In this episode we talk about the slowdown in Indian textiles exports, liquor retail stores shutting down in Delhi and why an e-commerce tech startup is going through a meltdown.
Hello and welcome to This Week in Indian Retail - a podcast and blog dedicated to the major events, news and stories that impacted the Indian retail industry in the last week. This is July 31st 2022 and I’m your host Prateek Malik from New Delhi. Let’s get started! Summary of Week 30 of 2022 :
Slowdown in the Indian textile exports According to industry sources, the global recession is still impacting the Indian textile export orders, primarily due to the ongoing recession in Europe and North America. Some exporters are citing reduced demand by 40% as a majority of the customers were in the western part of the world. Adding to the same, many export houses are claiming that the existing order promises are also being delayed; and even deliveries have been refused in some cases. The international buyer groups have cited inflation and piled up inventory in warehouses as the major reasons. Since the Indian apparel export market is majorly dependent on the summer season buying, not much uptake is being expected from the current buying cycle for the upcoming Christmas winter season. Winter apparel producers can expect recovery, however, others may still need to wait for the next season cycle.
The continuous shutdown of liquor retail outlets in Delhi As we discussed earlier in our podcast (and blog), the Delhi state government launched the new retail scheme last year where only private company vendors were provided with the licenses. This year, the scheme faced resistance from existing retailers due to the alleged unfair distribution and incentivisation terms. As a result of the same and mounting losses, each week, one or other of the new liquor retail chains are shutting down. In the last month 170 outlets have closed, and 108 new outlets are bound to surrender their licenses to the Excise department. Going ahead, the city may be left with only 360 outlets and some customers may head towards Gurgaon. Also, the government did not provide clarity to the private vendors regarding the extension of the licenses under the scheme. Meanwhile, in a statement, the Delhi government stated that a roll back to the older liquor retail scheme is likely. This caused a mad rush at the outlets in Delhi, with relinquishing retailers planning to clear the stock in hand at heavy discounts. Customers were more than happy to wait for an hour in the long queues to get their favourite alcoholic drinks at upto 25% discount. So far, the scheme turned into an absolute chaos, we will keep you updated for the next one.
E-commerce tech startup facing a meltdown In 2020, the Hyderabad based DIY e-commerce store setup app Bikayi rode the lockdown wave extremely well and grew to acquire millions of local mom and pop stores on its platform. In November 2021, it raised USD 10.8M funding from Sequoia India and few others. By December 2021, the monthly sales crossed INR 1 Cr. By March 2022, almost 30% of the customers left the app citing counterfeiting issues and fraudulent activities. In April 2022, Bikayi team initiated an internal audit to investigate the same. By May 2022, the team strength dropped from 500+ to 300+ among an exodus via firings and resignations. To make the matters worse certain internal conversations and audit details were leaked in the market. What came out was more than shocking - certain sales persons forged customer signatures to sign them up on the new subscription plans, and some misguided customers into EMI plans, that eventually caused the churn. This was going on without any credit score checks or verification processes. Initially Bikayi started as a free platform and then asked for a Rs. 500 per month fee. However, in the last one year, the plans went up to Rs. 18,000 per month, leading to a constant backlash from the user base. The company claims that their focus is now into the enterprise marketing space, while competition is surging from Indian e-commerce platform focused companies like Dukaan. Also, for SMBs, there are already hundreds of startup apps that have gained significant market share - mostly focused on khata or book keeping, invoicing and customer messaging services. Bikayi’s story is not the first one to burn venture capital in the digitisation of kirana stores in India. Multiple international retail giants have also burnt their hands in this space with regional initiatives and eventually divulged the business models. Paralelly, the traditional retail tech solution players have evolved immensely in terms of tech capability and are finding more takers with the new retail chains.
That’s a quick wrap for this week. You can also view and share the transcript blog of this episode at the link given in the description. If you’re interested in being on our podcast to share your retail experience or reflect on the new developments, you can tweet or DM me over Twitter at @geekprateek . Keep listening to us and do share with your peers in the retail ecosystem.
See you in the next one.
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