Startup Street: Is This The Future Of Brick-And-Mortar Retail?

This week on Startup Street, a look at a newly launched platform that wants to help brick-and-mortar stores get customers back. India starts work on a new, more detailed startup ranking framework for states. And a foodtech unicorn teases its initial public offering. Here’s what went on...

Getting Customers Back To Stores, Virtually

A Bengaluru-based startup has developed an experiential shopping platform to help revive dwindling footfalls at brick-and-mortar retail stores, especially after the Covid-19 outbreak dented economic activity.

One-year-old ReCast Technologies launched MallStreet, a live video shopping platform, that lets customers buy products by giving them the experience of visiting stores without having to step out of their homes. The end-to-end sales platform will also allow billing, payments and even order management instead of being just another video-calling app.

“We realised that the retail community does not have a cooperative marketing effort at all. And the challenge from digital commerce led to a slow decay in footfalls. Then came the pandemic,” Co-Founder and Chief Executive Jayesh Chakravarthi said at the launch of the platform. “Covid was really the last straw that broke the camel's back for brick-and-mortar stores.”

The pandemic wiped out sales for physical stores as non-essential shops were shut down completely to curb the spread of the virus. Even with the economy reopening, stores face the challenge of convincing shoppers to visit outlets while also ensuring that the risk of infection remains minimal. Live commerce, as video-driven commerce is more commonly known, can help bridge that gap between customers and retailers.

ReCast is banking on the Indian shoppers’ tendency to physically check out products before they buy it—a habit that is gradually changing due to e-commerce—to drive traction on its platform. The idea is to combine the best of both worlds.

“E-commerce is faster and transactional. Physical shopping is more experiential. Live commerce will come the merits of both,” said Chakravarthi. “This is an idea whose time we think has come now.”

Live commerce is not new though. Many companies have dabbled with it—most notably Google with its Shoploop platform. In India, similar ideas have been explored by BulBul and Pesopie. However, they are product-focused and involve short pre-recorded product demonstrations. ReCast, on the other hand, is trying to bring the shop itself in the spotlight.

The benefits for store owners, apart from potential sales, are more intangible, the Chakravarthi said. “The moment a shop goes online. It loses its identity. Only its products, brands and categories are displayed there. In live commerce, we do not go online with just the brand and its product. We present the store to the shopper in all its splendor.”

Besides, store owners can get more marketing reach, display real-time promos and get customer insights from the platform. All this, while also ensuring they build a personal relationship with the customer like in a completely physical shopping experience.

The startup said due to the onset of the festive season they are offering their service free of charge for now. Thereafter, the startup will have a subscription model for listing shops and also have other models like one which is based on talktime and another per transaction.

Currently, the company has launched the service only in Bengaluru and expects to have 300 stores online by the end of this month. They are targeting over 3,000 stores by the end of March 2021. ReCast also wants to expand to the top 20 cities by the end of next year.

India Working On More Detailed Startup Ranking For States

The Department for Promotion of Industry and Internal Trade has started working on State Ranking Framework 2020 for startups and it will take into account the feedback of the participating states and union territories.

The DPIIT’s report said the next framework delves deeper into policies and incentives and builds on comprehensive accounts of states in the process of the ranking exercise of 2019. “State Ranking Framework 2020 aims to address challenges, comprehensively incorporate feedback and portray the all-encompassing growth trajectory on a state and national level,” the department said in a report.

The DPIIT report also stated that governments would have to invest heavily in research and development and upcoming technologies, to ensure first-mover advantage and build further on their competitive value addition to this exercise.

As part of this collective initiative, it said, the central and state governments would need to work together and build the required infrastructure, a dedicated system, pool of intellect and financial resources for all age groups across the country.

The ranking based on the 2019 framework was released by Commerce and Industry Minister Piyush Goyal on Friday in which Gujarat bagged the top position.

The 2019 framework had seven broad reform areas, consisting of 30 action points ranging from institutional support, easing compliances, relaxation in public procurement norms, incubation support, seed funding support, venture funding support, and awareness and outreach.

Zomato Eyes 2021 IPO

Indian food delivery unicorn Zomato has plans to go public in 2021, its chief executive revealed to employees.

“Our finance/legal teams are working hard to take us to IPO sometime in the first half of next year,” CEO Deepinder Goyal told employees in an email, PTI and Bloomberg. “The value of our business is going up dramatically, all thanks to the hard work and commitment of our team. We hope to create a lot of value for our current employees who have ESOPs sometime in the next year.”

The Zomato IPO is around the corner and waiting a little longer will result in more value creation for all, he added.

On Thursday, the startup secured another $160-million fundraise led by Tiger Global and Temasek, valuing the food ordering platform at $3.3 billion.

The company continues to seek funds ahead of its market debut. Global investors Tiger Global Management, Temasek Holdings, Baillie Gifford and Ant have joined Zomato’s latest financing round, Goyal added.

“We have raised a lot of money, and today, our cash in the bank (about $250 million) is more than ever in our history. We estimate that our current round will end up with us at $600 million (about Rs 4,400 crore) in the bank very soon, he said.

With improving market share, Goyal said, these freshly raised funds will help the startup fend off competition or any potential price wars.

“The best part is that our burn rate is very low and our market share is accelerating in all regions,” Goyal said in the note. “We have no immediate plans on how to spend this money. We are treating this cash as a ‘war chest’ for future M&A and fighting off any mischief or price wars from our competition in various areas of our business.”

With PTI inputs.