A Forrester report points out challenges faced by some business-to-business firms working online.
Big Bazaar Direct already is one of India’s largest retailers. But it wants to be bigger, and rather than open more bricks-and-mortar stores, it’s arming small Indian merchants with tablets pre-loaded with a special Big Bazaar app that enables shopkeepers to place online orders on behalf of their customers, most of whom do not have Internet access.
Bricks and mortar cost money, lots of money. Especially when you need enough to build hundreds of stores. It costs just shy of $1 million to build an 8,000-square-foot store in the U.S. today, according to Reed Construction Data LLC. By contrast, it only costs around $500 for a really good tablet.
Those were the kinds of numbers mass merchant Big Bazaar Direct was looking at when it decided the best way for it to expand its footprint across India, which includes 300 stores (17 million square feet) that generated US$2.9 billion in 2013, was to turn the countless local mom and pop merchants in the country into franchises for the Indian retailing giant. And tablets are playing a big part in the program.
Big Bazaar Direct has launched a franchise program where local shops pay around US$6,000 and in turn are armed with tablets pre-loaded with a special Big Bazaar Direct shopping app that enables the shopkeepers to show products to customers browse and place orders on their behalf. Orders are sent to local warehouses or grocers and shipped to customers’ homes. Customers can receive confirmation texts or e-mails.
“Our goal is to jump from 300 stores to 2,500 stores by the end of 2014,” says Vivek Biyani, director of Big Bazaar Direct, which has 40,000 employees in 93 cities and serves 300 million customers a year through stores, the web and mobile. “Currently our physical store network reaches around 18% of the Indian population of 1.2 billion. With the tablet program, we believe we can double that number.” He adds that in addition to small stores, individual entrepreneurs can sign up to be part of the Big Bazaar Direct franchise program.
Iksula Online Solutions, an Indian e-commerce and m-commerce technology provider, built the tablet app for Big Bazaar Direct. Biyani says it cost about US$300,000 to build the tablet app; however, that figure does not include in-house back-end systems work required, which he declines to estimate. About 30% of Big Bazaar Direct’s online budget is devoted to mobile commerce, Biyani says. Iksula Online Solutions manages part of e-commerce content operations in the U.S. for Meijer Inc. and Bed Bath & Beyond Inc. and manages e-commerce operations in India for Amazon.com Inc. and eBay Inc., the vendor reports.
“It took Big Bazaar Direct 12 years to get to 300 stores, but why wait another 12 years to gain another 300 stores when they can leverage the power of mobility to use the existing network of mom and pop stores in India to reach the rest of the Indian population much, much faster?” asks Samarjeet Singh, president of Iksula.
Since launching the tablet program late last year, Big Bazaar Direct has 300 “tablet franchisees” and 10,000 applications it’s working through, the company says. Biyani says the retailer looks for three things from applicants: Sales potential and location of the applicant; the applicant’s network of influence; and the ability and time the applicant has available to dedicate to the business.
Of the roughly US$6,000 one-time fee a franchisee pays Big Bazaar Direct, one-third is put into the franchisee’s online wallet so there is credit there to pay for orders, since local customers pay the franchisees in cash. Another third is a deposit in case a franchisee winds up owing the national retailer money. And the final third is a fee to be a franchisee. Franchisees earn a commission of between 10-15% on every order they place.
Local merchant experts armed with tablets could come in handy in a country where most residents rely on cash, not plastic, and where only 12% of the population has Internet access and only 2% have transacted online, Iksula says. “Everyone right now is fighting for a chunk of that 2% pie,” Singh says. “However, by leveraging mobile commerce through tablets, Big Bazaar Direct is focusing on the 98% who have never transacted online.”
Big Bazaar Direct is the largest property of Future Group, which also includes Central, Brand Factory, Ezone, Home Town, KB’s Fair Price and other, smaller merchants.
Follow Bill Siwicki, managing editor, mobile commerce, Internet Retailer, at @IRmcommerce.