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January 14, 2015

Start-ups Steering Retail

Posted by Girish Pai (View Profile | View All Posts) at 2:34 AM

Start-ups are providing retailers with an affordable way to steer ahead of the competition

What are the most important things on a retailer's mind? Staying ahead of the curve, with a little help from technology, of course! Up until a few years ago, this meant large capital investments on the part of the retailer. But, things are changing. Start-ups are providing retailers with an affordable way to steer ahead of the competition.

Start-ups provide retailers with two distinct benefits: speed and cost. Today, start-ups are working on exciting solutions. An interested retailer can experiment with these technologies in controlled markets and see what works. Then, there is cost. Some of the innovations, especially in the omni-channel space, require capital and infrastructure. Start-ups are building such solutions on a small scale allowing retailers to leverage these investments in a controlled pilot before determining if there is a business case to do something new on a large scale. For retailers who are trying to leverage their brick and mortar footprint in the omni-channel space, start-ups can provide a way to leverage their store networks, which are closest to the end-consumer as a competitive advantage against the likes of Amazon and AliBaba who are making huge investments in this space.

In fact, there's already some success in this space. Instacart, which is located in the Bay Area uses the concept of crowdsourcing to home deliver products from the store to the consumer's door step. Similarly, Chicago's WeDeliver is building a local delivery network that can offer local businesses and chains the advantage of same-day delivery. Curbside which is an app that facilitates convenient pickup is being piloted by a retail giant like Target. ShopKick, an in-store rewards app, was recently sold for about $200 million.

Ultimately, the focus is on simplicity and consumer convenience. In China, same-day delivery services are becoming common. Employees (delivery persons) of one logistics company uses public transit and brings the package to the customer, who collects it from over the turnstile. No cost is incurred because the man never left the station! China's JD.com, a leading online direct sales company, has 2,045 delivery stations and 1,045 pickup stations in 1,855 counties and districts across China, staffed by its own employees and offers same-day delivery in 130 counties and districts. Similarly, Zopnow in India is offering delivery within three hours at ridiculously low prices. These start-ups can help retailers get an edge over pure-play online companies like Amazon, Ebay and Flipkart.

It's evident that start-ups can revolutionize the omni-channel space, and the retail industry as a whole. But, retailers can also play an important role in the innovation cycle. Retailers are closest to consumers. By engaging with them, they can help start-ups to develop innovative solutions, relevant to consumers. The aim is to foster a win-win-win situation for retailers-start-ups-consumers.

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