Amazon com (NASDAQ:AMZN)
Historical Stock Chart
2 Months : From Sep 2019 to Nov 2019
By Corinne Abrams
MUMBAI -- India's ubiquitous mom-and-pop stores are being weaponized in e-commerce wars, as Walmart Inc. and Amazon.com Inc. square off against India's richest man in the country's nascent online retail market.
The millions of tiny stores and stands across the country have proven tough to beat for e-commerce giants and supermarket chains looking to capture a slice of the spending of India's middle class.
Almost every neighborhood in India relies on the stores, known as kiranas, for groceries and staples. Kiranas are often smaller than a one-car garage, their shelves packed with everything from toothpaste and soft drinks to lentils and spices. Owners typically have known their customers for years, and will often extend credit and deliver even the smallest items swiftly for no extra charge.
Big retailers have found it hard to compete with that winning formula. But now, Amazon, Walmart-backed Flipkart, Reliance Industries -- run by India's richest man, Mukesh Ambani -- and others are hoping to capture new business by capitalizing on the stores' close ties with customers rather than trying to break them.
Modern chains make up just 10% of India's grocery market, according to Bank of America Merrill Lynch, and big competitors hoping to create a supermarket habit for customers have found space in cities is scarce and expensive.
E-commerce sales in India are expected to reach $160 billion in India by 2026, according to Morgan Stanley. While millions of Indians are getting online through smartphones and cheap data plans, they have yet to fully embrace ordering online.
Reliance is trying to do with retail what it did with phones -- offer cheap data and hardware to attract first-time users, then use that access to rope them into its ecosystem. For the kirana stores, Reliance has developed an affordable point-of-sale machine that will bring store owners online for the first time.
Store owners can keep track of their inventory and see what is selling on the machine. Reliance hopes that eventually owners will rely on them for the delivery of stock and to take orders through its app.
Reliance plans to help small stores compete with the steep discounts offered by e-commerce companies and big supermarkets by providing them with offers negotiated on their behalf with consumer-goods companies such as Unilever or PepsiCo.
"These highly energetic and self-motivated entrepreneurs have suffered in recent years because of their inability to invest in technology and infrastructure," Mr. Ambani told shareholders in August. "We are working toward enriching and empowering them with our end-to-end digital and physical distribution stack."
Nikul Desai, owner of Nilgiri Tea Supply, a kirana store in Mumbai, has been selling tea, coffee and milk powder for over five decades. Mr. Desai, who has been using Reliance's billing point-of-sale software for over a year, said the machine allowed him to digitize.
"Now I can accept any kind of card payment. I don't need to make manual bills anymore. It becomes chaotic when the store gets busy," he said. The company also charges him less on card transactions; the Reliance machine charges 1.3% per transaction compared with 2.5% for other providers of point-of-sale machines, he said.
Amazon has pledged to spend $5 billion in India to capture a part of the country's $36 billion e-commerce market. Amazon is trying to harness the power of the kirana stores' relationships with their customers by persuading owners in some of India's smaller towns to guide them through purchases on devices at the stores. The company says thousands of stores have signed up to help it reach customers who either don't know how to order online or don't want to do it through their phone.
V. Shankar, 46 years old, owner of the Shree Swastik General Store in eastern New Delhi, acts as a delivery hub for Amazon.
He said he gets around 14 rupees, or about 20 cents, per package, and during the Diwali festival season when it is auspicious to make new purchases, he receives as many as 50 packages a day to be sent out for delivery or picked up by customers.
"Both Amazon and the customers from the area trust the shopkeepers like us," Mr. Shankar said.
In a country where making the last-mile delivery can be a headache, Walmart's Flipkart says it has signed up about 27,000 kirana stores to help it deliver stock to customers. It says it has trained the kirana owners to deal with customer requests and queries.
"Kiranas are the oldest and most widely spread retail format in India," said Kalyan Krishnamurthy, chief executive of Flipkart Group. "Our approach to inclusivity for last-mile partners is guided by the synergies we share."
--Vibhuti Agarwal and Krishna Pokharel contributed to this article.
Write to Corinne Abrams at firstname.lastname@example.org
(END) Dow Jones Newswires
October 13, 2019 17:39 ET (21:39 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.