Pushing the n-commerce frontier

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A fresh-off-the-block debutant to enter the field of hyperlocal grocery trade in India is LazyLad, which has started operations in four Indian cities about a month ago. Founded and co-promoted by three young graduates from IIT Guwahati – Saurabh Singla, Paresh Goel and Ajay Sethi – their mobile application venture aims to bring the fruits of technology to brick-and-mortar stores in neighbourhood localities. The aim is to provide consumers a convenient access to an ecosystem of stores, and for retailers to become more efficiently organised to meet the everyday needs of customers right from their mobile phones.
Small retailers and kirana stores in urban neighbourhoods are increasingly becoming a magnet for tech entrepreneurs looking to harness the potential of neighbourhood commerce in today’s digital economy. E-commerce giant Amazon recently launched a new service called KiranaNow, a platform that leverages technology to ensure quicker and faster delivery of everyday-need consumer products through neighbourhood kirana stores. Like Amazon, nimbler start-ups like Grofers and PepperTap have also borrowed the hyperlocal playbook for the online grocery business. Also working on a similar model are the comparatively older players like LocalBanya and ZopNow, now looking to expand their turf. All of these players are banking on online technology, especially mobile applications, to bring smaller brick-and-mortar grocery shops under their fold with the objective of expanding and streamlining the grocery market in the country. The incentive for the small retailers is that they can reach out to more number of people by embracing technology without incurring any extra investment.
The market opportunity for the hyperlocal model in the food and grocery business is huge, which is attracting many fresh start ups like Lazylad and business-exploring techpreneurs like the likes of Singlas, Goels and Sethis to customise, refine, and fine tune the model further. Groceries account for 65% of the consumer’s wallet spending, and if this category takes off online, there could be an upside to the growth of e-commerce, which is expected to touch anywhere between $48 billion and $60 billion by 2020 from $4.47 billion last year, UBS Securities said in a report on e-commerce released on April 14.
Sales of food and groceries currently account for more than two-thirds of all retail sales, consultants Technopak say, and the value of these sales is expected to nearly double to $686 billion by 2020. With an estimated valuation of over $360 billion, India happens to be the sixth-largest grocery market in the world today. As big stores and supermarkets only occupy a 20% share of this market, the hunt is therefore getting keener for players sniffing at opportunities. Like LazyLad, new players entering the field want to tap hyper-local collaborations in the online grocery trade and try their luck in selling every day groceries.
With smartphones becoming ubiquitous, it has now become possible to pick up the phone, tap on an app and get all the grocery items, including milk and vegetables, delivered to your door step within 30 to 90 minutes of placing an order. According to global networking solutions provider Cisco, India will have about 700 million smart phone users by 2019. Techies see this as a happy hunting ground for testing their entrepreneurial ambitions.
“Our market research showed that people in large numbers buy a lot of stuff from shops and stores in their neighbourhood. But fulfilment of a requirement within a timeframe as desired by the customer is a gap area in online retail, and we decided to address this issue by developing an app to meet this need,” says Singla, who is also the CEO of LazyLad. The founders decided to give the moniker of LazyLad to the app because the technology not only offers a user a smarter and more intelligent option of doing everyday shopping, it also by default makes one slightly lazy due to the convenience factor involved.
The LazyLad team surveyed and spoke to customers buying their daily stuff from neighbourhood shops and found that these people were buying expensive products like laptops and mobiles from e-commerce platforms and would certainly not mind e-shopping for their everyday needs items. “Even with retailers providing home delivery, buyers need to call up on their cell phones and place the order. But they are not able to see the price of products, have no idea of the range available and neither do they have the option of tracking their order. Our app helps to redress these pain areas,” says Singla, who sees his app as a technology tool to help neighbourhood commerce or n-commerce grow efficiently and in a more organised manner.
“When we approached the retailers in the different localities of Gurgaon with our mobile app model, a majority of them showed great enthusiasm and interest in joining the platform because they are quite clued in to the market trends towards e-commerce,” says Singla, whose app is a simple plug-and-play application that any retailer can dowload on an Android phone by simply registering with the company. From the customer point of view, Singla and his team figured that given an option, people would love to spend the time they spend going about buying their daily chore items in other engaging and fruitful activities. “People want to go out to the gym for workouts, attend to the education of their children, catch up on their own interests and hobbies but feel short on time. Our app helps people to knock out the time that goes into making the daily purchases to making it available for what they would otherwise love to do,” he says. Besides, customers also stand to benefit from LazyLad’s tracking system, which can tell them about what kinds of foods they are consuming – whether it’s more of carbohydrates, proteins etc, and whether they should be buying more of a particular kind of food to balance their nutritional and health needs. Also, the app will help customers to reduce their carbon footprint as they would no longer need to ride or drive down to the nearby store to make the purchases.
With the proof of concept in place and a like-minded team to take it forward, the LazyLad team went about identifying and listing the commonly bought products in people’s weekly and monthly volume shopping to everyday top-up purchases. They prepared a list of 70 categories, out of which they finally shortlisted sixteen categories for classifying diverse products ranging from food grain staples, cereals, meat and poultry, bakery, fruits and veggies and a host of other household grocery purchases. “As of now our mobile app platform supports six categories, which includes even perishable items like poly pack milk. The six categories that have gone live on the app are groceries, fruits and veggies, bakery, stationery, meat and seafood, and flowers,” informs Singla.
The concept of n-commerce is new to India and LazyLad is gunning to become the most buzzing brand in this business. “For us there were two options: either we could keep and maintain our own inventory and logistics and deliver products directly to buyers via our mobile application platform or we could tie up with retailers. We decided to go for an asset light model and opted for tie ups,” says Singla, adding that the latter option again involved deciding on two choices. “One was that we tie-up with a few retailers in the cities that we decide to operate in or to go hyperlocal and tie-up with vendors in neighbourhoods. Since most shopping is neighbourhood shopping involving daily purchases made from shops and stores where people live, we chose to stick with the concept of neighbourhood commerce.”
The lazyLad team believes that due to the asset-light nature of its model, the venture is in a position to scale very fast without incurring a big investment. “Unlike some players also in the mobile app business model for e-commerce, we took a conscious decision to not have our own logistics so as to keep operational costs low. We have been able to get our show running with a meagre investment and yet get good numbers of downloads within days of the launch unlike some other players who were able to get 5000 dowloads after spending $10 million in funding,” says Singla, pointing to the fact that what makes LazyLad different from other players in the game is that the backbone of its technology platform is frugal innovation. “All that we needed by way of seed capital to launch our operations was Rs 2.5 lakh, which we we managed to raise on our own.”
Within a month of its operation, LazyLad is already present in four cities, including Gurgaon and Chandigarh. “We have been live for a month now and over this period there has been about 1500 plus downloads of the app, which currently runs on Android only. “In Gurgaon, over 80 odd sellers from various localities in the city have got on to our mobile app so far. We are getting 20-30 orders daily and we hope it will multiply manifold in the coming days,” says Singla, who informs that the delivery time for users of LazyLad is currently 90 minutes, which it hopes to bring down to 30 minutes gradually.
As the model achieves scalability and numbers get bigger, the question of what revenue model to follow has become a matter of priority for LazyLad. The company believes it is providing a technology platform very similar to that of WhatsApp and Uber and it likes to call itself the eBay for nearby stores. At the moment, LazyLad is looking at 3-4 revenue models, including the Uber model in which it takes a token amount from retailers for transactions made through its platform. “We are working on the numbers but it would be a very nominal charge, something in the range of Rs 1-2 for a transaction value of, say, Rs 500. We are not looking to get any kind of a cut or commission from the transactions,” says Singla.
Another revenue model that LazyLad is looking at is to push promotional coupons to consumers for neighbourhood services such as gym, beauty and hair salon, restaurant, etc. “With the time that people manage to save by buying through the app, they will have more time on their hands and the freedom to indulge more of these services. This can create a good revenue model for the company, which can earn from pushing the coupons of these services and promoting them with the app users.
Then there is also the option to partner with FMCG companies who may want to use LazyLad data analytics services to know and understand the nature of the demand for various products in different micro markets. As the app has a robust technology for tracking products ordered by consumers in different localities, LazyLad can offer valuable insights for FMCG companies. By virtue of the power of information in its possession, it can offer precious market intelligence to FMCG companies by providing them with information on which areas to concentrate on for product sales, which kind of customer profile to focus on, which retailers to target for different categories of products, and a number of other useful information which FMCG companies can lay their hands on without having to spend big amounts on research and market intelligence. “The application gives FMCG companies a very efficient and cost-effective platform to boost the volumes of their products in markets where there is more demand and boost market performance of products by acting on the data we can provide.
By the end of May or early June, LazyLad plans to make the app available on the iOS platform as well. “In markets like Gurgaon, the iOS has a share of 60-70% among mobile users, which is very big enough number not be ignored,” points out Singla. He informs that the company is aiming to be present in 15-30 cities more by the end of this calendar year, during which period it aims to cover the tier 1 cities and major tier 2 cities. “We are checking our model adaptability in a few tier 2 and tier 3 cities by running pilots and we will make the app operational in more cities and towns going ahead. By year-end we are looking to cross 5 lakh in dowloads and get 80,000 daily orders.”
While the company is still to decide on which revenue model to follow, the Uber model looks most suitable for LazyLad. “Even if charge just Rs 1 for a transaction, we stand to make Rs 80K per day in another few months, which shines a bright light on the model’s scalability and the allure of its business proposition,” muses Singla. But now that it is looking to scale, LazyLad will certainly need to raise capital. Hopefully, that should not be a problem as it has been fortunate to find backers interested in the venture’s success. “We have already got an initial funding commitment to the tune of $100K from Green House Ventures Accelerator, which is providing us intensive mentoring on business development, go-to market strategy and how to achieve healthy business metrics.. We will raise Series A funding as and when we roll out the app on a pan India level,” informs Singla.
To read the full version of the story see the May issue of Progressive Grocer India

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