How Express Stores is disrupting the hyperlocal kirana model

How Express Stores is disrupting the hyperlocal kirana model
Express Stores Co-founders (L-R) Kartik Gupta & Apoorv Jain
24 Mar, 2021

Although the demand for a certain product, say an idly premix, might be high in a particular locality, kirana stores only buy them in limited quantities to keep their inventories in check. It is this optimisation of resources, a knack for local palates and competition that has enabled mom-and-pop shops to retain business despite operating with wafer thin margins.

A little-known startup, Express Stores is now on a mission to automate business processes at these kiranas

Launched two years ago by Apoorv Jain and Kartik Gupta, Gurugram-based Express Stores wants to be the omnichannel branded kirana chain. The startup digitizes smaller hyperlocal kirana stores through technology-led supply chain, in-store experience, customer engagement and branding tools. 

“Small retailers today are running a one-man show. Backend management involves dealing with 20-30 distributors and then customer engagement in the front end. But with the help of technology many of these functions can be automated,” Jain, co-founder and CEO, Express Stores told TechCircle

Jain and Gupta met 10 years ago while starting up their first ventures and often exchanged notes and ideas on entrepreneurship. Eventually both ended up working together at German startup incubator and investment firm Rocket Internet in 2012. They wanted to try entrepreneurship again and ended up zeroing on solving problems for in the now-lucrative kirana segment in ‘Bharat’ using technology. 

The founders boostrapped with an initial investment of Rs 20 lakhs and started Express Stores in late 2019. 

Business Model 

Express Stores targets small kirana stores, where customers shop more frequently – a couple times a week—unlike a supermarkets that usually see crowds on weekends. The startup is onboarding these local mom-and-pop shops, branding them as ‘Express Stores’ and modifying their services. 

Jain calls the services offered by the company a “360 degree solution, which includes digitising customer relationship management (CRM), Point of Sale (PoS) technology, automatic replenishment of inventory or overall inventory management and pricing intelligence.”  

“Our systems will on grow smarter as we scale the product,” he said. Jain also noted that apart from MRPs, pricing for loose daily staples or unbranded products tend to vary as the shopkeeper might often change rates based on the customer’s socio-economic background and decide to not offer them discounts. 

At the core of Express Stores’ product is the PoS technology installed at each of the stores that the company manages. With the data gathered through these PoS machines, the startup is able to replenish inventories or place orders automatically, track what the customer buys from a store at a particular location and then market accordingly.  

When certain products don’t sell and are lying around for a long time, Express Stores tracks them and uses the information to optimise supplies based on demand, quality and quantity. 

Only the products and the brands with high return purchase and demands are stocked, which in turn helps in increasing margins and profitability for these kiranas in an otherwise thin margin business. 

Further, the startup’s pricing engine decides equal unbiased pricing for unbranded or loose goods across categories based on size of SKUs, loyalty of customers and quality etc. 

Most, importantly, these kiranas are also able to sell online through Express Stores’ e-commerce site, wherein they can get the orders in their neighbourhoods and deliver themselves.  

Currently, Express Stores is available in Delhi and Gurugram. Jain, however, didn’t reveal the exact number of stores in these locations. 

Revenue, funding and private labels 

Within months into operations, the startup claimed to be margin positive and profitable, thanks to its sourcing mechanism.  

The kiranas that partner with Express don’t just benefit from brand recall, but avail all the technology enhancing facilities free of cost, the company said.  

Express Stores’ revenue comes from the supply side as the startup procures directly from a mix of distributors and suppliers at better prices and margins. Taking responsibility of the quality of each product sold at its branded stores while getting better margins, the startup is in talks to procure directly from the brands and selling at the stores, cutting down middlemen and various levels of distributors.  

“Since we supply to these kirana stores directly, we are able to unlock sales margins, other brand offers, more revenue streams that kiranas aren’t able to do. We don’t charge any commissions from the partnering kiranas,” Jain said.  

Express Stores’ also has other revenue streams, including in-store branding and promotions.  

The startup’s business model found validation after it raised seed funding of Rs 8 crore -- or a little over $ 1 million-- in February this year led by early-stage venture capital firm Venture Highway, founded by Neeraj Arora, who worked at Whatsapp and Samir Sood, who was previously with Google.  

Venture Highway is confident about its bet on Express Stores.  

“The grocery market was ~$600B in 2019, growing to $1T in 2025. Express Stores’ addressable market is neighborhood kiranas, which constitutes 90% of daily consumer needs but is still largely unorganised. They have gone through multiple pivots to reach product-market fit and are at an inflection point for growth,” Sood told TechCircle

Other investors wo participated in the round included Kunal Bahl and Rohit Bansal (Snapdeal), Anupam Mittal (People Group) and Amit Singhal (Google) among others. The fresh capital will be used for product-market fit, initial growth, talent addition, supply chain and technology development. 

Next up, as the startup scales and expands its network beyond NCR region, it will launch its private labels across daily staples and other categories, Jain told TechCircle.  

“Express Stores is tapping a massive retail opportunity and has mastered the GTM & playbook over the last year. The team has the right mix of execution & business experience. Grocery is a huge yet tricky market, and the most important thing for a startup in this space is to have a clear sight of positive unit economics. Apoorv, Kartik, and the team are doing exactly that while also scaling fast,” Sood said. 

A recent Reuters report, citing data from Forrester Research, said that the Indian retail market was estimated to be worth $883 billion. Of this, the retail segment alone was worth $608 billion. By 2024, the market is estimated to touch $1.3 trillion. 

From quarterly earnings calls at retail behemoth Walmart to a PR photo of Amazon founder Jeff Bezos delivering package to a kirana store customer, Indian mom-and-pop stores have become the latest battleground for retail giants. 

Perhaps the biggest threat to any startup trying to get into the kirana segment is Reliance Industries (RIL), which initiated its ‘new commerce’ journey in 2020. According to chairman Mukesh Ambani, the company wants to revolutionise India's three crore kirana stores.

JioMart, which began with a beta launch in late 2020 has reportedly crossed BigBasket and Grofers in terms of daily active users, thanks to its aggressive expansion during the lockdown period and heavy discounts. The company partners with kirana stores across cities and segments and also sources inventory from its large retail network.

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