Retail Startups, who had bet big on vegetable and fruit Retail — like RainCan, DailyNinja and Ninjacart have seen an uptick in their orders even as management of their supply chain got tough with demonetization.
#DigitalErra Thought Corner
Online retailers said the length of the supply chain has been affected — from farmers to truckers to vendors — the cash crunch has led to a major drop in prices and outright losses for some. Distributors are refusing to supply unless they are paid in new notes. The demonetization of Rs 500 and Rs 1,000 notes has disrupted business at some of the largest APMC markets in states where the regulated markets are still major landing ports for farm produce. Likewise, the turmoil it unleashed has squeezed farmers in several states and even delayed the transfer of dues to rice growers in Kerala as banks cited a cash crunch.
- Technology doesn’t come to everyone’s help say truck and logistics companies. It is a massive undertaking where there is requirement of infrastructure for Network, PoS machines etc.
- Hyper-local startups said that the margins vendors operate on were too small for them to digitize. They operate on slim margins so paying an MDR (Merchant Discount Rate) of 2.5% is out of the question.
- “There has been a drop of nearly 30% in the inflow of fruits since 8 November. Consequently, there has been a proportionate reduction in the revenue that the APMC receives,” said S. C. Kawarke, APMC deputy secretary for the terminal market.
Solutions To Adopt
- A UPI-based payment solution can solve many of the payment issue with simple and effective payment procedure. Online marketplaces and Retailers can make logistics handlers utilize the payment solution by tying them up with the help of developers.
- Online Retailers can extend credit to its distributors so that they will do the same to their retail partners, in an attempt to deal with the liquidity crunch.
- BigBasket and Grofers have an inventory model and are not hyper-local. So, they get their products delivered directly to their warehouses by large FMCG players like Nestle, Hindustan Unilever negating the need of paying truckers or vendors. Early January, they took the initiative of digitizing an entire community of 5000 plus farmers by taking them online. It paid them back during demonetization with ease of transactions.
- Government can provide increased overdraft facilities for channel partners of Retailers.
Things will ease in coming days with normalization of cash flows. Meanwhile, supply chain players can check out the alternatives at hand to remove bottlenecks in delivery process.