- For 85% of all procurement, the corner stores would check with all the suppliers - Open Market Distributors, Udaan, Amazon Business, Flipkart Wholesale etc before making the order. The procurement decision is then made by the retailers after considering just one factor – who gives lowest price? There is almost zero loyalty for retailers to any supplier here.
- The remaining 15% procurement kicks in, when there is a stockout. For this, stores do either of below:
Roughly ~50% Corner Store owners rush to a nearby wholesale markets to get the products in cash.
And the remaining half decide to suffer sales loss for next 2 days. They make an order in any of the apps/distributors and get the orders in due time albeit suffering the loss in sales (and more importantly customer satisfaction) in the interim period.
- The procurement decision for this “15%” is unique. Retailers are willing to go through the inconvenience, pay in cash for the order and in a few cases willing to pay a small premium for some products. Almost all the companies focus on “85%” market and there is no one that is solving the “15%” problem.
- This “15%” procurement is done for FMCG products. These products have relatively higher margin compared to commodities (sacks of rice, sugar, wheat etc) that retailers plan and purchase.
- The order size of B2C consumer delivery apps such as Instamart (of Swiggy), Flipkart Quick and Amazon Fresh is ~ $6. Our AOV is ~ $65 that could be achieved at the same SKU collection in the warehouse and fulfilled at almost the same delivery expense. And there is more opportunity to become a sole supplier of our valuable customers in due time.