I write on the retail revolution that is going unseen … the small shop goes online.

Last week, I bought a bottle of water from a small shop in the middle of nowhere. As has been the case in the post-pandemic period, I was travelling with a small sling bag, and my phone, a Rs.500 note (as emergency cash), and some coins. And my house keys. “Chutta Hai” I waved my Rs.500 note for a Rs.10 transaction. I saw him roll his eyes as he pointed to the ubiquitous QR code. I paid for a Rs.10 transaction without cash, in a shop in the middle of nowhere.

The cashless economy is here, and most of us haven’t even noticed how little we need the physical note.

I have been carrying around that Rs.500 since the end of last year, when I decided to give up my heavy handbag and all the things I stuff in it, for a sling bag, a note, and a phone. It is also the period that I have been focusing on buying more local – local shops, local farms, local produce, local restaurants etc. And, I simply haven’t managed to use that currency note yet. The world around me, from the local service provider – plumber, carpenter – to the local grocery provider, to the local dairy provider, to the corner shops – have all gone digital.

Had you asked the experts 5 years ago, this retail revolution would have seen at least 15 years away. With a combination of demonetization and the need to go cashless; UPI has become ubiquitous, and the relative ease with digital-first players has been able to support cashless transactions. Companies like Paytm, Google Pay, Amazon Pay, and Airtel have allowed the permeation of digital pay.

With this, comes the next level of local e-commerce that is bringing the store itself online. Allowing customers to scan and view what is in a local store, allowing them greater choice. It allows the small retailer, who would have found the cost of investment in an e-tailing system too high, to scale up and reach for more.

Companies like Amazon have enabled these very small family-run businesses to jump onto the electronic superhighway, connected to the thriving mass of consumers, who might otherwise not even notice them. Enabling the chota dukan to become the digital dukan, services like Amazon Pay have created a turnkey solution for local retailers to offer their goods and services online. At the top is the list of payment options that the local retailer can now piggyback on – an entire suite of contactless payment options including UPI, credit, and debit cards, net banking, and Amazon Pay balance – without investing in separate point of sales systems. Also, Amazon has leveraged its own strengths and mass, to negotiate with credit providers for favourable EMI rates allowing consumption on easy payments.

In August 2020, Amazon launched the Amazon Pay Smart Store initiative with almost 17,000 family-run shops across Tier 2, and Tier 3 cities in India.  A combination of easy payments, easy EMI’s and generous cashback offers, is likely to spur demand, and help these retailers earn substantially more than what they earned without discoverability.

The system combines the best of the offline and the online experiences. The trust and relationship that goes behind a sale, the comfort of buying from someone who will provide local service – with the transparency of the process, the pricing, and even credit – with Amazon systems and processes. It is estimated that the very act of being made discoverable, will allow the revenues of the stores to jump between 30% to 50%. This in a year where a slowdown is predicted, is expected to buffer the impact of the economy, as consumption proceeds in instalments. 

Enabling local economies to gear up seems to be the next step of the retail revolution. As the sector consolidates, each major player is trying to see how they enable the last mile. In this, the big winners are both the local retailers, and the local consumers.

While Tier 2 and Tier 3 experience the same brands as consumers in metros, the plan would be to ensure that local produce, local crafts, and local food, reaches the cities.

All this can only mean growth.