Newsletter 06

  1. How Reliance is targeting kirana stores in India with an online-to-offline strategy

Reliance Industries is creating an online-to-offline ecommerce platform connecting kirana stores to its network. The retailer is digitising retail stores and wants to expand its retail presence to over five million outlets in India by 2023. JioMart has already launched in more than 200 cities — leveraging Reliance Retail’s store network and its partnerships with kirana stores across 20 cities.

India retail: India’s retail market remains highly fragmented, with 90% of retail taking place in mom-and-pop stores, also known as kiranas. According to market research agency Nielsen, there are 12 million kirana stores in the country. The food and grocery category is big business in India and will contribute around 66 percent of total retail revenue by 2020. While the category represents an attractive market, companies often struggle to service traditional stores.

Servicing mom-and-pop outlets: Servicing mom-and-pop stores is difficult — as they have high last-mile delivery cost, limited cash flow, and credit hungry shop owners. Kiranas often don’t have street addresses and are in congested areas with narrow streets.

Potential of kirana stores: But companies are discovering the potential of kirana shops. Their large footprint and close working relationships with customers make them an ideal pick-up point for online shoppers. In return, kirana shopkeepers are paid a commission for product storage and delivery to customers.

Jio mobile point-of-sale (POS) device: Reliance is installing Jio mobile point-of-sale (POS) devices at kirana stores and connecting it to its high-speed 4G network. The Jio POS system can be used for placing orders, scanning barcodes, billing, facilitating credit card payments, and calculating goods and services taxes. Brand owners will also benefit from Reliance’s technology — providing them with better data analytics and the opportunity to offer targeted promotions. It plans to add more services — and recently introduced an app which will enable mom-and-pop stores to create and launch their own chatbot with customers.

Facebook deal: Facebook announced in April this year that they are investing $5.7 billion in Jio Platforms. The collaboration allows consumers to order via WhatsApp, but purchased at their nearest kirana store with Reliance’s online-to-offline (O2O) model. The model uses kirana stores as a fulfillment centre and links inventory to the nearest kirana store — not a large warehouse.

Engine for growth: Companies such as Reliance, see an online-to-offline retail model as an engine for growth in India. Mobile technology is also fuelling ecommerce and India will have an estimated 800 million smartphone users by 2022, according to Cisco Systems. The appetite for online food and grocery shopping will only increase — and the modest kirana store could be an important player.

2. Sokowatch launched an electric tuk-tuk programme in East Africa

Sokowatch a business-to-business (B2B) ecommerce platform has added electric tuk-tuks to its delivery fleet in Uganda.

Electric vehicle (EV): Gayam Motor Works (GMW) builds the EV, and it takes three hours to charge and the battery last for approximately 2-3 days. The two and three-wheeler segment is an important component of the East African transportation sector. Low-cost EVs often use off-the-shelf components or locally assemble imported kits, and there is an opportunity to develop local manufacturing capabilities beyond just assembling imported kits.

Tuk-tuks: Tuk-tuks are an important part of Sokowatch’s strategy to service more than 16,000 dukas or micro-retailers in East Africa. The startup has a fleet of more than 200 tuk-tuks and function as mobile warehouses — to service outlets on-demand. The vehicles also require less space to drive and park on East Africa’s congested city streets.

3. Other news

Cost of mobile data: Despite the growing prevalence of mobile networks worldwide, the cost of mobile data varies greatly from country to country. India ranks the cheapest at $0.09 per GB, a 65% decrease in price compared to the country’s average cost in 2019. 

Financial inclusion: A new project launching this month in Kenya, led by BFA Global, Shujaaz Inc and the Financial Sector Deepening Kenya (FSD Kenya), aims to assist financial service providers identify young informal traders who are high-potential candidates for loans and credit. The project will closely track their experiences — opening up finance access for an underserved demographic. The project will connect 1,500 young micro-entrepreneurs with tailored financial support and help them restart their businesses after the COVID-19 crisis.

TechnoServe and WhatsApp training: When the COVID-19 crisis hit Mozambique, many women entrepreneurs struggled to keep their businesses going. Recognising the importance of continuing to support entrepreneurs during this difficult time, but wanting to do so safely, TechnoServe adapted its in-person training program to a digital format using WhatsApp. During each session, the lead trainer shared 60 to 90-second videos, key messages and images. The trainer paused for discussions, questions, and practice exercises.

Indonesia provides tech challenges for Tokopedia: Uneven technological penetration and infrastructure gaps in Indonesia has made in difficult for ecommerce platform Tokopedia to incorporate informal traders such as warung or kiosks into its online-to-offline (O2O) platform. According to the company, poor regional infrastructure and low smartphone penetration among warung are creating difficulties for the tech company.

Mr. Price’s township retail model: Mr. Price has launched a new container store model targeting South African townships. They follow Shoprite, who is accelerating the roll-out of its Usave eKazi container stores in South African townships. The clothing retailer says shoppers are increasingly opting to shop closer to home.

South Africa’s changing township retail sectorSouth African companies like SAB, Albany Bread, Pep, Shoprite and MTN have long recognised the economic power within the country’s townships or informal markets. Numerous companies have yet to enter the market and the rise of mobile ecommerce is changing the landscape. Yebo Fresh is a good example. The food delivery startup is servicing Cape Town township customer with fresh produce, but has since expanded its product range to meat, fish, and general groceries. Goods can be ordered on WhatsApp, online, or by phone with a call-back service.

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