Who has an edge in the retail battle for the Kirana store?
During the week ended 24 July, Flipkart announced the purchase of Wal-Mart’s cash and carry business. This gives Flipkart a much bigger access to the wholesale franchise of Wal-Mart. But, this must be seen in a much larger context. RIL is in talks to take over the Future Group while Amazon is trying to buy a 9.99% stake in Reliance Retail. It looks like the beginning of the big battle for the Indian retail market where the Kirana store could become the focal point. Wal-Mart and Reliance may end up fighting for a bigger share of the India Kirana market pie.
Transforming Kirana
On the day Flipkart acquired Wal-Mart India, it also announced the launch of Flipkart Wholesale. This will be a digital market place to transform the humble Kirana store. That is exactly what RIL is also attempting through its alliance with big global names like Facebook and now with Google. In short, Flipkart Wholesale will be in direct competition with Jio Mart. Of course, Jio Mart also plans to use its telecom outreach and its broad-band network to offer technology based solutions to the Kirana owner. Wal-Mart currently handles 1.5 million members through its network of 28 best-price stores and 2 fulfillment centers. In its new Avatar, Flipkart will lend financial, logistic and technology support to the Kirana owners with a centralized order and inventory management system. That is expected to be the next driver.
Jio Mart is sprucing up too
To an extent, Jio Mart has already made a start post Jio stake sale to Facebook. It has launched grocery deliveries via WhatsApp in 200 cities across India. With just an SMS link, customers can order goods via WhatsApp and Jio Mart takes care of the fulfillment. But the bigger game plan that Reliance moves towards is on-boarding the Kirana stores on its platform. These Kirana stores will be also encouraged to manage their inventory and their order management and replenishment system using the POS platform offered by Reliance. It has the massive advantage of access to the WhatsApp customer base of Facebook, which could be like a captive market.
Who can win the game?
Both competitors have deep pockets for sure. Wal-Mart and Flipkart can surely match Facebook, RIL and Google; dollar for dollar. The bigger challenge will be who can manage the B2C game better. The new retail model being envisaged will be a dual engine model. It will have to drive B2C reach on one side and vendor efficiency on the other side. While vendor efficiency is still a game of technology, the B2C experience could be the critical differentiator. It is here that the combination of Wal-Mart and Flipkart could have a slight edge with its deep global insights into feet-on-street B2C. How B2C is eventually managed could provide the winning edge.
