In an ideal digital-first world, every neighbourhood kirana store or food & grocery shop should be running its website/mobile app by now, with regular customers purchasing online without second-guessing product quality. Buyers may not even visit physical shops, as is the wont of O2O (online to offline) commerce, thanks to the trust factor built over the years, and doorstep delivery will happen via hyperlocal quick commerce players.
But this is not the scenario even after Covid-19 turbocharged digital adoption across industries and businesses.
Limited budget, lack of tech literacy and operational bottlenecks might have hindered retail MSMEs from joining the digital rush. However, a report by NeoGrowth Study reveals that 90% of Indian retailers still make more than half of their sales offline, while 54% of buyers prefer in-store shopping due to assured authenticity. More importantly, only 18% of retailers acknowledge that ecommerce has affected offline retail growth.
Monish Shah, founder of the retail store-focussed marketplace and hyperlocal delivery platform Streetz, is one of them.
He still recalls how his uncle’s garment and flower shops started losing customers to online sellers and clearly understands the losses offline retailers may face. On the other hand, e-retail is expected to become the largest channel globally, bagging 14% of total retail sales, according to Mordor Intelligence. In India, the online retail market may touch $325 Bn by 2030, per a Deloitte India report, against an estimated global market size of $8.5 Tn in 2029. As these numbers indicate a massive opportunity for offline merchants, Shah built an app for brick-and-mortar retail businesses based in Ahmedabad to provide them with a much-needed digital interface.
Streetz went live in May 2023, onboarding offline local retailers, listing and selling their products in the digital marketplace for greater reach and ensuring a two-hour delivery in and around Ahmedabad. The products featured on the app include groceries and other daily essentials, cosmetics and toiletries, apparel, footwear, toys and more. Its zero-inventory marketplace makes the business asset-light.
People can browse products category-wise or store-wise (stores that are within 20 kms) via the shopper interface, place orders directly and pay via PhonePe, a versatile digital wallet system. Businesses can receive these orders through the seller interface, making transactions smooth and revenues grow.
“Moreover, we aim to give every local store a unique identity when they list their products on our platform,” said Shah.
To enable deliveries within the stipulated time, Streetz has set up an in-house fleet that collects orders from partner stores and home-delivers the same.
The startup claims to have onboarded 150 local stores, with 12K products listed on the app. It has made 7.7K deliveries to a B2C user base of 7.5K.
Streetz’s disruptive model – a platform helping offline retailers sell online and leverage a cost-efficient rapid delivery mode (not yet comparable with the 10-30 minute delivery done by typical quick-commerce players) – seems to have resonated well with local businesses and consumers. Hence, it has raised pre-seed funding of INR 1.89 Cr from renowned angel investors, including Sagar Shah, vice-president at American Express; Hitesh Jobalia, MD at Shree Parshwanath Group; Atin Tomar, founder & CEO of Yapan Bio and others. The B2B2C startup hopes to clock INR 1 Cr in revenue in the current financial year ending March 2024, just 11 months after starting operations.
It is raising INR 3 Cr in another pre-seed round at a valuation of INR 16 Cr. The money will give the startup a year-long runway to support its growth initiatives.
Shah, a second-time entrepreneur, has intriguing plans on the cards. For instance, he wants to grow beyond hyperlocal marketplaces and create an exclusive pan-India platform to sell Gujarati snacks to celebrate his cultural roots. Eventually, it should emerge as a global destination for all things ‘Gujju’ (he chuckled while emphasising his ethnicity).
Inside Streetz’s Strategic Ops & ‘Techdom’ For Empowering Local Merchants
Despite the digital boom, the startup’s initial journey was challenging. But Shah told us entrepreneurship was his forte, which kept him going. Initially, he launched an FMCG startup called Mother’s Magic Food in 2013, which was eventually sold to Rasna International in 2016 for an undisclosed amount. After that, he worked with Swiggy, Shuttl and Flipkart in various roles. But the entrepreneurial bug proved too strong and Shah finally went ahead with Streetz.
As the newest kid on the block, winning trust was an issue, and Streetz found it difficult to onboard local store owners and grow its consumer base. Things came to a head in October 2023, when the startup offered festive discounts to ensure a surge in demand, but the hurried move put the business under severe financial strain. The funding raised at the launch also ran out, leaving Shah to pay INR 30 Lakh to vendors from his pocket. With too few retailers and product listings, supplies were low, and business dwindled at the B2C level, putting Streetz’s revenue model (commission per order) at stake.
Nevertheless, the platform took strategic measures to onboard prominent physical stores across the city. Changing sellers’ perceptions was not easy, though, Streetz did it through consistent marketing, direct communications with target stores and complimentary cataloguing services. Timely payments further cemented the trust factor, helping the platform onboard 50 sellers and then more. Shah said, “We follow a seven-day payout cycle for sellers, irrespective of their payments module as payments are sent to their bank accounts directly after deducting 5 % commission.”
To help sellers with onboarding, Streetz has a dedicated team that provides hands-on support and addresses technological concerns. It also provides tutorials in various formats, including video guides and personalised training sessions for not-so-tech-savvy users.
The tech-driven platform further offers automated product categorisation, efficient inventory management, order processing and business integration with messaging apps like WhatsApp for seamless communication. Additionally, its support team helps with catalogue creation (product photography and editing) and catalogue management, all done digitally.
From browsing and purchasing to order processing, the feature-filled digital journey and smooth order flow between buyers and sellers deliver a quick, convenient and well-integrated experience every time. Additionally, the Zorp software, an AI-driven operations management platform, automatically assigns deliveries to Streetz’s in-house delivery personnel based on a partner store’s location, thus optimising routes and logistics costs.
Buyers and sellers can view the order status in real-time on their respective dashboards, complete with order logs and every step documented, right from the time Streetz receives an order confirmation from a customer to the time when the order is home-delivered.
Revenue comes from the commission charged for each order. Until December 2023, Streetz charged sellers a 5% commission on order value. However, the rate has been revised since January this year and merchants have to pay an average of 12%, which may vary depending on product categories. Sellers can also pay more to increase their visibility on the app. Users, too, have to pay a delivery fee of INR 5-7 per km to cover operational costs.
Next In Order: A Global Marketplace For Unique Gujarati Products
Shah envisions Streetz becoming synonymous with ‘all things Gujarati’ to celebrate and promote Gujarati culture, making it the startup’s USP. He will adopt the long tail and sell various niche products instead of solely focussing on a few popular items.
“As we scaled, we realised that we would need to shift our focus from speedy delivery to creating a niche market by selling unique Gujarati products that are not available in marketplaces,” he added.
Shah has started procuring and curating in-demand items like khakhras, chevdo, chakri and more by collaborating with local merchants selling Gujarati snacks. The platform has successfully onboarded major players in this niche in its endeavour to become the top supplier in Ahmedabad. Streetz will also diversify its product range and list more than 1K Gujarati products under handicraft and fashion by curating a select, high-demand product range. This move aligns with Shah’s vision of setting up an ultimate destination for all things Gujarati.
Will ‘Offline’ Focus, Rapid Delivery Remain Sustainable?
After creating a disruptive business model, Streetz is eyeing substantial growth in 2024. “We aim to grow our seller base 5x to 10x and scale our product list to 50K,” said Shah. It will increase its user base to 100K, an eightfold rise from its current count. The platform is also looking to expand its operations across India and globally and has partnered with Delhivery to kickstart its logistics. Streetz wants to emerge as a global marketplace in the next two to three years and feature niche local stores from key Indian cities like Delhi, Hyderabad, Mumbai, Kolkata, Indore and Pune.
Nevertheless, it is not a lone player in this space. Indian startups like MyKirana, Kirana King and Jumbotail run similar platforms to empower offline kirana stores. Although Streetz wants to turbocharge growth and build product variety to stay ahead of the competition, it has a formidable contender in the government-run ONDC (Open Network for Digital Commerce).
The pan-India protocol aims to create a level playing field for 8 Mn small and mid-size retailers by making the entire ecommerce fulfilment process – from order-taking to doorstep delivery – available and affordable. Better still, it will bring 90% of the Indian population who do not use ecommerce to its digital fold. This will make it a win-win for merchants and shoppers, as the former can access a massive consumer base and the latter will benefit from product variety and competitive pricing.
More importantly, sellers will no longer have to pay high commissions of up to 30%, which eat into their profit margins. The benefits are so tangible that there is little room to question the validity of ecommerce 3.0 taking over India.
ONDC is already live in 522 towns and it can generate $250-300 Bn in ecommerce GMV by 2030.
Streetz’s other USP – a hassle-free hyperlocal delivery within two hours – may also face trouble as pure-play q-commerce players like Blinkit (owned by the deep-pocketed foodtech giant Zomato), Zepto and its ilk are fighting every inch of the delivery space to win the 10-minute delivery game. There will be more cut-throat competition, as the hyperlocal delivery apps market in India is estimated to grow more than 14x between 2021 and 2032, per an FMI report.
As more industry giants like Facebook (WhatsApp)-JioMart collaborate to connect people with local stores and provide a seamless mobile shopping experience, millions of kirana stores across India can come online effortlessly, as RIL chairman Mukesh Ambani once said in a video message.
Meanwhile, the likes of Streetz need to make their businesses future-ready to grow in sync with a fast-evolving and digitally empowered retail market.
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