Reliance Entry In Online Retail Will Help Digitize 50 Lakh Kirana Stores By 2023, Report

According to Bank of America Merrill Lynch’s study, Reliance Industries’ entering online retailing will help increase the number of digitalized retail stores from 15,000 to more than 50 lakh by 2023. Around 90 percent of the retail market in India, worth $700 billion, is still unorganized. Mostly, it consists of neighborhood Kirana stores which sell groceries and sundries.

As stated by the study, these stores want to upgrade their Indian tech, leading the modernization wave. This results from the current growth of e-commerce and modern trade. As stated by the study, GST has created further pressure for modernization because GST compliant bills must be generated. Reliance, with more than 10,000 Reliance Retail outlets across the country, is spending the effort to create the world’s biggest online-to-offline e-commerce platform in India.

It’s likely that Reliance will install Jio MPoS (short for mobile point-of-sale) devices at Kirana stores so that neighborhood suppliers can connect with its 4G network which customers can use to order products. The company will take on GoFrugal, Nukkad Shops, and SnapBizz in the area of MPoS.

While SnapBiz, Nukkad Shops, and GoFrugal offer MPoS machine at a one-time cost of Rs 50,000, Rs 30,000-55,000, and Rs 15,000-100,000 respectively, Reliance offers the same thing at only Rs 3,000.

According to the Jio MPoS, not only does it have no merchant discount rate (MDR) on any charge, but it also has a loyalty program, with addition monetization strategy including aggregation of delivery, supply-side, and advertising. The company expressed its belief in increasing merchant adaptability with the entry of Reliance Industries Limited, which will likely help to drive down the price points and expand the distribution.

It added that consolidation is possible too, expressing expectation to raise the current base of digitized stores of 15,000 to 50 lakh as of 2023. The brokerage also said that it met with exes of SnapBizz at their Bengaluru-based office. Currently, it has over 4,500 devices installed across seven cities in the country, equal to more than 30 percent of total digitized stores.

According to the report:

With a Rs 50,000 one-time payment, the merchant owns a PoS device powered by SnapBizz software, a personal app for interacting with users, and a screen to display advertisements. SnapBizz is also designing targeted promotions/couponing for customers.

As per SnapBizz, it said that there’s a contractual agreement between it and retailers to provide third parties with aggregate level data, but it won’t share personal consumer data. Meanwhile, the brokerage stated that it collected feedback on general MPoS from 15 stores on Navi-Mumbai and Mumbai.

Accordingly, most retailers felt happy with the system and believe the investment has turned out good. What Kirana stores like best is the ease of billing/generating GST complaint bill. And the PoS system let them choose to add built-in discounts as well as push offers to the whole customer database through SMS. A large part of the shops aren’t syncing inventory in PoS and mostly using it for billing. Kiranas found it difficult to get used to the new inventory items or felt reluctant to enter the system due to fear of sharing data with PoS companies.