17 Jan 2017 12:46 IST

Ratan Tata-backed Snapbizz to invest $6 million this year

Retail tech start-up will ramp up store acquisitions and hiring

After transforming 2,000 local kirana stores into “virtual super markets” with its Android-based, cloud platform solution, Ratan Tata-backed retail tech start-up, Snapbizz Cloudtech Pvt Ltd is investing $6 million this year.

The investment will go toward upgrading technology, ramping up store acquisitions to a cumulative 15,000 stores and hiring 130 people in sales, tech, product and analytics to take its headcount to 315 by the year-end.

Currently, 2,000 kirana stores in Mumbai, Pune, Bengaluru, Chennai, Hyderabad and Delhi have adopted Snapbizz solutions comprising a 10-inch tablet, barcode scanner, printer and an intelligent, consumer facing large LED display for consumer engagement; for a one-time payment of ₹35,000. The LED display is placed where shoppers get to see all the promotions being offered by FMCG brands at the store.

India is home to approximately 9 million kirana stores that employ 50-60 million people. Prem Kumar, founder CEO, Snapbizz told BusinessLine, “These kirana stores spanning 500-1000 sq ft typically stock 300-500 SKUs. Store owners make gross margins of 10 per cent, of which 5 per cent goes towards opex and the rest is their income. Unlike big box retailers and e-tailers that are struggling to achieve profitability, these kirana stores are profitable. However, lack of visibility of merchandise/promotions results in average basket size of customers being 30 per cent lower than big format retailers and e-tailers.”

This is where we step in with smart store solutions, which provides merchandise visibility and inspires customers to buy more, helps store owners track, stock, manage inventory and sales, and also provides FMCG brands last mile connectivity to stores and customers where brands can contextually engage consumers in and out of stores, track promotions and analyse their business, he said.

Business model

Snapbizz does not sell its solutions directly to the kirana stores but through FMCG brand distributors who explain the benefits of the solution to store owners. Snapbizz charges FMCG companies an annual fee for the store insights they provide through their analytics software and for ad hoc reports such as impact on kirana sales during demonetisation.

Snapbizz also charges brands customer acquisition fees for every new transaction when they buy merchandise that is advertised on the LED display.

“We are empowering 600 new kirana stores every month, who are now getting a 3 per cent increase in gross margins as sales volumes grow. If a store owner takes home ₹1 lakh a month, with our solution he gets ₹30,000 a month,” said Kumar.

Asked if Snapbizz was competing with SAP Ganges, a solution that connected FMCG companies to the millions of unorganised retail stores, Kumar said: “Ganges focuses on FMCG companies whereas our solution is created with the kirana store owner in mind.”

Founded in 2013, Snapbizz competes with start-ups such as NumberMall, Shopsity, Storeking and iPay that help kirana stores bridge the digital gap to improve their business. Snapbizz has raised $9.6 million to date from Qualcomm, Jungle Ventures, Taurus Value Creation, Konly Venture.

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