Small Kirana stores, often referred to as mom-and-pop shops or convenience stores, play a crucial role in the retail sector, particularly in emerging economies. While these stores serve as essential providers of daily necessities, they grapple with cash crunch and inventory management problems that impact their operations.
One of the primary issues faced by small kirana stores is the need to order inventory only when cash is available for transactions. These businesses typically operate with limited working capital, making it challenging to maintain sufficient cash reserves for daily operations. This necessity for daily cash on hand drives kirana stores to engage in a high frequency ordering cycle.
Another issue these kirana stores frequently grapple with is the delicate task of managing their inventory effectively. On one side, there's a big risk of running out of stock, which could lead to lost sales and unhappy customers who may look for other options if they can't find what they want. On the other hand, overstocking presents its own set of problems, as it can tie up valuable capital that could be better utilised elsewhere and occupy much-needed storage space.
This constant need for cash and better inventory management restricts their ability to purchase inventory in bulk, leading to smaller, more frequent orders. Quick-commerce till date has been limited to end customers as it is seen as a good to have rather than a must have solution. CutBox is emerging as a game-changer in the world of small kirana stores, as it is using quick commerce to get more revenue for retailers. CutBox’s innovative business model is all about catering to the emergency needs of these neighbourhood kirana shops with one-hour delivery, transforming the way these stores currently operate. Its "No MOQ (No Minimum Order Quantity) policy", wherein small kirana stores can access the goods they need without the constraints of purchasing in bulk, acts as an anchor to those shop owners who do not wish to block their working capital by over-committing in their inventory.
The motto of CutBox is to help kirana stores increase their top line without burdening them with additional capital requirements. One efficient way of doing this is by increasing their product offerings also called SKUs(Stock Keeping Units). Today, these kirana stores only have 20% of catalogue penetration while 30% of their working capital gets stuck in dead-stock. CutBox brings them a quick fix, by introducing an arrangement that involves repackaging multiple SKUs into a single, convenient package which are then sold to kirana stores at the cost of a package containing a single SKU, effectively turning CutBox into a "wholesaler on wheels".
CutBox is led by Saurabh Agnihotri, Ziaul Hoda, and Rajarshi Chattopadhyay, a seasoned team with over 27 years of collective experience in the industry. Prior to establishing CutBox, these entrepreneurs played pivotal roles in the top management of Rentomojo, a furniture rental startup, contributing to its journey towards profitability. Their expertise in this sector laid the foundation for their first venture, Dukaanse where they were involved in last mile delivery from kirana stores to their customers in under 30 mins. Their first-hand experience with kirana stores through their initial endeavour provided valuable insights for CutBox. They observed a unique pattern among kirana store owners, some of whom were reverse ordering goods for their own inventory needs.
With an annual Gross Merchandise Value (GMV) of $800 million, accounting for 80% of the total market share, small kirana stores in India present a robust market opportunity. The presence of approximately 1.2 crore small kirana stores signifies their widespread reach across urban and rural areas, making them an integral part of India's retail ecosystem. This vast network of kirana stores caters to the diverse needs of India's population, serving as essential neighbourhood hubs for everyday goods. Furthermore, this market opportunity is set for a high growth curve as kirana stores increasingly embrace digital solutions, expand their product offerings, and adapt to changing consumer preferences.
Cutbox addresses the need of kirana stores by offering a digital solution tailored to their requirements, disrupting traditional supply chain dynamics by leveraging technology to connect businesses directly. Enabling flexible order quantities and a wide product variety, the founders are addressing an untapped opportunity. The pedigree of all the three founders and a promising business traction is well placed to scale in the coming years.
CutBox's innovative approach, with its, one-hour delivery service and "No MOQ" policy, and introduction of "CutBoxing," is reshaping the way these kirana stores operate, enabling them to access essential goods without the burden of seeking additional capital. This innovative venture promises to drive disruption in the traditional supply chain landscape and unlock value for both kirana stores and consumers alike.