Aaramshop Brings Your Local Grocery Store Online For Free [Interview:Founder On Business Model]

Aaramshop is a Delhi based startup that is bringing grocery shopping online. Instead of going the regular eCommerce way of Grocery shopping like MyGrahak, the startup is bringing existing retailers online. A user can choose their nearby Kirana Store from the listed stores along with a convenient time of the delivery. The local store would be informed about the order and it would be delivered to the address at the time mentioned with the payment of cash only on delivery. Launched back in June there are currently 358 retailers in 9 cities in the Aaramshop network and the startup aims to take this number to 1000 by year end.

The model does look scalable and rather interesting as compared to regular eCommerce shopping. There is no logistics cost that the startup incurs and it brings in the comfort of your local store as well. The only issue is predictability of order delivery as live inventory is not available online. The current format is more like providing one more interface to your regular grocery store, with the same issues and comforts.

In terms of UX the site needs to be improved. A more of ajax functionality would make the shopping process faster and avoid showing shopping bag page after every item is added.

Here’s a QnA with the Founder – Vijay Singh.

1. How big is the overall team? How is the distribution across BD, tech, operations? Geographies?

We are a very small team. There are just 14 of us with about 10 focused on getting the technology right for the platform. The rest of us are focused on engagement with channel partners and evangelizing the idea / concept with the brands. We are based out of Connaught Place in New Delhi and launched about 3.5 months back.

2. How do you decide if a retailer is suitable to join the Aaramshop network?

AaramShop has been designed to be a preferred commerce partner of the independent neighborhood retailer / the mom & pop store / the kirana wala (AaramShops as we call them). Any retailer who is keen to create a web based store front for himself is welcome onboard, so long as he fulfills simple & articulated criteria. A lot of our current AaramShops are nominated by the shopper community.

3. Any significant competitors?

A number of folks think of AaramShop as a retailer that is a attempting to create a traditional e-commerce business within the FMCG / CPG category. That is a wrong assumption. AaramShop is a hybrid retail platform that enables the neighborhood retailers to have a web-interface for their existing physical store for free. It further enables the “short-on-time, high-on-stress” consumers to choose from a huge range of brands, and then select their preferred AaramShop which services their neighborhood. When the order is placed it is sent to the retailer real-time, who delivers the grocery at the appointed time and then collects cash on delivery.

The retailer or the customer does not have to pay us anything for this usage. The model is unique and I don’t believe there is a similar model. In fact we have filed for patents around a number of salient features of the model.

4. Are the product rates standard across all Aaramshops? Or are they the same as in the offline store? I don’t see any discounts, any specific reason for that?

AaramShop lists the prevailing MRP on all products. In reality we all know that a number of products have a MOP, however, we let the retailer decide on his margins and terms with the consumers. We do not dictate terms or interfere. We believe that the retailers are keen (as they have been for generations) on retaining their consumer base and they extend the best possible service ranging from discounts to credit to home delivery.

What is also important to note is that we list no private labels or commodities. Listing is free but restricted to all national and regional brands.

We do have our Value@Home program starting later this month which will enable brands to reach their offers and promotions into homes via AaramShops.

5. What is the challenge you face on getting a retailer onboard? In terms of convincing him and then operationally? Do they already maintain inventory digitally?

The retailers do not need convincing. They understand that AaramShop is a facilitator for their business and not a competitor. However, while all of them want to join up, they need to have progressed a bit on technology adoption to them to enjoy the fruits of their shop’s online presence.

There is however a common misnomer about the independent retailer and contrary to that normal belief, we find a very large number of  2nd and 3rd generation retailers who are very well educated, very aware and very keen to stay competitive in the market and relevant to their consumers – so while they saw limited merit in making investments in technology, now that with AaramShop they are getting orders on the email – we would imagine a very large number of them to cross the digital gap and do so quickly.

We are also working on a mobile app based solution for the retailers to process their orders, that should make the game a lot easier for the retailer.

There are only a limited few who maintain inventory digitally, and while we are technologically we are geared to integrate, we have chosen to roll-out the current non-integrated model.

6. Is the inventory data available real time from the store to you?

No it is not.

7. If the store inventory is not available with you then how do you make sure that user gets what he is ordering? What if the SKU is not maintained at the store or the product itself is not there?

Our experience is that the retailers by and large are well stocked basis the requirements that emerge from the neighborhood. The early indications are that the retailers are able to fulfill most of the requirements and where there are stock out situations the retailers interact with the consumer and gives options (in the same way that he would do if you were to walk across or cal on the phone). Also the fact that there is no collection of monies up-front enables a very high level of inter-operatability between the offline and online mediums.

8. What is the commission structure like for Aaramshop.com?

🙂 It’s free. There are no costs for the retailers. The retailer, when he sign up, gets a customized and unique URL & a micro-site. His presence is plugged into the specific geography that he services so that his customers can find him with ease. His store is also created to be transaction ready. For all this the retailer does not incur any upfront / monthly / transaction linked costs. It is absolutely free.

And because the retailer does not incur any additional costs to be part of AaramShop, we expect him to be true to his consumer and offer the best possible services and rates.

Our revenue model : Our revenue model is based on a number of premium opt-in services offered to the brands. Just to clarify, we do not charge brands for listing of their products / SKUs / offers etc. In fact the brands (or their agencies) can seamlessly manage their brands’ presence on AaramShop on their own.  We enable all national and regional brands to list on AaramShop platform.

Our premium services for brands are based on usage of advanced analytics based marketing, various advertising models, enabling a call to action on the brands digital marketing assets, creation of customized brand apps, widgets etc. Our premium services are aimed at helping brands better integrate their zero moments of truth with their 1st moment of truth.

9. If the monetisation is dependent on analytics and FMCG brands rather than retailers then what kind of volumes do you think would make sense for somebody who is paying you for analytics. Do share some metrics that you think brand owners would pay for.

I agree that volumes need to be significant for the brands to start taking online retail opportunity seriously (or as seriously as they take on-ground channels). At this point in time I don’t think online retail in FMCG can be viewed as something that will significantly move the sales needle for brands, however, it is an emerging channel and while it is small in size it gives brands great insights into how consumers and shoppers behave online, which categories are co-related, shopping bag specifics and its variations from the traditional shopping methods. Request you to take a look at the State of Online Grocery Shopping Report which might give you a broad view on the nature of insights. http://www.aaramshop.com/reports/sogs/sep2011/

We have rolled-out a couple of our premium services last month and they have been well received and there is a fair bit of interest from brands.

10. Given that all payments are made on delivery, what rate of fake transactions / return rates do you see currently? How do you aim to reduce it.

We have not come across too many of these. We do however, have a lot of abandoned shopping bags on the site and we are changing our bagging process – hopefully that should help cut that down a bit.

11. Who is the real target audience? What market size are you looking at?

Our target audience is the “hard pressed for time, high on stress urban citizen”, who would value the extra time that he gets to spend with his family and the extra convenience of having his order delivered to his door-step, rather than spending few hours over the weekend in an unending check-out queue at some super market. Our TG are the guys who have excess to internet on their various connected devices and for whom usage of the net is a norm rather than an occasion. AaramShop is about converting a necessary chore to a convenience.

While the size of the market is fairly large, we believe that it is a service that will take time to become a mainstay activity as it has a very strong experiential angle.  We also believe that with the release of our apps for mobile devices, a lot more people will start using the service (thanks in part to the long to and from office commutes)

12. Does Aaramshop also own any of these inventory? Or do you aim to do that in future?

Other than the beer in the office refrigerator, we don’t have any other worthwhile inventories:-). We expect our retailer partners to maintain their inventories.

What do you think of Aaramshop? Do try them out for your next grocery shopping and let us know your experience.

[Naman is a startup enthusiast and has worked with couple of Indian startups as Product Manager. He is the founder of FindYogi]

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