India’s ubiquitous mom-and-pop stores are turning out to be a key ally for its fledgeling e-commerce sector.
Given their presence in every nook and corner of the country, e-tailers are increasingly turning them into last-mile delivery channels.
E-commerce companies were once seen as a threat to these neighbourhood stores; but later they were seen to be complementing each other: The online companies, looking to ensure timely delivery, were roping in kirana shops to supply products to neighbourhood customers.
However, now, e-tailers have found a completely new role for them. Tapping into the latter’s wide presence, they are solving their last-mile delivery issues by turning these local players into quasi-delivery boys, suggests a note by e-commerce consulting firm RedSeer.
The kirana stores’ proximity to households makes them particularly well-placed to deliver or drop-off parcels of goods ordered online. Tying up with them ensures last-mile delivery, reduces delivery failure rates, and saves costs.
In May 2016, Ekart, the logistics arm of Flipkart, India’s largest e-commerce company, said it had roped in 700 such stores. “We are already doing 6-7% of alternate delivery channel volumes via kirana stores now. We are working on enhancing this network to 3,000 stores by end of year to fulfil more deliveries via this channel,” Neeraj Aggarwal, senior director, last-mile operations at Ekart told The Times of India newspaper last year.
Amazon, too, has looped in kirana stores under its ”I Have Space” program, a company spokesperson told Quartz.
The idea is to allow consumers to opt for these stores as pick up points when they aren’t home, instead of turning away delivery boys. In return, the kirana store owners are paid a small commission to ensure the order is picked up or delivered at customers’ homes in time. Compensation structures vary across companies. Third-party logistic companies too, are using kirana stores as drop-off points, the note added.
RedSeer also counts the neighbourhood pharmacists, chemists, and druggists in this category.
Orders delivered or picked up at kirana stores accounted for over 10% of all e-tailing shipments in the first quarter of 2017, up from 4% in the year-ago period, RedSeer, which began tracking pick ups at kirana stores in late 2015, said.
“The growth of the kirana store network is crucial for the industry, as it enables a lowering of the delivery failure rate and last mile cost structures while increasing delivery speeds,” said Mrigank Gutgutia, of RedSeer.
Last mile logistics in India faces several challenges, including difficulty in locating addresses, Gutgutia said. Failed or reverse deliveries, i.e. deliveries unfulfilled because customers aren’t home, are a sore point for the industry.