After spending more than a decade, and disrupting the neighborhood stores from the U.S. and several other markets.
Amazon and Walmart are employing an unusual strategy in India too, to face off the competitor who is Friending them.
Walmart and Amazon both have faced restrictions from New Delhi (INDIA) on what all they could do in India. They have partnered with thousands of neighborhood stores all over the world’s second-largest internet market this year and that is to leverage the bigger presence of these mom and pop stores.
In June of this year, at the maximum height of the pandemic the Amazon announced “Smart Stores.” Through this India-specific program, for instance, Amazon is basically providing physical stores with a software to maintain the digital log of the inventory that they have in the shop and supplying them through a QR code especially.
When consumers walk in to the store and scan this QR code with their Amazon app, they see nearly everything the shop has to offer them, in addition to any discounts and past reviews from customers.
They can select the preferred items and pay for it using Amazon Pay instantly. This payment in India supports a range of payments services that include includes the most popular UPI, and debit and credit cards.
Amazon partners with not hundreds but thousands of kirana stores all over India as delivery points. It’s good for every customer, and it helps the shop owners to earn additional income easily.
Got to visit one in Mumbai. Thank you, Amol, for letting me deliver a package. #MSME pic.twitter.com/VpoHUoJOIH
— Jeff Bezos (@JeffBezos) January 18, 2020
India has more the over 60 million small businesses that is 6 crore, that dot the thousands of cities and villages across the country. These mom and pop stores offer all kinds of items, are family type, and pay low or min wages and little to no rent there.
This enabled them to operate an economics that is better than maximum of their digital counterparts, and their scale makes it to them to offer unmatched fast delivery easily.
Krishna Shah, a New-Delhi-based doctor, on paper, she is one of the perfect customers of e-commerce services. She lives in an urban city, uses digital payments on apps and her earnings put her in the top 5% income level peoples in the country.
That neighborhood store, which employs fewer than twelve people, was competing with those giants and heavily funded startups like Grofers and BigBasket still it won.
At stake is India’s retail market, which estimated to be worth $1.3 trillion by 2025 from about $700 billion in last year. According to Boston Consulting Group and the Retailers’ Association India, E-commerce has by several estimates, accounts for just 3% of retail market all over country.
If that figure wasn’t small enough already, consider this: Some of the biggest customers of Flipkart and Amazon are also these small retail stores and an executive with direct knowledge of the matter told the Tech Crunch that during some sales, as high as 40% of all smartphone units are bought at in physical stores.
The idea is, the executive to buy the devices at a discounted price. Which sit on them for a few days, when Amazon and Flipkart are done with their sales. Sell the same phones at their standard prices.
Sujeet Kumar a co-founder of Udaan Startup, a "Bangalore-based" startup that works with merchants had said that even as smartphones and the internet have reached all corners of India and or but the e-commerce hasn’t been able to disrupt the retail market so far.
“The problem is that it is very difficult for e-commerce companies to build a supply chain and distribution network that is more efficient than those established by neighborhood stores. These mom and pop stores operate on an insanely different kind of cost economics. E-commerce companies are not able to match it,” he said.