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Covid-19: Pandemic forcing smaller retailers to adopt O2O, social commerce

By April 23, 2020 No Comments

With the pandemic making it difficult to move products on the offline market, retailers around the country are considering a move to offline-to-online (O2O) or social commerce platforms. While such platforms had been growing in India for a while, their customer base was more limited to lifestyle sellers and new businesses who didn’t have the resources for e-commerce.

Now though, even kirana stores and other essential businesses like medical stores are looking to get on these services to build their business. In fact, Amazon just announced a Local Stores initiative in India, which is a first for the company, that brings offline businesses to the country.

The company has been running a pilot for Local Stores for six months now. “Thousands of shopkeepers, from across the country, are already taking advantage of the pilot to showcase a wide range of products, ranging from consumer electronics to mattresses, kitchen items to grocery and consumables, apparel and shoes to gifts, and even fresh flowers and cakes,” wrote Gopal Pillai, VP, Seller Services, Amazon India in a blog post.

Jasmeet Thind, co-founder of CoutLoot, an O20 and social commerce platform, said his business has seen 3,500 businesses come onboard per day over the past two months. The number stood at approximately a 1000 new businesses per day earlier. CoutLoot has approximately 400,000 businesses on the platform right now.

The phenomenon isn’t limited to India alone, but India is bringing more grassroots businesses to such platforms. “Typically we’ve seen people building e-commerce, accessories etc. But we have seen quite a few of our merchants bringing essential services,” said Anurag Avula, chief executive officer (CEO) and co-founder of Shopmatic, another O2O platform.

“I’m now getting merchants from towns I’ve never even heard of,” Avula said. A lot of these merchants are grocery and kirana stores. They’re using platforms like CoutLoot and Shopmatic to send out their product portfolios through WhatsApp and other platforms, taking orders and making home deliveries.

Avula said April 2020 was the best month for Shopmatic in the last 12-15 months, both in terms of new merchants coming onto the platform and growth in revenues. In fact, the company has decided to go ahead with its Series B investment round because of such growth, at a time when most businesses are deferring plans to raise funds.

According to Avula, Shopmatic would have been profitable by the end of 2020 but has decided to put that off for next year now, to accommodate the new merchants. “If India was open to non-essential services, I’m sure it (revenues and transactions) would have gone much higher,” he said. Shopmatic also runs in Singapore and Hong Kong, and is also getting offline sellers in those countries.

Through platforms like CoutLoot, Shopmatic, Shopify and more, offline retailers can quickly create their own web stores and take orders. Marketing for these platforms is done through Facebook, WhatsApp, TikTok and more. CoutLoot also lets prospective customers chat with merchants before making a purchase. Thind says sometimes customers chat with a business for days before buying anything.

The influx of new businesses has also forced these platforms to innovate. Shopmatic is working on developing a group buying system on the app right now, which allows direct tie ups with colonies. Buyers will place mass orders and possibly get discounts on the same and sellers get to offload higher inventory at a time. The company is also working on increasing the number of languages supported on the platform. CoutLoot, on the other hand, is working on video commerce. Sellers are expected to create their own shows through TikTok-like videos that promote their own products.

There have also been challenges in managing the supply chains and logistics. For platforms like CoutLoot that also aid merchants in deliveries, the focus is on hyperlocal deliveries because that’s what’s allowed. Hurdlers in logistics differs from state to state right now. “We’re encouraging people to buy products from the same city so that the deliveries are easy and no special permissions are required,” said Thind.

The thinking right now is that the new normal is going to be different irrespective of how things pan out. While local businesses in big cities work with larger cash flows, the same isn’t true for their counterparts in smaller towns. In fact, Avula says Shopmatic’s business from the organized retail sector has tanked by 10-15% during the pandemic.

While the pandemic is forcing businesses to try the offline model right now, it’s unlikely that they will ever change. Industry stakeholders say that the pandemic could change the way small businesses and mom and pop stores do business forever.

Source: LiveMint