Reliance Jio MPoS devices to help digitise 5 million kirana stores by 2023: report

Reliance Jio MPoS devices to help digitise 5 million kirana stores by 2023: report

With the launch of its afforadble Jio mobile point-of-sale devices, Reliance Industries could consolidate the scattered PoS market, a report by Bank of America Merrill Lynch said

The retail sector in India mostly comprises unorganised neighboured stores. The retail sector in India mostly comprises unorganised neighboured stores.

Reliance Industries' entry into online retailing will help to digitise more than five million kirana stores by 2023, a study said. Inclination of offline retail stores towards modernisation rising out of growing competition from e-tailers, and GST implementation will be the driving force behind digitisation, the report added. The Mukesh Ambani-led conglomerate already has 10,000 Reliance Retail stores across India and is working on creating the biggest online-to-offline (O2O) e-commerce platform in the country.

The report by Bank of America Merrill Lynch (BofAML) came in the backdrop of Mukesh Ambani-led Reliance Industries launching its Jio mobile point-of-sale (MPoS) devices for kirana stores. These devices will allow the shops to connect to Jio's 4G netowrk, allowing their shoppers to place their order online. The Jio MPoS will take on SnapBizz, Nukkad Shops and GoFrugal in the fragmented MPoS space.

ALSO READ: Reliance's acquisition of Hamleys takes the retail war to global shores

Reliance Industries has launched its Jio MPoS at an one-time investment of Rs 3,000. SnapBiz offers the same machine at a one-time cost of Rs 50,000, the report said. One-time charge on Nukkad Shops MPoS ranges from Rs 30,000 to Rs 55,000, whereas GoFrugal offers its POS software at an one-time investment of Rs 15,000 to Rs 1 lakh.

The Jio MPoS has no merchant discount rate (MDR) on any charge and offers a loyalty programme, the report said. Its monetization strategy includes merchandise delivery, advertising and supply-side aggregation.

"We believe, with 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. Consolidation is also a possibility; as a big player, RIL is entering an otherwise scattered market. Overall, we expect RIL to help expand the current 15,000 digitized store base to 5 million-plus stores by 2023," the report said.

Most of India's $700 billion retail industry is unorganised and is made of neighbourhood kirana stores selling groceries and other sundries. As of now, there are 15,000 digitised retail stores in India Bank of America Merrill Lynch report said.

ALSO READ: Politicians favour shares of Mukesh Ambani's Reliance Industries, Kingfisher Airlines for investments

The US-based brokerage said SnapBizz has more than 4,500 MPoS devices installed in over seven cities in India or over 30 per cent of the digitised store base. "The Merchant PoS by SnapBizz is a point of sale platform where merchants can keep a digital record of their inventory, generate GST compliant bills and keep a track of consumer's buying patterns, in addition to making payments," the report said.

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 app to interact with users. SnapBizz is working with Israeli start-up to design targeted couponing/promotions for customers. SnapBizz has a contractual agreement with retailers to share aggregate level data with third parties; however personal consumer data is not shared, it said.

The brokerage said it visited 15 stores in Mumbai and Navi-Mumbai to get feedback on general MPoS. "Most retailers we visited were happy with the merchant PoS and believe the return on investment is good. Kirana stores liked the ease of billing/generating GST complaint bills the best. The PoS system provides an option of adding in-built discounts and also push offers to the entire customer database via SMS," the report said.

Majority of shops visited are not synching inventory in PoS and mainly are using it as a billing device. Kirana stores either found it difficult to enter new inventory items or were reluctant to enter with a fear of sharing data to PoS firms.

ALSO READ: BT Buzz: Consumer companies are bracing themselves for the worst

(With PTI inputs)

Published on: May 12, 2019, 4:35 PM IST
Posted by: Vivek Punj, May 12, 2019, 4:35 PM IST