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Why is the kirana store inventory pick- up model unviable? “Hyperlocal companies started charging

7 per cent margin from the kirana store, when the store’s gross margin is just about 10 per cent. So, on an order size of ` 1,000, the delivery company would make ` 70 and from that their marketing and delivery cost would get deducted. Bulk of their margin goes in delivery cost, which means they would make just about ` 10 per order. If you hold the inventory, your gross margin will be around 15 per cent. On a ` 1,000 order your gross margin will be ` 150, and after paying for delivery, warehouse and marketing costs, you can still make ` 50,” explains Ashish Kumar, Co- Founder and CEO, Near Store. He says most kirana retailers list unbranded items such as pulses, which give them higher margins so that they can afford the 7 per cent margin which the hyperlocal delivery companies charge them.

Though owning inventory in dark stores surely seems more profitable, hyperlocal delivery companies can’t ignore the 15-million strong kirana store network in India. This had led to the emergence of multiple models around the kirana ecosystem. Technology service providers such as Jumbotail, Snapbizz and Near Store are focusing on empowering kirana stores to becoming robust omnichannel retailers. The belief is that if 60- 70 per cent of the grocery bills are below ` 200, it is only the neighbourhood kirana store that can fulfil those needs. “It won’t make business sense for a large marketplace to service an order as low as ` 200. They need an average order size of at least ` 1,500 to break- even,” points out Prem Kumar, CEO and Founder, Snapbizz.

No. of kirana stores in India. Many models emerged around the kirana ecosystem during the lockdown

Kirana Is King

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