Indian Billionaire and Richest Man in India Mukesh Ambani-led Reliance Industries latest announcement to foray into online retailing will boost and expand the current 15,000 digitized retail stores to over 50 Lakhs by 2023, a study of Bank of America Merrill Lynch said. As much as 90 per cent of India’s USD 700 billion retail market is unorganized, made up mostly of mom and pop stores selling groceries and other sundries. These kirana stores are now ready to upgrade their technology and this lead to huge wave of modernization, the study said.
India is transforming itself in terms of technology and infrastructure through massive boost from Digital Indian Imitative. So now more and more local kirana stores are aiming to modernist themselves.
Due to emergence of E-commerce startups and new online platforms foraying into Tillion dollar Indian retail sector as a result now kirana stores are even excited to modernize their merchant point-of-sale (MPoS) technology.
“The current one-time price point of Rs 50,000 limits the market to Class A/B stores (turnover of Rs 900K+/month).
“We believe that with the RIL’s entry, we could see an increase in merchant adaptability, as the price points will likely come down (RIL’s current one-time deposit is Rs 3,000) and reach should expand,” the research noted.
As a big player, Reliance Industries is entering an fragmented and scattered market. Some of crucial competitors in the fragmented merchant point-of-sale (MPoS) today are SnapBizz, Nukkad Shops and GoFrugal.
“Overall, we expect RIL to help expand the current 15,000 digitized store base to over 5 million stores by 2023,” said Sachin Salgaonkar and Sukriti Bansal, Research Analysts at DSP Merrill Lynch (India).
For the research, the team met with the SnapBizz management which has over 4,500 devices installed in more than seven cities in India which accounts to over 30 per cent of the digitized store base in India.
For a one-time payment of Rs 50,000, the merchant gets a PoS device with Snapbizz software, a screen space to display ads and a personal application to communicate with customers.
As due to implementation of this new MPOS Technology, the retailers’ revenue is forecaster to improve by Rs 8,250 per month, thus recovering the investment in six months.
“Kirana stores liked the ease of billing/generating Goods and Services Tax complaint bills the best. The PoS system provides an option of adding in-built discounts and also push offers to entire customer database via SMS,” the research noted.
It is also rumored that Startups such as Paytm, PayUMoney, and Google Pay are also looking to enter this space.
In July,2018 Flipkart’s digital payment subsidiary PhonePe has made an acquisition of Zopper Retail, a hyper local Point Of Sale platform for small and medium businesses.
India’s unorganized sector currently represents 40 per cent of our Gross Domestic Product. It employs 81 per cent of India’s employed population. Only 6.5 per cent of employed population works in organized sector. Unlike organized sector, it provides employment to women, aged, and transgender. It is a truly equal opportunity for employer. Its implementation to high technology will unleash more job opportunities and contribute to higher growth rate in future.
Reliance Jio is on a mission to digitize 5 million kirana stores with the help of Jio MPoS. If done correctly, this scale would give competition to how WeChat converted retail stores into digitizing payments in China!