India's 15 million strong kirana store network which dots every neighbourhood would have never felt more important. From Reliance to Amazon, all retail biggies are desperately trying to woo them. While cash and carry retailers have delivered merchandise at the kirana's doorstep through the lockdown, tech start-ups are busy on-boarding them in a bid to help them digitise.
India's ecommerce pioneer, Flipkart (now owned by Walmart), has now upped its kirana play with the launch of Flipkart Wholesale, a digital marketplace that promises to transform the kirana ecosystem with technology. Flipkart Wholesale, has acquired Walmart India's Best Price cash and carry business, making it an omni-channel organisation. Walmart has 28 Best Price stores across the country. With this move, Flipkart, like Reliance Retail is also talking about helping kiranas to improve their ROI. "Our experience with Best Price has helped understand pain-points of the kiranas. Our tech insights will help them understand what and how much will sell in their area, it will help plan inventory," explains Rajneesh Kumar, SVP & Chief Corporate Affairs Officer, Flipkart Group.
To begin with, Flipkart Wholesale plans to work with retailers in the NCR region and subsequently launch services across the country. Flipkart's kirana empowerment story sounds similar to that of Reliance Retail. Will Flipkart also push kiranas to install its POS (point of sales) machine? Will kiranas be forced to bypass traditional distributors and buy inventory only from Flipkart Wholesale?
Kumar clarifies their motive is not about replenishment of inventory. "The value we bring to them will be in terms of how we make them successful and prosperous." Critics believe the only mission of retail biggies is to acquire consumers and they are using kirana stores to do that. "I wonder whether the kiranas will trust the motives of Reliance, Amazon or Flipkart," says a senior retail expert. Though the kirana store owner's appetite for having a digital face has gone up in the COVID era, many are skeptical on joining hands with retail biggies.
As far as Flipkart Wholesale is concerned, apart from joining hands with kirana stores, the idea is to also offer a much larger platform to small manufacturers, sellers as well as farmers.
"If you produce oranges in Maharashtra and are part of the Flipkart market place, you can service a fruit-seller in the North. It becomes a digital market place wherein any seller or manufacturer across the country can become part of the digital market place. We also have a logistics backbone, so if you have a product to offer you can list yourself on our digital market place and we will ensure the product is delivered," Kumar explains.
The consolidation of Walmart's wholesale business under the Flipkart umbrella was waiting to happen, say, experts. "It made no sense to have separate entities. The costs are too high. Flipkart has the added advantage of a strong logistics network and a higher brand recall in India than Walmart," says Arvind Singhal, Chairman, Technopak Advisors. B2B retail has become a tech-heavy business with retailers increasingly encouraging customers to buy online. "Flikpart has all the tech assets to support the digital transformation, therefore, it is an extremely logical operational move," points out a senior retail tech expert.
According to a former Walmart employee, the merger would reduce Flipkart's cash burn. "Walmart India has revenue and makes a profit. So, by merging them, Flipkart gets a revenue boost. Also, their burn gets netted off with profits from the Walmart business." In fact, Walmart India, in January this year had announced large-scale lay-offs and had even said that it would even shut down its largest fulfillment centre in Mumbai.