New Delhi-based retail commerce startup 335bazaar offers an omnichannel-hyperlocal retail model for neighbourhood mom and pop lifestyle stores
It taps influencer and analytics to drive footfalls into stores and is building towards a consumer demand-driven manufacturing process
On one hand, the pandemic has helped to increase online fashion shopping by over 51% in FY21, on the other hand, the physical non-essential retailers have been hit badly by lockdowns impacting monthly earnings by up to 40% for every month of lockdown
Omnichannel retail has been the buzzword for businesses across urban India for quite sometime now. Everyone from conglomerates to global tech giants have been on the lookout for a way to crack the hyperlocal and omnichannel business model in ways that allow big businesses to have micro-level insights into local trends and demands.
While the likes of BigBasket, Amazon, Flipkart and Nykaa may have made some headway into this space with large food and daily essentials categories, but, for the majority of non-essential retailers, it remains a distant dream. Conglomerates like Reliance Retail are also trying to capture the network dominated by Kirana stores by tapping into their knowledge and database of neighbourhood demand metrics. Then there is a brigade of dukantech startups who are also working towards tapping this opportunity.
New Delhi-based 335bazaar is also trying to have a pie of this particular market with its hyperlocal online-offline (O2O) retail model. 335bazaar follows a model similar to hospitality giant OYO – where it takes the charge of supply chain management, branding, marketing and customer experience for small retailers and offers an omnichannel shopping experience to their customers.
Launched in August 2020 by Taponeel Mukherjee and Poornima Vardhan, the startup is backed by the US-based early-stage VC Village Global which is backed by the likes of Bill Gates, Mark Zuckerberg, Jeff Bezos, and Reid Hoffman. Village Capital recently invested an undisclosed amount in 335bazaar’s seed round. Out of 145 investments that the VC has made globally since 2017, it has been a lead investor in only 15 of those including 335bazaar.
What Is 335bazaar?
The retail market opportunity in India is diverse. Ecommerce comprises barely 5-6% of the total retail sales pie in India. Why does this market matter? According to an EY and IVCA’s March 2021 report, the India ecommerce market is expected to reach $99 Bn by 2024, growing at a 27% CAGR over 2019-24, with grocery and fashion/apparel likely to be the key drivers of incremental growth. There are, of course, thousands of startups in this space trying to build the next big idea like Amazon or Flipkart. Then there are crowded shopping malls that cater to a premium price range whereas neighbourhood stores offer generic or unbranded products with minimal shopping experience but are convenient.
Building on providing the experience of both worlds, 335bazaar allows stores to offer both — a mall-like experience to physical shoppers and an ecommerce experience for online shoppers which comes with live deals, group shopping and entertainment.
“We have a standardised agreement with stores which goes beyond getting stores a store management app. Stores sell the products and also act as micro-warehouses that can help fulfill online orders within 6-8 hours. We take care of the inventory management, analytics and customers can discover stores via influencer partnerships,” says Vardhan. Both the stores and the influencers earn a share of commission from sales.
According to Inc42 Plus India’s retail market is poised to reach $1.7 Tn by 2026 and among all fashion has the highest growth potential and is estimated to reach $43.2 Bn by 2025.
Flipping The Traditional Brick-Mortar Retail Model
“In the offline world, we take existing unbranded lifestyle stores and brand them for 335bazaar. In the online world, we work with influencers to create a live shopping experience for consumers. This is a model tailored for India,” says Mukherjee, summing up the business model.
Added to this, the startup also has partnerships with contract manufacturers who produce 335bazaar brand products based on the demand. “It is a completely data-driven process where we design and license our products. It’s almost like a consumer to manufacturing business (C2M) where the production depends on the demand that we perceive,” says Vardhan.
The C2M model, popularised by Chinese ecommerce giant Pinduoduo and perfected by many other Chinese companies like Shein, aggregates trends across customer groups and gets manufacturers to build for that user base. Think of how digital marketers use targeted ads? Well, this is a step further where manufacturers use the same user demand profile to manufacture lifestyle products for that customer base. This prevents wastage and ensures that there is a certain predicted set of buyers for these products.
How does this translate for 335bazaar? The company wants to focus on one store and a roughly 3 km radius around it for omnichannel customers. Suppose, its customers around one of its South Delhi stores show a preference in search patterns like “Pink kurta”,” Camouflage leggings” or “lace tops”, the supply chain will place orders for design and delivery of these items based on the sales data from that particular store. The customers can also buy online from that store through their app.
Once a store signs up to be a part of 335bazaar, its supply chain, logistics, look and feel as well as demand aggregation is completely handled by the startup. The costs such as rental and utilities are taken care of by the store and 335bazaar owns the operations and promises to increase sales and footfalls. Much like what an OYO promised to hotel owners. From a 335bazaar perspective, it helps to keep an asset-light model where it is largely in charge of streamlining the supply chain technology and experience management part of the retail process.
The company plans to open 100 stores in the next six months across all neighbourhood markets in Delhi and then expand to other cities thereafter. The founders say these stores experience a high volume of repeat purchases and witnessed up to 6x growth in revenue after the 335bazaar branding. The company did not disclose the commission share that stores are offered. However, 335bazaar wants to differentiate itself by strictly moderating the stores that sign up to be on the platform.
“We have a playbook when it comes to store selection which covers criteria across store location, rent, team size and management because we have a huge number of live in-store events which need to be factored in,” says Mukherjee. The stores are usually 100-500 sq ft in size.
Tapping Into The Influencer Bandwagon
The model is not just the stores alone. The company aims to partner with retailers as it grows to offer an increasing number of bundled partnerships and offers based on its hyperlocal demand insights. Currently, the startup sees average order values of around INR 999 per customer.
“We already see that 90% of our sales are driven by bundled offers. As this model plays out, we expect to report higher average order value for much lower customer acquisition costs,” says Mukherjee.
The other driver of sales is the influencer based social commerce model that 335bazaar wants to tap into. At a hyperlocal level, influencers will not only drive footfalls through their own social media follower base but can also help to promote these stores among their family and friends. Livestream shopping usually involves a host talking about products that customers can buy directly via the live broadcast. It has become very popular in China to the extent that the government contemplated regulating it.
“Influencers can livestream products from the stores as well as from their homes. They can be the resellers and monetise their follower base by earning a share of the sales they help to make,” says Vardhan.
Are Local Stores Ready To Go Digital?
According to Anand Ramanathan, partner, Deloitte, such “new commerce” models offered by digital platforms to physical stores help physical stores to increase their customer base, enable online order receipt, support in-home delivery and ease of payment. With increasing customer preference for online purchase, digital channels are going to be vital for all local stores.
However, these platforms tend to increase the fees charged to retailers as the customer adoption of the platform improves. This hurts the profitability of stores and increases dependency on these platforms. “The store owners need to understand the terms of product return/ reimbursement to minimise the subjectivity and loss of business. Since the product returns are more common in clothing categories (due to design preference, size mismatch and feel of apparel), the store owners and platforms need to have SOPs to accept and process product return.”
According to the EY report cited earlier, 77% of Indian consumers have chosen, recommended, or paid more for a brand that provides a personalised experience. And efficient supply chains will drive growth that businesses can expect from ecommerce.
So, 335bazaar may have much to offer retailers but these are early days. Live streaming-based shopping is yet to catch on in India and the pandemic has hit physical non-essential stores in the worst possible way. As the solution grows, there will be other fast movers and tech providers in the growing omnichannel retail market. Hopefully, 335bazaar will make an impact in this space.
