Gearing Up For The Next 500 MILLION
In this article, I would like to speak about a kiosk based platform specifically designed for India, to reach the next 500 million in our Tier 2 & Tier 3 cities and big villages. This article explores the idea of reaching to the next set of 500 million customer for consumer ecommerce marketplaces like Flipkart, Amazon, Nykaa, Myntra and many others.
Lets start with our topic. During pandemic, India witnessed heavy adoption of online shopping. Those with means to go online pushed countries’ e-commerce adoption rate to +85%. This was observed across the age groups. Pandemic gave Indians taste of Online shopping. But now, with minimum COVID restrictions, customers are once again heading towards their comfort zone of offline shopping. We also have some difficult hurdles to pass to achieve the next phase of customers from our smaller cities and towns! the biggest one is,
Offline Preference
ICEA Study — Contribution of Smartphones to DIGITAL GOVERNANCE IN INDIA, of July 2020 says India surpassed 500 million (50 crore) smartphone users by the end of 2019. India is also expected to cross the mark of 820 (82 crore) million smartphone users by 2022. While these are very intriguing numbers, customer preferences of buying smartphone reveals a different story. The ET Article talks about the demands for smartphones in Tier 2 & 3 is outperforming the demand in Tier 1. While this is all helping solve the connectivity and internet accessibility problem, shopping preferences still indicate population in small cities and towns tend towards shop nearby their locality.
The same ET Article explains Indians still prefer to buy their smartphones offline. This can be translated as a habit that Indians are more comfortable with physical shops which are in their town/village and they tend to trust towards transactions done locally. Does this mean online marketplaces should look at store concept in small cites and towns?
Opening up an offline store in small towns and cities is a risky affair. Though the rents are sizably less and cost of employment is also low for locals, gauging the sales is very risky. Also, opening up retail stores would cost a bomb. Does not seem to be a very good idea!
DO WE HAVE A SOLUTION HERE?
The reach is important and after a point, you have to go offline. But the market presents smarter ways of doing so, one such way would be, RETAIL PARTNERSHIPS..
In India, we find general retail and grocery stores at every corner. Its the most common scene across the horizon. Grocery stores generally deal in bakery, dairy, beverages, staples, frozen foods, personal care, cleaners, fruits and veggies (extended store) and many other categories. It means they cater to 90% of our daily needs. On an average, a family member visits a grocery store 3 to 4 times a week. Penetration of grocery stores in our countries landscape is unmatched by any other sector. This is also one of the reasons why telecom companies went with grocery stores to reach to the customers at large.
My suggestion is to tap this huge network, as they will provide necessary footfall as well. A touch-screen based kiosk at any grocery store offering thoughtfully predetermined catalogue in the locality will attract good number of potential buyers. This model can be worked out on a partnership/franchise basis.
To my knowledge Flipkart is already working on a similar concept, with the name Flipkart BuyZone and the pilot is operational in some cities. This model is also helping Flipkart in assistive shopping, as small cities and towns prefer local presence.
Overall this model has many benefits. The model is, in comparison with a full fledged store, very asset light. By profit sharing agreement, marketplaces do not have to take fix expenses of salaries and rentals, and it can also provide a substantial additional income to the entrepreneur/franchise partner. Kiosks can be made centrally and will be very easy to install and operate.
Platform X — Launchpad
While retail partnership is one way of increasing the reach, online marketplaces can also look for an existing setup of a different industry. Take for an example, Airtel. Airtel already has a good presence across Tier 2 & Tier 3. The stores are already equipped with 4G internet and they will also be the amongst first once to get equipped with 5G as well. Most of the stores already have kiosks and computer infrastructure. If not, for a franchise, it will not be too much to ask even if they have to invest some money in a new kiosk system. It will be a great value addition for Airtel and its stores to also act as an “ offline storefront for an online marketplace “, promoting themselves as a launchpad service. Smaller marketplaces can actually benefit to a large extent from this.
Other telecom operators like Gio, VI and even India Post can think of such model and present themselves as a launchpads for all kinds of products and services.
CATALOGING
I would like to highlight that CATALOGUE is also a key to success in small cities and towns. The catalogue that you showcase here, has to be unique and generated according to the geography. The marketplace should also consider the usability of the products getting displayed. Small cities and towns tend to spend less on luxuries and more on necessities (this habit will differ locality to locality according to the disposable income generated). Aspirational products will not play a major role in this scenario, instead, economic products with best possible deliverables will give better results. Also, please do remember that the cost of acquisition might go higher than in Tier 1, so it is important to maintain the inventory very well and avoid stock outs at all costs.
Hope I’ve done justice with the article. These are interesting times and I would surely love to see a Platform X getting launched or a marketplace launching its Kiosks in the near future. Please write to me at tejaspatilofficial@yandex.com. Comments and suggestions are always welcome. Thank you for your time.
With this article I am exploring an idea to acquire Tier 2 & 3 customers for consumer marketplaces in India.
LinkedIn Article Link: https://www.linkedin.com/post/edit/6769913343617626113/
