Technology to bring in operational productivity 

• Balancing inventory: Becoming omnichannel is the current strategy of most retailers. Stores are trying to balance the e-commerce and in-store inventory to ensure they have the right amount of inventory to fulfill customers’ preferences. At the same, managing returns from the various channels is a daunting task. This signals the retailer’s investment in predictive and prescriptive analytics to gather data from internal operations and supply chains to have inventory visibility and prepare better for surges in consumer demand, avoid empty shelves and bring in more agility. 

• Use of RFID technology: Technology that was once restricted to the warehouse is now being put to use in front of the store. Radiofrequency identification (RFID) technology is gaining popularity for providing solutions in apparel, sporting goods, and electronics retailers. It enables faster and less labour-intensive inventory management where several items can be tagged at the source. It helps facilitate quicker returns processing and inventory reshelving.

• 5G technology: Leveraging 5G in the retail industry can aid in rapid digital transformation by addressing problems such as connectivity and bandwidth issues in brick and mortar stores/warehouses. Smart stores that will leverage technologies like smart apps, video analytics, robotics, drone delivery, etc will require adequate network capability and bandwidth.

The retail space is filled with fierce competition and those with unique business models combined with high operational productivity will ace this. To emerge stronger and connect well with evolving consumer behaviour, the processes should be digitalised and well connected for which agility, personalisation, innovation, and viable business model will be crucial for any retailer. 

Learnings for startups and D2C from Shark Tank India

• Knowing your business entirely: A startup founder needs to understand how the internal and external factors would affect their business in the long run. For example- in one of the pitches in the reality show that showcased Modern Myth- a vegan bag brand, Ashneer Grover was quite unconvinced with the bag designs being non-replicable in the future for which the founders did not have an answer. Startup owners need to understand where their business stands today and how they scale in the future. Having a long-term plan and forecast of your business is very crucial.

• Knowing the numbers: While seeking funds from investors, startup founders must know the numbers of their business like last year’s sales, net earnings, EBITDA, customer acquisition cost, etc. Not knowing the numbers will make investors see your business as red. Besides, own numbers entrepreneurs should also be aware of the market size they will be serving. Startups while asking for funds should also be aware of the valuation number basis on which they are seeking funds. A flower gifting startup named Shades of Spring asked for funds based on 300 crores but to the shark’s surprise, their sales were not convincing as per the ask that disappointed the sharks and they returned empty-handed.

• Passionate about the venture: Nothing can match the passion shown by Jugaadu Kamlesh for his venture. After all, it is the passion of an entrepreneur that gives an edge to the business having a strong sense of purpose and desire to change the conventionalities. With no previous funding or loans, Kamlesh had the burning desire to introduce his hand-drawn cart that could ease the fertiliser and insecticide spraying for farmers. Not to forget the unique demonstration of his product on the show along with his nephew Naru which went on to become the ‘pitch of the season’. The startup’s idea attracted Lenskart’s founder Peyush Bansal who offered him Rs 10 lakh in exchange for 40% equity, and an additional Rs 20 lakh as a loan, without interest.

• Is the business scalable: We remember Sippline’s pitch where the founder talks about solutions to ensure oral hygiene and limit contamination while venturing out by putting a plastic rim around glass and teacups cups serving beverages in hotels, small food joints, banquets etc. The idea of the startup was not appreciated by the sharks and questioned the scalability since making people carry the plastic rim while venturing out demands enormous habit change for which huge funds are needed. As of now, Sippline did not make impressive sales, for which the sharks could not agree to invest and found it to be unscalable. Entrepreneurs should ask themselves that is the business akin to the current times? Can the product cater to the present market or in the future? Getting a proper plan for your business may not be possible but readying for unforeseen circumstances is essential.

How AI recognition will work magic for offline retail?

• Reduce inventory losses and wastage: Fresh fruits and vegetables in transit from the farmer’s place to the retail store undergo deterioration in quality such as green leafy vegetables losing water or apples shrinking in size, gradually moving closer to the expiry date. The change in the size of fruits and vegetables goes unnoticed by the naked eye. This prevents the retail owners from selling first the inventory nearing the expiry date. AI recognition will analyse the shape of fruits and vegetables that will help retailers or grocers to sell stocks of near expiry first and keep them for little time, thus preventing losses and wastage. It also helps supermarkets to plan inventory with the help of an algorithm that analyses previous demands and sale trends.

• Increase profits and sales through an optimised planogram: The AI product recognition can identify which items are missing from the shelf to remind the store staff to restock products immediately thus following planogram compliance of products on the shelf. According to a study by National Association for Retail Merchandising Services (NARMS) when an optimized planogram is 100% matched, sales will be increased by 7.8% and profit by 8.1. 

• Increases efficiency at the checkout: Long billing queues are a disappointment for a majority of retail shoppers in India. Automatic product recognition ensures an efficient checkout process. Until now cashiers have had to type in the barcode for all fruits and vegetables for billing but with automatic product recognition, this will no longer be necessary.

• Accurate stocks: Had there been barcodes, there exists a probability that an organically grown potato is accidentally scanned as a normal one impacting the accuracy of the actual count of organic potatoes. But, AI recognition on scanning reflects this in the store data. This also solves store-level ordering conventionally done using pen and paper, which is considered to be the biggest pain point in the world of fresh food.

 Can grocery stores in India adopt AI recognition?

A CIPHET study finds that the post-harvest waste and loss in the fruits and vegetable segment in India stands at 40,811 crores. 5 to 16 percent of perishables like fruits and vegetables are ruined in transit or on farms therefore the appetite to adopt AI recognition systems or platforms in grocery retail exists. But lack of internal expertise and fear of complexity hinders them to adopt the same. For AI to be used in grocery retail, somebody has to train an AI model that knows what and how to do what the customer wants. The AI models require to be retrained constantly once integrated with the store. Retraining is necessary since AI models tend to lose accuracy and performance over time. 

Top trends in 2022 for the Indian footwear industry 

Here are the trends that will be a fillip to the Indian footwear industry in 2022. 

• Let the toes shine: With new cases of Omicron rising and the possibility of a new third wave of covid, it might be possible that the outdoor movement is restricted. The preference for open or comfortable footwear such as sandals and slippers will increase.

• Let us lead an active lifestyle: With gyms and sports activities on a halt, people have taken up running and jogging to maintain a healthy lifestyle. E-commerce platform Flipkart has witnessed a sales spike in athletic shoes upto 1.5 times compared to pre-covid times and a 20 percent increase in sales from July to August. 

• Push of Make in India: The government wants to make the Indian economy a self-reliant one and is emphasising local manufacturing under the ‘Make in India’ initiative. India’s footwear and leather industry is always an export-oriented one to further become the export hub, the government has announced a $364 million incentive package for the leather and footwear industry. 

• Going Omnichannel: Footwear brands are opting for omnichannel sales and bringing synchronisation across all sales channels to minimise operational complexities and cater to customer needs easily. Bata, whose digital channels earlier contributed 6-7 percent to its sales has rolled out Bata Chat Shop on WhatsApp that covers 600 of its stores across India where customers can chat with their neighbourhood stores to order products. For offline it had introduced ‘ Bata-on-Wheels’, a mobile shoe store to enhance its omnichannel presence. 

• Automation: Creating a pair of shoes requires tremendous manual labour especially in sewing and making the upper part of the shoe which takes a minimum of 18 months from forecast to delivery. As the third wave approaches, the government might again put restrictions that businesses need to operate with 50 percent capacity. By implementing automation in production, businesses can benefit from lesser manpower and match up with the demand and supply. 

The Indian footwear industry in 2021 has suffered from lockdown, but with the increased pace of vaccination, likely, the organisations will again return to the conventional work-from-office that will again fuel the demand for footwear. 

D2C brands holding a soft corner among small-town shoppers

Surprisingly, job losses and pay cuts did not reflect in the purchases of D2C brands. Here are some of the reasons why it drove the demand.

• Rise of social commerce: Social commerce platforms are currently becoming the launchpad of D2C brands and have empowered several small retailers and women entrepreneurs. Generally, products sold in tier-II and tier-III cities are unstructured and unbranded. Being listed on social commerce platforms helps small D2C business to sell their products to nearby towns and cities without having to bother about middlemen and pay commission. Also, listing businesses on B2C platforms is a time-consuming process. According to a study by Bain & Company, three out of every five shoppers now come from smaller towns.

• Faster and timely deliveries: The shortening of delivery timelines by introducing same-day delivery or delivery within five days has instilled confidence for shopping online more as in physical shopping they get the product as soon as they purchase it.

• Shopping in vernacular: Vernacular will drive shopping for the next generation of consumers. Most shoppers from small cities will prefer purchasing browsing web pages that have vernacular content. According to Bain & Company, webpage translation to vernacular languages increased to 1.5 times in 2020. 

• Digital Payments and BNPL (Buy Now Pay Later): Digital payments are increasingly gaining acceptance and especially with purchasing electronics online, newer payment models such as BNPL (Buy Now Pay Later) that do not require upfront full payment is quickly gaining ground in online shopping.

Another reason for D2C brands’ success can be attributed to its focus on ‘ individualisation’ especially in the personal care segment. Different hair types, skin types, body sizes, and purposes are driving the demand for the same.

What is in it for the D2C brands to foray into tier-II and tier-III cities?

According to a study by Bain & Company, India’s e-retail market is projected to grow at 25%–30% annually over the next five years to reach $120–140 billion by FY26, which is higher than Modern Trade. It is anticipated that India’s e-retail growth will be fuelled by small-town shoppers especially by women and older shoppers. Moreover, most shoppers from lower-tier cities are aspirational and thereby will choose products that will enhance their self-image and desirability. Gone are the days when brands underestimated the shoppers of low-tier cities based on their income and willingness to shop. With deeper internet penetration and increasing disposable incomes, tier-II and tier-III markets will have maximum growth potential than metro cities. 

Bargaining online? A win-win for both seller and buyer

The usual business model of e-commerce sites to drive maximum profitability and sales is to exploit the festive period to give heavy discounts, for which the shoppers eagerly wait. But what should e-commerce platforms do to ensure they get the best deals even when it is not a sale and can treasure their loyalty?

Indian shoppers are habituated with assisted shopping through up-selling and get the right price from a seller through bargaining.

To which Coutloot, a social commerce platform that emulates Taobao’s model to allow any offline seller to sell their products online has implemented an ‘automatic bargain’ feature that allows both buyers and sellers to bargain automatically. This auto-bargain feature provides a pre-decided bargain price to the buyer within a chatbox that allows them to close deals instantly. The buyer can select and quote a desirable price that he/ she feels is appropriate for the product. Coutloot aims to achieve a conversion rate of 15 percent with this live bargaining feature.

Kurland and Marrapodi’s e-commerce negotiation site

Hunting for the best deals online is not limited to Indians, but even to American founders Andrew Kurland and Joe Marrapodi that led them to build their e-commerce negotiation site Greentoe. It is an e-commerce site that allows customers to haggle down prices. What drove them to build their site was the frustration arising from spending too much time to find the best deals online.

It works in this manner, say a shopper wants to buy a camera online at the best price but does not want to spend a lot of time comparing and looking. Greentoe’s network of vetted online retailers simplifies the process by showing the average price and the lowest price possible for each product currently available online, it is then upto the willingness of the customer to pay for that product.

What lies ahead for the e-commerce sites on live bargaining?

The freedom to bargain on e-commerce sites is although in its infancy in India, but the platforms might not want to miss the loyalty of its customers since according to a study by Kearney, value shoppers will constitute 38 percent in online shopping by 2026 and will become 50 percent by 2030. Therefore, there is a need to humanise and Indianise online shopping by adding a live bargaining feature.

D2C Brands going the traditional way 

After foraying into traditional retail these D2C brands such as WOW Skin Science, Sugar Cosmetics and Bombay Shaving Company witnessed a high frequency of orders. Below are some of the D2C brands that are planning to sell their products through physical retail. 

• Peesafe: A female personal care and hygiene brand that was founded in 2013. Cut to February 2021, Peesafe launched its first exclusive stores in 2021 in the cities of Gurugram, Bengaluru, and Ahmedabad; and plans to launch 50 offline stores in the next 12 months. There will be exclusive brand outlets launched through the franchise-owned and franchise-operated model. 

• Plum: Plum a paraben-free skincare brand has recently opened its physical in one of the malls in Mumbai. The purchasing journey of a customer goes through touchpoints of inquisitiveness, awareness, consideration, trials, and purchase. It is not certain that the processes are followed sequentially, but in the online purchases, some of the steps are skipped. A traditional retail store gives a combined experience across all the touchpoints and the assistance of humans also elevates the experience of buying and consuming the product. Plum has its shelf presence in more than 750 assisted outlets and more than 10,000 unassisted outlets. 

• Mellora: Where jewellery purchase in India consists of touch, feel, and trials, Mellora a D2C fine jewellery brand first launched as a digital-first brand. Before, purchasing a customer would like to try out designs, check for genuine gems or stones, etc. which makes having an offline storefront necessary. After, tasting success online, it has ambitious plans to open more physical stores. Currently, having six physical experience centres in cities Bengaluru, Delhi/NCR, and Bhopal, it aims to establish 350 experience centres across India. Moreover, it is adopting a hybrid approach where customers can choose products online and place the order offline in any of its experience stores.
  

  The shift to traditional channels from online – A good move 

Pivoting to offline retail is necessary for the online-only brands where the touch and feel of the product influence the purchase decision of customers. For better growth and penetration, the brands need to have better visibility physically for a larger set of consumer touchpoints. Face-to-face interaction with the brand in terms of fragrance, textures, look and feel increases customer’s persuasion eventually giving a smooth post-purchase experience.

Acquiring the digital media and lifestyle companies

The intent of acquiring digital media and lifestyle content platforms is to allow users to consume content and urge them to make a transaction on the platform. Human beings tend to buy what they see. Thereby, by creating branded content on these entertainment and lifestyle platforms it aims to push its products for sales utilising its already made massive fanbase. Pushing products through branded content gives high conversion rates. In August 2020, Good Glamm then MyGlamm acquired content and influencer marketing platforms POPxo and Plixxo that increased its reach exponentially amongst its female fan base consisting of 88 million and 1,50000 female influencers. Recently, in October 2021, Good Glamm has acquired ScoopWhoop which will continue to work independently but with an increased focus on its male fanbase which is 60 percent. This acquisition will pave its entry into content-to-commerce for the fast-growing male personal care segment.
Users consuming the kind of content on such platforms will help Good Glamm to decode the kind of content the users’ consumer using its improved data science and analytics capabilities and give clarity about the kind of products they will be interested to spend.

Good Glamm’s Funding and IPO Plans in 2023

Good Glamm aspires to be the next HUL owning an umbrella of brands offering everything in personal care under the same ecosystem. The funds raised from the investors will be utilised to invest in product development, support data science and technology research, increase offline expansion and working capital requirements.

Consecutively in September and October, Good Glamm raised funding of Rs 255 crore in series-C and Rs 1,110 crore in series-D respectively to join the unicorn family and become the 35th unicorn in 2021. By 2023, it is eyeing to release its IPO as soon as the company’s valuation reaches $10 billion.

Mensa Brands globalising the acquired D2C brands 

Mensa brands are focused to acquire D2C brands from verticals of fashion and apparel, beauty and cosmetics, and soft-home furnishings that are capable to generate annual revenues between Rs 7 crore to Rs 70 crore. Through its team of experts wants to globalise the acquired D2C brands by leveraging their expertise in driving growth, product, merchandising, technology, supply chain, and access to global markets. 

D2C brands in recent times have gained enormous popularity and profits amongst the neo-consumerist Indians who are willing to spend more on products and services that make their lives easier, more individual, and more controllable. Especially, in beauty products, customers are purchasing that has less sulphur and are vegan. D2C apparel sellers are becoming more size-inclusive for all shapes and sizes. 

How Mensa plans to make the brands global

Mensa follows a three-step process to understand a brand’s potential. 

• First Step: Decoding the brand‘s journey both financially and qualitatively. 

• Second step: After thoroughly knowing the business, the second step includes coming up with a fair and transparent commercial construct.

• Third step: It consists of carrying out due diligence and verification of financial statements, sales, costs, marketing, and supply chain. If Mensa is satisfied with the brand’s growth prospects, it attaches a valuation and undertakes the preparation of contracts and other paperwork to integrate the seller. 

Soon after the brand undergoes integration process Mensa brings its expertise across various functions such as marketing, technology, supply chain, inventory management, logistics, and product development to scale the acquired brand rapidly. A part of the profits earned in the process is distributed to the startup founders.

Lastly, these Thrasio-style startups will thrive on acquiring profitable D2C brands, which can be a bright future since according to a study by Avendus Capital the D2C market is estimated to be $100 billion by 2025. But, this thing should be taken into consideration that although India has a huge retail market, people shopping from the online market is completely is yet in its infancy to bring huge economies of scale.