Amid the talks of ‘Digital India,’ next door local kirana stores are hesitant to adopt digital technologies. This is in contrast with modern retail and wholesale players such as Amazon, Big Basket and Reliance Jio Mart which are making conscious efforts to disrupt ‘company-distributor-mom & pop retailer chain’ with the introduction of mobile/online ordering. These kirana stores, accounting for over 80 per cent sales for staples and Food and Beverage companies, have second thoughts on introducing digital means for various reasons. These reasons range from not being technology savvy to lack of convenience, Motilal Oswal said in a research note.
What troubles these small kirana operators the most is the lack of enough manpower. Many of them are managed by one person and working simultaneously on the phone orders and servicing the customer at the shop becomes inconvenient. Many owners are middle-to-senior aged individuals who are unable to understand the devices and apps. Being technologically challenged, they are not keen to use this method of ordering and even if they do, they have to rely on company salespeople for help in ordering. Another reason is that they have established good relationships with distributor sales personnel. This helps them to understand new schemes and learning these apps, on the other hand, will pose a challenge store managers.
Another major reason for rejecting online ordering among kirana stores, managing credit. “The kirana store economics work on credit with distributors (they offer credit ranging from 7-30 days). Online ordering model, on the other hand, is cash & carry, making it unattractive for the kirana shop,” said the research note. Furthermore, there is a burden of inventory risk. If the product is defective or expired, in case of online ordering, there is neither a return policy nor a trustable mechanism for the return. Therefore, the process becomes a hassle for the store owner to deal with. Apart from these, the kiranas shops have been doing their business opaquely. They fear that if they opt for online ordering, it would make their business dealings transparent and will require them to declare their income and pay taxes.
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Source: Financial Express