It is an open secret that e-commerce is still a minuscule part of the total sales happening in India, and traditional e-tailers don’t cater to its vast retail and commerce needs.
Despite the massive marketing and PR spends by Flipkart, Amazon, Paytm and other smaller players, e-commerce still remains to reach full potential. The key reason is that all they are catering to the same set of urban customers.
They have managed to only scratch the surface yet, and a larger 600 million middle-income mass market in India still remains largely untapped. These consumers don’t enjoy the same online shopping experience as Tier I markets do.
This makes India fall in a unique position, as e-commerce has covered predominantly the large metropolitan cities.
“Almost all digital companies are today targeting the same 40-50 million active internet buyers in India,” said Amit Sharma, CEO and Co-founder of ShopX, a startup aiming to redefine how e-commerce is executed in India.
“As a result, much of the larger 600 million-plus population residing in Tier II and Tier III towns remain untouched. Many factors have contributed to this. Scaling up issues, rising real-estate costs and inefficient last-mile delivery are some of the hurdles dogging Indian e-commerce. Other aspects like a linguistic barrier, trust, and comfort are other key challenges,” he added.
He said that the general population of Tier II and Tier III towns normally consider the suggestions of nearby kirana store (small family-run retail store) owner before making an online purchase.
“This is where we sniffed an opportunity. We realised that technology with a ‘human touch’ could make a difference. We also realised small retailers can become a point of contact, not just for purchase but also for delivery of products,” he said.
ShopX, run by Bangalore-based startup 10i Commerce Services, was conceived in 2015 by Sharma and former colleague Apoorva Jois. The startup aims to make digital commerce available to the 600 million middle-income mass market in India. ShopX does this by empowering kirana stores to act as a platform connecting vendors/brands with consumers.
Through the B2B app targeting kirana stores, retail stores can offer various digital services such as mobile and DTH recharge, bus and flight booking, utility bill payments, and lending services for ShopX distributors. This in addition to a wide range of physical products in categories like FMCG, mobile phone and accessories, and fashion.
“The benefits for the retailer are low investment, zero stocking, and increase in income opportunities. The app enables retailers to earn 30-40 per cent more than the traditional retail model,” notes Sharma.
Consumers can access the ShopX app at over 50,000 of its partner retail outlets in over 230 towns across 10 states. More than 50,000 products are available on the platform. He says ShopX does more than 20,000 physical transactions every day. It has so far served more than 5 million customers.
The company has easy order and return policies to provide consumers and retailers a hassle-free shopping experience, according to Sharma.
ShopX uses a business model that Sharma says is highly scalable and profitable. The firm charges a non-refundable fee of INR 1,000 (US$16) per retailer to use the app. It also charges a commission from vendors and brands, which can also use the platform for promotions.
But how do you crack last-mile delivery, a real pain for e-commerce companies?
“Well, while last-mile delivery remains a challenge for e-commerce companies, we recognise that this step in the value chain is of great importance. If this step is poorly executed, it affects the entire process of delivery,” he said.
“In order to scale up accessibility in Tier II and III markets and to enable faster delivery, we leverage our last-mile delivery network to strengthen the supply chain. We have thus integrated our local partners to into the value chain which has reduced the delivery time to two to three days instead of four to five days,” Sharma went on.
To date, ShopX has raised US$10 million in funding from some well-known names like Infosys Co-founder and former UIDAI chairman Nandan Nilekani. These funds helped the startup to strategically reach out to its target audience.
An Engineer with over 16 years of experience in technology, startup building and e-commerce, Sharma is a serial entrepreneur. He has successfully raised multiple rounds of funding, built a profitable e-commerce business in India, and has led the Startup Leadership Program in Bangalore. He holds an MBA from UCLA, and worked with leading consultancies in Silicon Valley, before returning to India.
Jois is the (COO) has over 16 years of experience in technology, startup building and e-commerce. He has a deep understanding of product development and management, operations, e-commerce, business planning and startups management. In the past, Jois co-founded Go Untucked and was a founding member of Cubel Technologies. He has served key roles in Infosys, where he was working for over a decade.