Nov 5, 2020
India’s food and grocery landscape looks a lot different than it does in the United States. Unlike the U.S., big-box supermarket chains where consumers go to purchase a week or so worth of food items are not the norm. Instead, shoppers tend to purchase non-processed staples, like rice, every couple of days.
The food and grocery supply chains in India, along with local Kirana stores has to deal with a fragmented market to acquire the items they need for their customers. Thus there is a significant need and opportunity to digitize India’s food and grocery supply chains, and for these small retailers to embrace online commerce.
That can only happen, however, if the technology is able to meet the unique needs of India’s market. But, success not only means moving the needle in B2B eCommerce adoption, but also in digitizing India’s largely-cash economy.
Many industries in India continue to rely on legacy infrastructure to operate and the food and grocery sector is no different.
India’s food and grocery sector is about $500 billion with mom-and-pop Kirana stores as a key contributor is almost entirely made up of standalone. These local retailers are as many as 12 million — are typically run by a family that must physically visit a wholesale market to procure items they need to sell from hundreds of different suppliers.
Not only is the industry’s supply chain fragmented, but there is added inefficiency due to these retailers having to make inventory purchases quite frequently, and then organize their own transport of goods back to their stores.
A typical store would essentially deal with 100 or 150 different suppliers. The retailer has to go to a large wholesale market. It’s a highly inefficient process, and it usually takes a full day.
Digitizing the procurement process has become a need of the hour and a B2B eCommerce portal is needed for these Kirana stores and suppliers to connect and transact online. With support for multiple languages, the platform can be accessed on a mobile device and offers warehousing, delivery, and financing solutions for both buyers and sellers.
When the pandemic hit, tackling these friction points became even more important. Amid a widespread shutdown, Kirana stores remained open as essential businesses to continue serving their local communities — yet store owners were unable to physically visit their wholesale marketplaces. For that reason, the digitization of B2B commerce became perhaps even more important than the digitization of B2C.
Solving for some of the most unique pain points of India’s food and grocery arena means addressing challenges on the B2B side of the market, including supply chain fragmentation and last-mile logistics inefficiencies.
When it comes to payments, India presents another unique challenge: While the nation remains a cash-dominated economy, it also operates one of the most sophisticated payment networks in the world today: UPI. While the infrastructure exists to optimize and digitize payments, there is a “mental block” that keeps cash at the top. It’s a puzzle that presents yet another opportunity to inject efficiencies in the food and grocery supply chain — with consequences that can reach even further into the wider economy.
Today, there is a “disincentive” to digitize payments on both the B2B and B2C front because many of today’s suppliers don’t accept electronic payments. That means they need cash to pay their vendors and the most efficient means of obtaining cash is to accept it from customers. By supporting electronic payments in the B2B use case; there is an opportunity to drive further digitization of a significant portion of B2C payments volume in the country.
If they were to turn B2B payments largely digital, it would be a huge driver of B2C payments becoming more viable, it would really catalyze a transformation in the economy toward digital payments on the consumer side.
As India continues its path toward modernizing its economy and transforming its payment ecosystem, there is a significant opportunity for the food and grocery arena to make a real impact in achieving these initiatives. While tackling the unique challenges of India‘s market is important, India isn’t alone when it comes to a cash-fueled, fragmented supply chain.
There are a lot of economies that are very similar and in comparison India is well-positioned to export this technology to other parts of the world … the world of food and groceries is going to look very different in the next five years — not only in India but in pretty much every part of the world.