Amazon-Kirana store partnerships pay off; fulfilment cost 10% lower each year

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Amazon was the first to tie up with kirana stores, in 2014, to improve the quality of its logistics. This it managed through an alternative supply chain initiative called the I Have Space (IHS) Programme. With kirana stores employed to take care of last mile fulfilment the etailer expected to:

  • Overcome the high percentage of failed deliveries
  • Reduce delivery costs
  • Speed up delivery

Results of IHS

During the period from January to March, the total number of orders fulfilled by IHS reached 28 percent, claims RedSeer Consulting. Back in 2016, during the first half, the total number of deliveries handled by 4,000 kirana stores all over India amounted to 15 percent. With 400 stores in the first half of 2014, only 1% deliveries were fulfilled by kiranas. By the initial half of 2015, it was 5% of orders, as Amazon’s network of kirana stores rose to 1,100.

Year-on-year, partnerships with kirana stores have reduced last-mile delivery costs for Amazon by 10%, per packet. The US-based etailer also leverages its relationship with kirana stores for its Kirana Now platform.

Amazon interests kirana’s in tying up with it, through an attractive fee structure. Every order delivery attempted by a kirana store earns it Rs.20-25. Plus, these partners are guaranteed a minimum of Rs.2,000-8,000 per month. So, on an average these stores make about Rs.25,000 in revenue every month.

Others following the kirana trend

Flipkart launched a service similar to Amazon’s IHS programme back in 2016, to assist Ekart with last-mile delivery.  It roped in 700 kirana stores and local stores for this purpose and even tied up with a network of pharmacies. Bigbasket also used the services of kirana stores to ensure 1-hour deliveries.

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