ShopKirana: Empowering India's Tier-2 Cities - PM Modi Acknowledges the Trailblazing B2B Commerce Disruption!

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Authors: Anupam Gupta and Rinku Vatnani

Today, we are joined by Deepak Dhanotiya , a highly accomplished entrepreneur hailing from Indore. He holds degrees in production engineering, GATE AIR-1; he went on to complete his MBA from Indian Institute of Management Mumbai , Mumbai, with a specialization in supply chain.

He is now renowned as one of the co-founders and Supply Chain lead of DIRECT | Empowering Retailers (earlier ShopKirana). ShopKirana started as a first-of-its kind B2B sourcing commerce platform for unorganized kirana stores in India. It empowers millions of mom & pop store retailers to be competitive by providing technology, operational expertise and scale advantage. On the demand side, ShopKirana directly works with brands to enable reach to masses with transparency and deep market intelligence.

The beginning of a revolution...

What is the origin story of ShopKirana, how did it all begin?

ShopKirana's origin can be traced back to my time at NITIE, where I was inspired by supply chain's potential in India. Interestingly, my own background played a role in shaping this journey as well. My father owned a small Kirana store in a rural part of India, and I witnessed the challenges he faced in connecting with brands and manufacturers. Later, when I worked at P&G, I realized that even well-established brands were grappling with similar issues. The idea of bridging the gap between Kirana stores and companies like P&G was born. I teamed up with co-founders Sumit Ghorawat and Tanutejas Saraswat , and together, we founded ShopKirana with the mission of empowering retailers through technology and operational expertise.

Brewing industry of e-commerce and the role of 'Kirana Store'...

Could you provide some insights into the industry landscape when you first conceptualized ShopKirana? Particularly, with the emergence of e-commerce and modern trade, how did you perceive the future for traditional Kirana stores?

Broadly, businesses undergo three stage: (1) Assessing if there is a need for their products or services, (2) Determining their feasibility and possibility, and finally (3) Evaluating their profitability.

When ShopKirana was conceived in 2014, e-commerce was in early-stage evolution. Modern Trade was growing but still figuring out the size/ format of stores, and the profitable SKU mix. But, traditional Kirana stores still dominated, constituting 90% of the Indian retail market. In 2014, the Indian retail industry was valued at $500 billion, and has crossed the trillion-dollar mark today. Out of the incremental growth of $500 billion over the past 7-10 years, a sizeable $400 billion can be attributed to traditional Kirana stores, showcasing their significant contribution even amidst growing modern retail and e-commerce. This size was our biggest excitement together as a founder group.

Creation of a powerful brand name 'ShopKirana'...

The name "ShopKirana" is intriguing, what was the inspiration behind the name choice?

When we envisioned the company's mission to empower Kirana stores through technology and supply chain solutions, I came across Tanutejas, who was already experimenting with a pilot project named ShopKirana. I was impressed by Tanutejas as a person and also found the name ShopKirana to be fitting for our journey. In India, many successful brands combine two popular words to create a catchy and relatable name, and ShopKirana, combining "Shop" and "Kirana," easily resonated with our purpose and became an easy-to-use name for our day-to-day operations.

A customer insight leading to rebranding...

Can you explain the evolution of ShopKirana into "Direct" and the reasons behind the rebranding?

Certainly! Our company, formerly known as ShopKirana, underwent a transformation last year and was rebranded as "Direct”. As we evolved, we not only connected retailers but also collaborated with brands, leading to a need for repositioning. The name "Direct" was chosen for its neutrality and technology-oriented perception, emphasizing our goal of connecting people directly on a single platform.

An interesting anecdote fueling this rebranding effort is when I asked a retailer – ‘Aap Humare platform se kyun nahi khareedte h’ (Why do you not purchase through our platform?). His reply was ‘Hum to direct kharidte hain (we buy direct).’ It made us realize the importance of rebranding to align our image with our technological facilitation role and avoid being mistaken as middlemen. This led to the decision to rebrand and reposition ourselves as "Direct."

The changing narrative from the investors in the face of competition...

Were there any other similar players when you started, how has competition landscape evolved?

We went through following set of changes for us.

Around 2014: “sab udhar bhaag rahe hai, aap yahan kya kar rahe ho” (everyone is doing e-commerce and modern trade why are you doing B2B commerce?)

2017-2020 “Har Koi isme kar raha h, app isme kaise jeetoge” itna tide hai, Reliance bhi hai yahi kar raha h, big basket, tata bhi hai,?aap bhi hai, so aap kaise Jeetoge”? (Everyone is into this business, how will you win?)

2020-Now- “Koi bhi nahi kar paya, to aap kaise karoge”. (Nobody has been successful in this, how will you do it?)

When we founded the company in 2014, B2B e-commerce for Kirana stores was a novel concept in India, and we faced little to no competition initially. However, as the industry evolved, there was a surge of companies entering the Kirana Tech space between 2017 and 2020, driven by the growing demand and potential in this sector. Some prominent players like Udaan, JumboTail, Reliance JioMart, Flipkart, and Walmart joined the fray. Despite the increased competition, our early entry and in-depth understanding of the business gave us a strong foundation. Many newcomers failed due to their uneconomical approach, leading to the current phase where we must continue navigating the competition and evolving in this dynamic market.

Evolution of a new boss, a lesson for many corporates...

Tell us more about your co-founders, your roles and synergies?

In the early days, we all had flexible roles, encouraging each other to learn various aspects of the business. Sumit handles external affairs, including financial controls and fundraising, ensuring responsible financial management and maintaining relationships with brands, our valued customers. On the other hand, Tanutejas excels in frugal marketing and growth, taking charge of marketing for employees, potential investors, and projecting ShopKirana in the startup ecosystem. As for me, I focus on supply chain and operations, optimizing cost and service efficiency, and implementing technology-driven processes. Over time, we've rotated roles to gain a well-rounded perspective and adopted a structure where the plan becomes our boss, promoting democratic decision-making in the startup. Every three months, we debate and align on a plan, commit to it, and ensure we deliver without deviating from it to avoid distractions from new ideas.

'Direct' recognition from the prime minister Shri Narendra Modi...

Tell us more about the significant moment when you and your team interacted with PM Modi?

Indeed, it was a high point for us, garnering PR recognition and an opportunity to engage with PM Modi, which holds great significance in India. The moment was special as we were representing a prominent startup from Central India, highlighting the impact of the Kirana industry, which is a crucial employer and livelihood source for millions of people in the country. For our team, especially in tier2 cities where startup validation can be scarce, such recognition reaffirmed our hard work and success.

The roads ahead...

How big is DIRECT now and what is your vision for the next 3-5 years?

Our industry holds immense potential, and in our company, we focus on creating value for investors, customers, suppliers, and employees alike. While we have always aimed to build a large company, we prioritize protecting the value we offer to all stakeholders. Despite the impact of events like COVID and funding challenges, we have remained resilient, and though we may be slightly behind in our growth aspirations, we continue to execute our plans and bounce back when the time is right, ensuring we deliver on our commitments. Our business is already established in 15 out of approximately 35 cities with a million plus population, after excluding the top 5 cities with 5 million plus population. Our vision is that any company targeting India’s Tier 2/3 markets should be able to use our pre-ready, digital, data-led distribution supply chain.

Putting Indore (a Tier 2 Indian city) on the startup ecosystem map...

Can you share top three challenges you overcame while starting ShopKirana from Tier 2 Indore?

Our journey presented several significant challenges. Firstly, we had to convince people about the emergence of B2B commerce in India, gaining retailers' trust in digital buying and convincing brands to adopt digital go-to-market strategies. We are thankful to our competitors as well for following suit and making this an industry. There can be no company without an industry.

Secondly, building a strong talent pool in Tier 2 Indore and instilling a startup mindset in our employees posed its own set of challenges. ?But we were inspired by US examples (E.g., P&G started from a small city like Cincinnati and the city has transformed due to P&G).

Finally, ensuring robust business controls to prevent bypass and maintain a disciplined approach to growth required dedicated efforts. Overcoming these hurdles has been crucial to our success, and we remain committed to putting Indore on the map as a thriving startup hub.

Lessons worth a million dollar...

Entrepreneurship requires sacrifices and investment; can you share your personal journey as an entrepreneur?

Personally, I've always been more focused on talent and impact rather than material gains. I wanted to utilize my abilities to the fullest, which I felt wasn't possible in the corporate world. Coming from a humble background, I ensured my worst-case scenario was safe enough to take the leap into entrepreneurship.

When my resume had NITIE, P&G, SGSITS and all-India Gate rank one, I thought I was safe enough.?This resume is my safety.

Lifestyle was never a top priority for me, and I believe that those who prioritize it over the journey of entrepreneurship may find it challenging. As for my co-founders, they have also embraced the simplicity and dedication to work that I believe in.

I also feel that the people at the top college such as NITIE should be worried about how much jobs they can create so that remaining 2,000 colleges can get the jobs. ?If the top 10 also look for a job, then remaining 2,000 will never get a job.?

It is important to identify your core strengths and leverage them...

Based on your experiences, how has your background from NITIE aided you in building ShopKirana? What message do you have for other aspiring entrepreneurs?

NITIE has been instrumental in honing my expertise in supply chain and operations, which is vital for a large-scale distribution business like ShopKirana. In India, distribution is a significant challenge, and understanding cost systems is crucial for success. Entrepreneurs can be broadly classified into two categories - those who focus on service and product experience with premiumization, and those who disrupt the market with cost-efficient solutions, similar to SpaceX. The message is clear: identify your strengths and bring value disruption through innovation. You can excel by mastering either cost disruption or product and service excellence or even adopting both approaches. It's crucial to understand your core strengths and leverage them to take on the challenges of entrepreneurship.

Onboarding the real boss...

Is there something interesting from your journey at ShopKirana or your personal life that you haven't shared before but would be comfortable sharing here?

Certainly! In the initial days of ShopKirana, my life partner (wife), coming from a different background, found it challenging to understand my unconventional working style and sudden bursts of activity. To bridge this gap, I invited her to work with me for a while, specifically in control and accounting projects due to her background. Over time, this experience helped her comprehend the reasons behind my actions and made it easier for both of us to communicate and align our perspectives. It was an intriguing use case of how shared experiences can foster understanding and strengthen relationships beyond gender roles.

Never looking back...

Looking back at your journey, are there days when you ponder what life would have been like if you had chosen a corporate path like P&G or any other?

No, such thoughts don't occupy my mind. I believe in taking leaps of faith and propelling myself into new orbits. Entrepreneurship is the orbit that aligns with my energy and intellect. The exposure, the people I meet, the ideas we discuss, and the self-control I have in this journey are incomparable. The experiences, the scale of problems we tackle, and the constant learning make it a 1 versus 99 versus 50-50 scenario in favor of entrepreneurship. I am grateful for this fulfilling path I've chosen.

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