One mn monthly orders of fast moving consumer goods on ONDC but mostly served by brands directly: Kiko Live

Direct brand-led FMCG has grown to over 1 million monthly orders on ONDC but these orders are mostly fulfilled from central warehouses, instead of local kirana stores, said Kiko Live, a SaaS solution for neighbourhood stores

Kirana sales have dropped by up to 35% in tier 1 markets where quick commerce primarily operates. While customers still visit the store for larger orders, the small order basket, traditionally ordered via phone and delivered by the store delivery boy, is moving to quick commerce. Retailers understand that retaining these customers would require offering a similar quick commerce option.

"Kirana-led grocery orders are also approaching a quarter million orders a month, with Kiko Live as the leading player. This is expected to grow rapidly in the coming months, with retailers understanding that going digital is not an option but a necessity for survival," said Alok Chawla, Co-Founder of Kiko Live, adding early adopter retailers have started creating digital storefronts and offering trackable 30-minute quick commerce-type deliveries.

The Kiko Live solution enables retailers to offer a quick commerce option to their customers and provides integrated inventory management, logistics, and remarketing modules. The retailer's inventory pipeline gets plugged into multiple front-end options for buyers, including the seller's webfront, the Kiko buyer app, and numerous buyer apps on the ONDC platform. Eventually, their inventory can also get plugged into the quick commerce apps, which would want to make long-tail SKUs available without stocking them. Quick commerce apps could also use this inventory to fulfill orders in smaller town markets or areas with low population density.

While the significant quick commerce players are processing between 2-3 lakh orders a day at a national scale, in just a few months of operation, Kiko Live sellers are already doing business with upwards of 3000 orders a day, and that too in a single city operation, it said.

"So if only a few hundred stores in a single city can achieve 1% of the national scale of quick commerce apps, once thousands of stores at a national level start offering this solution to their customers, there lies an opportunity for store-led quick commerce to be a far larger play than dark store led quick commerce," Chawla added.

About 13 million kirana stores in India generate over $800 billion in annual business, yet most of them do not have a digital footprint. These sellers continue to depend on orders received over call and Whatsapp for their home delivery business which constitutes over 10% of their business — that's an $80 billion plus kirana led home delivery business that already exists today, in spite of availability of quick commerce.

At present, stores are seeing inventory build-up, as in-store sales have been lower than expected in the festive season. This is leading to lower fresh orders to distributors. While e-commerce is a national trend growing in small towns due to the limited availability of products and variety in local stores, quick commerce is still an urban phenomenon. Inventory and dark store-led quick commerce is viable only in high population density areas, as the investment needed to activate and operate a dark store becomes viable only at high daily threshold order volumes.

However, retail store-led quick commerce has no such limitations, and given that the store costs and overheads are already recovered with their existing operations, they can run a viable online operation even with small order volumes, as each order is, in effect, unit economics positive, right from the first order.