कर पैक करें।
  और ग्राहक को यकीन दिलाए की जो भी बिल हुए है वे सभी पैक हुए है और उनकी MRP का मिलन प्रोडक्ट से अच्छी तरह कर ले। 
• अपनी दुकान पर अनलाइन पेमेंट के लिए वॉलेट का क्यूआर कोड लगाए, जैसे भारतपे, पेटीएम, फोनपे, और क्रेडिट कार्ड स्वाइप मशीन भी रखे ताकि ग्राहक अपनी सुविधा अनुसार पेमेंट कर पाए। 
• समय बचाने के लिए b2b सप्लाइ चैन अग्रीगेटर जैसे #किरानाकिंग, उड़ान, शॉपकिराना आदि से माल मंगाए, इससे आपके समय की बचत होगी  और आप ज्यादा समय अपनी ग्राहकों की सेवा मे लगा पाएंगे। 
• आपकी दुकान पर माल बिकवाने के लिए बहुत से डिस्ट्रिब्यटर, b2b सप्लाइ चैन वाले आते है पर अगर कोई ब्रांड आपको अपने फ्रैन्चाइज़ मोडेल मे शामिल करना चाहता है तो आप उस कंपनी का फ्रैन्चाइज़ी बन सकते है। जैसे जयपुर मे #kiranaking है। आपकी दुकान को एक बड़ा प्लेटफॉर्म मिल जाएगा और ग्राहक आपकी दुकान पर आना चालू हो जायेगे, तो जाहीर है आपका धंदा बढ़ेगा। इस तरह के प्लेटफॉर्म से बहुत फायदा होगा है। 

और भी बहुत से तरीके है जिनसे दुकानदार अपनी दुकानदारी बढ़ा सकता है और भीषण प्रीतिस्परधा से अपने आप को बचा सके। 

उपरोक्त अंश मेरी किताब के है जो जल्द ही प्रकाशित होगी। ये किताब इंग्लिश मे होगी पर साथ ही इसका हिन्दी संसकरण भी उपलब्ध रहेगा। 

मेरी कुछ सोच है जो जरूरी है किराना वालों को सशक्त बनाने की।  परिवर्तन से प्रगति का  हिस्सा बनने के लिए आप जयपुर मे स्थित हमारे स्टार्टउप "किराना किंग" से संपर्क कर सकते है। 

" जो दिखता है वही बिकता है और आप वही चीज दिखायेंगे जिसे बेचने पर आपको फायदा
होगा।" 

" खाली दुकान दुकानदार को खाए, भरी ग्राहक खाए। ग्राहकों को नहीं।  इसलिए दुकान भर कर रखे। .।। बलवंत राणा 

" सोच से ही संसार है, सोच मे ही विचार है, तो सकारात्मक सोचे। 

इस बाबत आपको और कुछ जानना हो तो आप मुझे लिखे "parjakalyanm@gmail। com " पर और अगर आप को मेरी किराना ब्यापार  से संबंधित किताब ऑर्डर करनी हो तो आप बताए। 

धन्यवाद आपके बहुमूल्य समय के लिए। 

लिखक: बलवंत राणा। 

लेख : 11.2.2020  का है। 

Q-Commerce - A Bubble in the Quest

Q-commerce – A
bubble in the Quest.

A philosophical interpretation

 

A Bubble in the Quest

 Thank god technology has created a lot of options for shoppers and even for
business to business convenience. There have been many developments in the
retail ecosystem, every six months there are reports that something new has
come up and such startups get good funding. I must say that it is the “war of
ideas” that is being fought in the retail ecosystem and it is causing
disruption in some way or the other. We are in the era of Retail 5.0 where we
have to accept that Omni Channel is the way we serve our customer and consumer.

Whatever be the idea, concept and way of doing business but the quest to
reach the consumer is never ending. Startups are inventing new terminology to
lure investors to their full potential and there is no doubt that they are
succeeding and getting good funding. There are many examples of turning this
idea around and mixing it with technology and the names are eB2B, social
commerce, dynamic commerce and now Quick commerce.  During last 10 years I
have seen the advent of technology driven b2b, b2c, social commerce and
adjoining it with hyperlocal facilitation etc. etc.  

One thing is very clear that despite the huge
funding, coverage and overall market penetration of these startups, there are
still doubts as to when will they become profitable and how long will it take
to recover the customer loyalty and the duration of the customer life cycle.
Will you (investors) burn more money? or as a marketer still around the typical
market fundamental that burning is earning? 

Startups are raising funds and even they are getting it at inflated
valuations. This suggests that in future either the number of customers or
their preferences will improve and some will remain in business. Yes, it is
market funda’s and usually we expect the same, but in the present scenario
where every six months’ new ideas come with huge investor money, who are
burning money to test the scenario of their business strategies. Is it?. Will
they be like "frogs"? What is not? It will be discussing in
later articles.

I am very positive that something new must come in the market and that new
must be disruptive enough to lead to a profitable & sustainable business.
For a year now we have been talking about Quick Commerce or Q-b2C, the
imitation of the West being tested in the Indian retail ecosystem. Some startups
received funding of millions of dollars. Wonderful! Yes, those same investors
are testing their luck with the Q-commerce startup. Incredible 10-15 minute
delivery services are factually based dear. It is not a dream or a thought
inside the nerves of the brain. Already, four startups have received
substantial funding from investors and have started operations in some cities.
I would not have mentioned their names as it would not be wise to evaluate them
or compare them with each other at this initial stage.

I have a slightly different level of positive thinking
about these kinds of ideas and how they work. I use business environment
fundamentals and ground realities first and accordingly dare to share my views.

only concerned about the longevity i.e.
sustainable business life cycle, because that comes through making good profit
and making it sustainable for a long time. But do you think that startups who
are testing their luck in the startup ecosystem are making money? or is there
any possibility that they will be profitable even after ten years of
operations? have doubt because of the fundamental which they are not
applying. 

Take the example of grocery retail. There are over 55 startups operating in
the Indian grocery retail ecosystem. All are tech driven platforms. More or
less they are connecting the supply chain. Let us examine the margin spreads of
FMCG and Staples. 15-18% is the average margin spread of FMCG products
nationally. Leave 10% off for retailers. Those working on DTR (Direct to Retail)
are burning 7-10% i.e. 8% on average as supply chain cost (this cost is
inclusive of reverse logistics cost). 5% on average they are burning on
promotions, deals and offers. Overall it comes out to 10% Retailer + 8%
Operation Chunk + 5% Marketing = 23%.

Similarly B2C players are burning 15-20% of their money in promotions,
bringing in new customers, maintaining their loyalty and worrying about the CLC
of the consumers. Take an example, if a startup from eB2B or B2C or Q-B2C takes
a minimum of five years to reach a unicorn level or some takes 2 or 3 years. It
is 99% possibility, that during the said period they will burn money to build
bigger and bigger market share and make top line. If you take the example of
existing startups in the same ecosystem, you will find that they have lost
millions of dollars. If it takes five years for a business to reach and
generate a level. Take an example that Rs. 1000 crores accumulated loss, then
think that when they are on the positive side of business operations. It will take
another five or ten years to payback the loss and capex. My statement in this
regard is that no one will make money even after 10 years of operation in the
said segment.

This is a common man's calculation. Around 5-8% of the revenue by the b2b
startups gets burnt for some reason or the other and 15-20% in the B2C. The
only concern is to win the top line. This will lead to higher valuation which
will be the benchmark for raising more funds.

Now, let's take a look at where Q-commerce is going to disrupt the retail
ecosystem in a big way. Some of the existing B2C companies have changed their
names and are now swimming in the same tunnel but they forget to analyze the
basic and ground reality and even their vision. Well, leave them to their fate.

Quick Commerce a new way of e-commerce

Positive aspects of the concept:  Q-Commerce is time bound and
time count third generation e-commerce concept. Here we must say that
technology made it happening. New capabilities built in technology to drive the
operations smooth in a TAT.

Characteristics of Q-Commerce:

1.      Technology driven ubiquity

2.      Consumer centric as on demand
fulfilment

3.      Turnaround Time specific

4.      Convenient in terms of need.

5.      Interactivity

The positive aspects of the concept really pertain to the retail ecosystem.
It is best suited for the impulsive and thirsty needs of grocery, medicine and
services. The consumer is thinking of cooking something about a new recipe.
Previously they had to plan the event and make purchases, but technology brings
new features with the promise of quick delivery, so things happen on click.
Whatever you plan to eat, try and fry, the consumer is ready to eat in 10 or 15
minutes. It is indeed a huge force of technology and developed operational
capabilities of companies providing anything on click within the promised time.

Who's on top? No doubt it is the consumer, the cycle of events is
around the consumer and is very focused towards specific needs.

There is no doubt that startups came up with the idea that they will make
profits in the short term and will be at the top of valuations. Similarly,
early investors will have multi X as ROI in the next two or three years.

As a retailer and a retail expert, I congratulate the minds behind the
Q-Commerce idea and lead for their execution.

Take a look at the operations matrix and feasibility:

Macro level - cost of serving an orders comes Rs.
45-50/- including cost of picker, packer and riders. It means 12-15%
cost element. Micro level this cost can be minimize to Rs. 25/- per
order.  Now rest calculation is for you and evaluate and please revert
to me.

Flip of the event:   There is another side of
the store which is destructive to the Kirana /or other Retailers or Small
retailers ecossytem.

Anything that gives value for money to the consumer is my cup of tea, but
my concern is about the backbone of this retail ecosystem, i.e. the “The
Retailer” /or "Grocer" / or the “ Kiranawala” who is most likely to
suffer.

Why the Retailer will suffer the most? 70% of the Retail shop's over the
counter sales are from the immediate needs of the consumers. Consumer visit the
nearest store and buy Rs. 100-150/- bucket and disappear. Many consumers also
visit these shops many times. Some visit for milk, biscuits, bread, butter,
sugar or any other impulsive needs of their kitchen. The journey takes 10
minutes or 15 minutes. Eighty percent of consumers consider it a burden to go
out from for shopping, and twenty percent want it as an opportunity to walk on
the street. Think about the eight percent of consumers who are going to get
impulsive goods in 10-15 minutes’ time just by clicking on their mobile. In
this way, Q-commerce will fix the match in their mind and will definitely swap
the earnings of smaller 2 retailers.

Roughly estimated 30% of small grocery stores
will be on death beds in the next one year or two. The arrival of
Q-commerce or likewise will be a negative news for their livelihood.

Any thoughts on this? There are organizations like CAIT,
local retailer’s associations,
he Federation of Retail Traders Welfare
Association (FRTWA), Retailers Association of India (RAI) and 35 other
retail associations in India who said to be advocate of retailer’s welfare as
such has no influence. This is true that they are not able to raise their voice and accordingly not able to
present the lobby.

It is true that the consumer needs convenience which they should have. It
is also true that market is so kind and pertinent which gives opportunity to
every businesses and every business have their own market share, but here we
are talking about Retailers i.e. the Mom & POP stores the backbone of
retail.  As a developing country we have to think that a community of more
than 14 million micro entrepreneurs, who Creates 8%
employment in the country, contributing their 11% to India’s
GDP, still there is no promise from policy makers as to safe
guard the interest of Retailers.

Skill India , Make in India is good for the country and a good initiative
but we cannot leave everything to the open economy policies. As a policy
maker, India Govt should patiently think that whether India retail need such
disruption in the name of Startup India or we should think to empower and safe
guard the business of small retailers.

My topic here is "Q-commerce is in the bubble of quest". It
shows how unsusceptible we are in the ecosystem to assess business dynamics or
how inconsumable we (investors) are to invest our money. Is technology driving
the business Q-Commerce is the best example of this? A next level of search is
on the way.

Bubble is not good for anything. Startup founders are working restlessly
and want to make it a unicorn, similarly investors are burning their money in
the hope that someone will give them 10x returns but what if such things take
the shape of a bubble in the ecosystem.

This article is a way of mixing philosophical and psychological way of
interpreting my thoughts that will take anyone either way. You may think
positive till the middle of reading this and find it negative in the end.

The truth has never worked out as would like it to be, sometimes it appears
unexpectedly and then "the policy makers i.e. retail policy makers
will open their eyes and the bubble will burst with huge noise.

Best way is Empower the Existing Ecosystem whether they are Small
Retailers, Distributors and Wholesaler. Create opportunities for them and take
them with your journey.

The best way is the best of luck!

----------------------

written by Balwant Singh Rana on : 09.01.2022

 

Balwant Singh Rana

 

FMCG Distributor - Dilemma - Conflict to Survival

 

Distributors Dilemma & the Conflict 

Indian Retail
market is rapidly growing, expected to reach USD 1.55 trillion ($1555 Billion)
by the end of FY 2023.  however, 80%
market is still traditionally driven but supported somehow by technology. No
doubt transformation in terms of Infra and technology is going on at a keen
pace, which will take this to the next level of growth.

FMCG Industry in India, Just for more clarity I
extracted from it : https://www.ibef.org/industry/fmcg.aspx

As per the Apex Retail body IBEF,
the Indian retail FMCG market will touch 2.20 trillion markets by 2025 almost
double of existing market size, out of which 60% is the grocery market i.e.USD
1.2 Trillion. Currently, the market is around $883bn. India's $883 billion
retail landscape is dominated by Kiranawalas.

    

The market is
growing due to changes in customer preference, increase in disposable income
inflated the consumption too, more technology-driven distribution is underway,
retailers are also benefiting from the new age disruption by eB2B players, but
there is an important member of this ecosystem who is suffering the most and is
currently his existence is going through a dilemma. They are the
Distributors who are in great dilemma and struggling to sustain their business. 

Why is such an
important member not taken care of by Brands? In a real sense, they are
the real connector and bonds. Distributors are connecting retailers with
brands. Without its existence, we cannot think of reaching the retailer and
ultimately end consumers. But, this community is now in great danger as they
struggle to protect their business from stiff competition from supply chain
aggregators.

Why I am keen
to write on this topic?  Because I am
from this ecosystem and working closely 1998 and understand the pain of an
existing distribution channel partners.  I
have been witnessing growth in grocery retail since 1998 when we introduced
pulses in consumer packaging and find ways to make it a brand. At that time
retail was in the development phase and retailers were at the forefront of
moving a product through its placement cycle to the stage of making it brand.
There is no doubt that retailers still have that power and are at the base of the
retail pyramid, although the penetration of technology has provided new
workspaces and room for developing technology-driven supply chain aggregators
that will eventually lead to FMCG companies. provide wings in terms of more
sale verticals but with conflicts.

But, my
concern is more about the distributors because my way of thinking is that we
should empower the existing ecosystem and not disturb them in any way.

Let’s put to
light a few important things about Distributors.

With an ample size i.e. about USD 1.2 trillion markets
catered by 14 million small retail stores i.e. Mom & Pop shops serviced by 0.45
million distribution channel partners ( C&F, Distributors &
Stockist) still we are talking about opportunities in this segment.

New Developments in retail,

especially in the Kirana
segment

Venture
capital-funded technology-driven supply chain aggregators are the new
wholesalers and taking the pie of distribution channels. As per the estimates, funded
eB2B players are contributing USD 2.5 billion out of USD 800 billion of grocery
retail. It is negligible if we talk about the intensity of trading volume in
terms of GMV. According to me, the calculated GMV refers to the net revenue. I
am not talking about organized retail trade. Organize retail consists of
physical stores of retail giants like D-mart, Reliance, Big Bazar, Vishal, etc.
This article is about all the problems faced by distributors and how they are
affected by eB2B players.

Retailers are
in the centre of all activities, no doubt they will be benefited from such
developments but the same is happening with them as online commerce is taking
their share and getting the big bite from the pie. Social Commerce, Q-commerce,
and D2C platforms are going to take 30% of business from the Kirana Retailers
by end of 2023 but they will have more choice to fill their inventory but he
will be part of the conflict that is arising with Brands and Distributors very
soon.

eB2B players
are in process of reaching directly to Retailers so they are among the
change-maker who has money power, the influence of technology, and some great
risk-taking appetite disrupting the ecosystem. Disruption is a humble word for
disturbing the system.  Let’s continue
with it.

First of all,
we have to understand the role of distributors in the retail ecosystem and how
they are impacting the process.

Distributors
are wholesale agents who connect manufacturers and retailers. Distributors
purchase large quantities of goods from the producer and supply these to
individual retailers, thereby eliminating the need for the manufacturer to
contact a large number of retailers one by one. They provide large coverage and
penetration in terms of selling line items of the product line, ensuring proper
placement and through promotional activities by the brands creating a
breakthrough.

Typically, distribution approaches support company-level objectives
related to growth.

• Transactional functions: buying,
  selling, and risk assumption
• Logistical functions: assembly,
  storage, sorting, and transportation
• Facilitating functions: post-purchase
  service and maintenance, financing, information dissemination, and channel
  coordination or leadership, Expiry Management and providing replacement and
  services to retailers related to any queries arising due to quality of products
  and delivery timing etc.

1.  In a more
   refined way, they are providing:
2. Delivery
   of satisfaction i.e. providing freshness
3. Standard
   of Living i.e. providing latest items on time and convenient availability
4. Value
   Addition i.e. Providing goods at the right quantity, at the right place, and the
   right time.
5. Communication
   i.e. Information flow from Brands to Consumer through retailers
6. Employment
   
7. Efficiencies
   i.e. Distributor is an entrepreneur so he has to work on the scale of the
   economy by way of keeping efficiencies in their deliverables.
8. Logistics
   
9. Financing
   i.e. provide on-demand credit to retailers and keeping good relations with
   them

In Net shell:

1. ·        
   Greater
   efficiency in making goods available to target markets.
2. ·        
   Intermediaries
   provide – Contacts – Experience – Specialization – Scale of operation
3. ·        
   Match
   supply and demand.

-------------

Based on the
above information which tells us about their important role in the ecosystem we
should mend our knowledge that they really contribute a lot. Now the question
comes if they are so important part of the market so they must be gaining a lot
i.e. earning good profit from the business. 
During my twenty years of experience in Retail, I got a chance to visit
hundreds of distributors and could see them closely.  They are still operating from a pitiable
infra and driving their business in a very economic style.

Route to
market should go through a proper channel. But, despite such an important role
in the ecosystem, there are many challenges which distributors are facing.
Let’s put a light on these issues and see how we can add value to their
business and empower them in the best way.

 SLL  is
done by the Distributors

Challenges faced by the Distributors

1. Most of the
   challenges are external to them, however, they have some of the internal ones
   which are generally related to their infra, mindset, and IT prospects, but for
   them, it is manageable amidst the low margins offered by the brands and somehow
   indifference from the brand side like isolation and lack of training mechanism.
   Distributors and semi wholesalers are catering to small retailers, truly they
   reach the last mile and reach out to the masses. With the advent of eB2B
   startups, distributors lost a significant portion of their revenue as
   small-scale retailers started placing orders with eB2B players using their IT
   tools.
2. Challenges
   from D2C
3. On-demand
   delivery by the Retailers
4. Last-mile
   delivery affected by the Supply Chain aggregations i.e eB2B startup
5. Emergences
   of social commerce, Q-Commerce, and consumer-driven B2C platform
6. Shrinking
   margins.
7. Territory
   bangs
8. Inventory
   Management & assortment management
9. Demanding
   Customers and prospects
10. Less
    penetration of IT tools
11. Sales return & RTV issues from the brands for new
    product lines.

There
is a lot to find out if we talk about the problem side of distributors but the
issue is why are they moving out from the stream and what is the solution, and
how can they be empowered?

The conflict
between brands and distributors is now visible in the ecosystem, recently All
India Consumer Products Distributors Federation (AICPDF) warned nationalized
brands not to be met by distributors if they did not find any solution for
them.  The problem is with horizontal
distribution i.e. eB2B supply chain aggregators and other big bang retailers
who are giving or burning their money in terms of giving 15-18% margin and
sponsored promotions to retailers through technology intervention, whether FMCG
brand through traditional distribution system spread margin from 10- 12% then.
Why this discrepancy?  

Here we have
to expand on the word "disruption", I'm not convinced by the
terminology that one segment of the ecosystem is burning money like crazy,
offering huge discounts to build a bigger network, regardless of the bottom
line. Creating the word “Disruption” exhibits an aura of disturbance in the
ecosystem. The only good thing in this kind of development is the emergence of
technology promising of that scale which is a huge parameter to
"evaluate" in the start-up ecosystem. But, before they were fired
from the ecosystem, we need to understand the fundamentals of the business.

Why
distributors are disturbed and losing the charm, interest, and business
opportunities?  This is not what we are
not able to figure out but the thing is that we are a part of this ecosystem
and are engaged somewhere and our selfishness is keeping us on hold that’s why
we are not speaking aloud. 

With the
advent of Modern Trade from 2005 to 2014: 
FMCG companies started focusing on Modern trade, this
has brought another line of consideration for them and they start giving low
preference to the General trade market. 
This has happened in every segment of retail, but yes grocery is the
most affected. Undoubtedly, Modern Trade has greeted them with good visibility
and stretched their product range beyond expectations. But, the landscape
started in a different direction when modern business outlets started offering
their own private label. The disillusionment of the FMCG company started in
2012 and onward. However, later some companies started introducing new pack
sizes with different MRPs to avoid the conflict with GT market. Still, Modern
Trade is a great platform for FMCG companies. But here the struggle has started
for the distributors, the same FMCG company is giving more margin to MT outlets
than GT. Somewhere the demand imbalance and consumer dissatisfaction made GT
retailers less preferred resulting in turmoil in the sales of GT backfire
distributors severe.  Things will go in
the same directions, as per the market trend of MT market size, it will grow in
double digits and will reach above USD 150 Billion by 2023, positively will
be in the range of 18-20% of total retail market size.  I completely agree and I believe this will
upset the existing distributors in a big way.

Ecommerce is
on the other hand made a heavy noise:  B2C
players, started entering B2B in one or another way.  This is something cannibalizing the
opportunity for distributors. The advent of technology-driven marketplaces and
diversion of the business model of b2c into b2b is something that is creating
panic in the distribution ecosystem. Everyone wants to each to retailers so
they are offloading their products and making the scale of the economy.
Something fabricated and fascinated way of practice is going in B2C startups. Many
startups are there to disrupt the ecosystem in their way.  They were getting heavy funds, some of them
got Unicorn status and again burned more money in terms of discounts,
promotions, and adoption. This advent in E-commerce will reach $111 bn size market
by 2024 and maybe more.

It would not
be wised to create a conflict, it will be a big setback for the FMCG companies
irrespective of status they have i.e. national, regional, or local.  All are going to suffer if this would happen
and distributors start a conflict with the brands.  Distributors can’t be let in the middle of
technology-driven b2b supply chain aggregators and the traditional method of
distribution. All stakeholders of this ecosystem should get a better solution
so that distributors should not suffer. 

According to
my sources, the AICPDF and FMCG companies have agreed to suspend the agitation
for time being, but the struggle is not showing any signs of abating. If we are
talking about any solution that FMCG companies will provide to them, honestly
nothing will happen. I have an argument to prove that if FMCG companies find a
way to resolve this conflict, it must go through a basic fundamental. As a
retail professional, I am curious to know the outcome of this conflict. How
FMCG companies will distribute lollypop among the distributors? 

Things need to
be discussed with the retail giants and amicable solutions need to be brought
into the retail ecosystem so that there is better consistency across all layers
of distribution.

I am working
to deliver some strategic solutions to the ecosystem so that such things can be
avoided with brands and distributors.

Your valuable
comments and suggestions are welcome to share with the stakeholders of this
ecosystem.

Post written by : Balwant Singh Rana /23.12.2021