Let us begin with a small fact. Your neighborhood corner shop is not just a place to buy groceries but a cultural citadel of the mohalla they are in. That chacha ji ki dukaan around the corner is where the evening meetups of the neighborhood elders reminisce about the ghazals of Madam. It is also the place where the accidental meetups of aunties lead to real matchmaking in the neighborhood. And needless to say that chacha ji ki dukan is the place that evokes childhood nostalgia.
What is also now a fact is that a lot has happened over time that has changed the concept of neighborhoods. The sprawling housing societies, the commercialisation of real-estate and the concomitant rise of supermarkets has changed what we could remember of neighborhood stores when we were of a younger age. Today, when we think of grocery shopping, retailers like Al-Fatah and Carrefour would most likely come to mind. It is getting totally out of touch now and the neighborhood stores in Pakistan, just as it happened in the Western economies, could eventually lead to losing their relevance not just as small businesses but as places that are a part of the culture and heritage of Pakistani society.
Part of the reason why neighbourhood stores could be on the cusp of losing their relevance is that large retailers, such as Metro, Carrefour, or Al-Fatah in Pakistan, have a seismic advantage over the humble neighbourhood kiryana store. Because of the sheer volume of products they buy and sell at their markets, they are able to negotiate much better margins than your average corner-store could ever dream of.
Yet nothing beats the convenience of the kiryana store or the familiarity you have with the dukandaar that runs this store. So what do you do? One answer would be to create a community of kiryana stores and dukandaars. Imagine the possibilities if just 100 kiryana stores banded together to place a single order from manufacturers that they buy from. They could in some manner replicate the model of large retailers, increase their volumes, and as a result bargain for better margins. Add to that the irreplaceable convenience of kiryana stores and you have yourself a serious competitor.
The most significant impediment to this, of course, is the lack of a common platform. It is with this vision of reviving the neighborhood store culture that 24SEVEN has decided to step up. Originally founded in 2016, 24SEVEN is one of the many startups that started out to deliver groceries to consumers at home. Yet they realized that the potential of the kiryana store went far beyond this initial model. Their innovative answer to the problem was exactly this: to provide a common platform to the many kiryana stores in the country and turn them into a living, breathing, network of neighborhood shops that 24SEVEN calls Apni Dukan stores – a name that also revives the nostalgia of corner shops of olden days, and which is also indicative of the importance these stores have in the neighborhood.
Apni Dukan’s plans are not only big, they are also very substantial and the idea at the center is to revive the kiryana stores and the cultural impact they had in their glory days on neighborhoods. The startup has so far bagged $6.2 million in funding according to Crunchbase data, out of which $6 million pre-Series A raise was announced this year in July. Its roster of investors include SOSV with participation from Betatron Venture Group, Newlin VC, Verity Capital, Argo’s Quest, and several notable Pakistani and international family offices.
The grocery retail transformation has been brewing in Pakistan for the past few years. In this time, it has seen dizzying highs and abysmal lows. But with a massive $241 million pumped into this space in the last two years, people have been waiting for an idea that changes the landscape of the retail industry. 24SEVEN Apni Dukan is the idea that is going to create a positive impact within communities by transforming the corner stores.
A question of community
What often gets lost in hardcore business talk is the influence innovative ideas can have not just on sectors and industries but on people and their everyday lives. Community commerce is not a new idea, but its application in Pakistan is painfully obvious yet has remained woefully ignored.
Consider China for a moment. There, tech startup Pinduodo follows a model under which a group of say 100 customers collectively orders items from manufacturers, with sales volume big enough to get a discount on the purchase. Community commerce is an arrangement in which an agent collectively orders for a large number of buyers which collectively get big enough to be able to get discounts and earn better margins.
The concept of community commerce is very prevalent in the startup space with JD.com, one of the biggest eCommerce platforms in China also operating a community commerce arm. Across the border in India, community commerce startup Deal Share raised a total of $393 million and achieved a valuation of $1.7 billion in February this year.
This concept was what inspired Jarrar Shah, the CEO of 24SEVEN, to start observing and calculating the possibilities of what could be done if a similar model was tailored to Pakistan.
“Our earlier model of delivering groceries to consumers got an impetus during the Covid-19 pandemic but soon after, stores started opening and we realized that in the long run, this model would be unsustainable,” says Shah. “We started studying alternative models and we studied Pinduodo in China which is an agent-led model that offers a bigger room for everyone and a bigger discount for everyone.”
Community commerce for many stores is what Apni Dukan is on the road to achieving. Once that happens, these grocery stores, currently facing an existential threat because of the big hypermarkets, would have another lease at life.
“It is about creating a relationship with neighbourhood kiryana stores that are trusted by the communities they serve, and then take them deep into that relationship whereby if the store wants to order inventory, it does the majority of it through 24SEVEN’s community commerce platform,” says Shah.
“If you go to a kiryana store, you have to go with some value proposition. Our value proposition is that we have a number of carefully curated SKUs. To acquire these SKUs, you have to go to 60-70 different vendors while being at the lowest core to negotiate discounts.”
Kiryana stores that work with Apni Dukan place orders for products with Apni Dukan, which then procures them from different distributors and delivers them to these shops. Because Apni Dukan is collectively ordering for thousands of shops (3,000 is the number of shops they work with), it is able to get a better rate from distributors that it is able to then pass on to these shops. For instance, if a shop is able to get a 1.5 litre bottle of Coca Cola at Rs115, Apni Dukan might be able to get it for Rs110 and deliver to Apni Dukan retail partners at Rs113.
Apni Dukan has hence become that platform from which shops can order inventory that Apni Dukan will then deliver for them after procuring it at a discounted rate. Unlike the other B2B models that are available in the market right now such as Bazaar, Dastgyr, and Retailo, Apni Dukan is a B2B2C startup and has more depth in the B2B leg of the business. Stores order bulk of the inventory from Apni Dukan instead of small orders placed intermittently with other B2B startups.
This also comes with benefits for distributors. If in a neighbourhood there are 20 shops out of which five are Apni Dukan shops, the distributor is taking orders for those shops through Apni Dukan but is not delivering those orders individually to them. The deliveries are taken care of by Apni Dukan. At a bigger scale, where there are thousands of Apni Dukan stores, these savings can be really meaningful for the distributors that, in the current scenario, are also struggling with cost pressures and decreasing revenue. This is a potentially very sustainable model as compared to what other B2B startups are pursuing, since the discounts are organic instead of being paid for by venture capital money.
Apni Dukan is perhaps the first startup that has realised the vitality and importance of the humble kiryana store and its place in our society and neighbourhoods. The power that these small shops have is undeniable now as central. Instead of trying to fight against it, Apni Dukan aims to use tech to galvanise these stores.
Their focus is first and foremost on building communities and empowering them through a common tech-based platform. It is, in a way, the first real attempt to incorporate the spirit of the kiryana store, the charm of the local dukandaar, and the ease of neighbourhood living into the tech-powered retail space.
That is why, perhaps, as they take on board more kiryana stores every day, they bring them underneath the banner of ‘Apni Dukan’ stores. What is Apni Dukan? It is the business vertical under which 24SEVEN brands the shops it works with as Apni Dukan stores and brings them in the fold of its community commerce platform. Behind it is the philosophy of reviving the cultural legacy of the neighbourhood corner store, and at the centre of all this arrangement is the digitisation of these stores to bring them into the fold of the community Apni Dukan is trying to build. A closer look at the concept of Apni Dukan will tell you that it will be a game-changer.
Creating the Apni Dukan
In early 2021, 24SEVEN introduced Apni Dukan. The new platform was both part of the new life they had breathed into the startup and an ambitious business-to-business-to-consumer (B2B2C) model under which they envisioned digitisation and rebranding. The way Apni Dukan envisioned it was that they go to different small-scale retailers, tell them about their services, bring them on-board the digital train and then make them a part of their network.
How do you digitise these quaint shops? It begins with equipping them with cutting edge equipment through which these retailers can place orders with Apni Dukan and better manage their inventory and sales.
i) Enabling PoS
The foremost step towards creating an Apni Dukan is to enable these retailers to be able to manage their store digitally. The likes of AlFatah, CarreFour and other have a seismic advantage on the one hand because of their volumes and on the other because of their ability to manage work digitally.
If a small kiryana retailer’s digital capabilities are enhanced and he moves away from manual paper-based system for recording sales and managing inventory, the overall operations of the store would be efficient and the shop owner can earn better profits. That is what Apni Dukan begins with: equipping the the small corner store with a point-of-sale machine to digitise their manual functions.
The kiryana retailers have so far remained elusive to such digitisation because if store owners were to do it on their own, such PoS machines would require a hefty upfront investment of tens of thousands to hundreds of thousands of rupees, which Apni Dukan equips these stores with for a very minimal subscription fee. These machines, seen by Profit, are sturdy, easy to use and have the options listed in English as well as Urdu languages since your average kiryana store owner is presumably not literate enough to be able to use such machines if they were all in English.
On these machines, the Apni Dukan retail partners can record sales electronically, maintain a ledger for sales on credit, manage in-store inventory and for ordering inventory from Apni Dukan as part of the Apni Dukan community.
For those unfamiliar with how the retail industry works, this is a seismic shift in attitude but a necessary one. Not only does this arrangement help kiryana stores improve their cash flows, it helps them procure inventory at discounted rates, all of which help them improve as a business to stay relevant as an integral part of the neighbourhood.
ii) Apni Dukan rebranding
Once the initial stage of digitisation is done, these shops will also be given a makeover to reflect that the shop is part of the Apni Dukan community. The transformation of the neighbourhood store from clunky looking to a visually appealing shop helps increase the footfall at these stores, Shah says. In this, Apni Dukan is giving small retailers a best-of-both-worlds scenario in which they can retain the charm and convenience of the kiryana store while also arming it with the better margins and clean-cut look of large retail chains.
Essentially, through this method, Apni Dukan is creating retail partners that are going to be a part of an ecosystem. “The name Apni Dukan reflects on the shop as belonging to a community and part of the 24SEVEN ecosystem,” Shah says. “It is about Apni Dukan creating a relationship with neighbourhood kiryana stores and then enabling the retailers to create and retain a relationship with customers that trust them because of the neighbourhoods they serve,” says Shah.
iii) Payments and lending
The digitisation at these retailers brings a lot of data on their sales that can be used to credit score them and provide them with working capital financing through partnerships with banks, eventually enabling them to grow further. Many fintech players in Pakistan’s startup scene are trying to find the right mechanisms to be able to accurately credit score small businesses to extend loans to them.
In the Apni Dukan scheme of digitisation, the data is more granular giving a better picture of the revenue of stores, which Apni Dukan wants to use to be able to lend to neighbourhood stores.
“We have an alliance with Habib Bank, we have an alliance with Telenor, we can have an alliance with everyone. That is only possible because we have created a community commerce platform using the community’s trusted corner store to use as a distribution point,” says Shah. “We are in fact going to get our own NBFC (non-banking finance company) license as well.”
In this mission, Apni Dukan is poised to succeed. It is setting up that infrastructure at retailers through which a spur in digital payments can be achieved. The PoS device at retailers already has the functionality of accepting payments from customers through QR codes and Apni Dukan is poised to build further use cases for digital payments at retailers. Apni Dukan would take a cut from the lending as well as the payments component of the business model.
Completing the B2B2C arc
Apni Dukan is ambitious. With a very well-timed pivot that has already garnered a positive response, one wonders what the bigger picture is in the minds of the team running this startup. They do have legacy costs of the original infrastructure they set-up for grocery delivery pre-covid, which came with significant capital expenditure such as setting up warehouses or dark stores for storage and fulfilment of deliveries to customers.
What they have in their current model is to synergise their efforts. Since Apni Dukan is converting these retailers into Apni Dukan retail partners, branding them as such and making them retail partners, they can be used to act as dark stores for B2C operations. This serves an important purpose in the Apni Dukan vision of digital retail transformation; that of bringing back customers to the neighbourhood stores in the presence of big retailers. This is why Apni Dukan does not aim to restrict itself as a B2B only startup and it sits well with their vision of reviving neighbourhood store culture.
Through an app, people in the neighbourhood can pre-order groceries from their closest Apni Dukan and then pick them up. Why would a customer want to pre-order from an app and then go collect it if he/she can simply go and buy groceries? The service for customers is based on a subscription-based model under which if they get the subscription, they will be able to get preferred rates on certain products and certain other benefits. The service is just like Amazon Prime, or the recently launched Panda Pro in Pakistan which allows certain benefits for paying a small monthly fee.
“We are starting this pilot in two weeks. The idea is that against your membership subscription, you are getting preferred rates on vegetable foods, preferred rates on staples, and then you are getting access to credit scoring and buy-now-pay-later services. Our shopkeeper is going to get an additional new customer; this is another layer on top of his customer base,” says Shah.
Perhaps the most significant element in all of this is the fact that more than anything else, 24SEVEN’s conception of Apni Dukan has understood the true essence of the kiryana store and the importance it holds. Using this advantage and the new concept they have brought into the retail market, the one thing you can count on is that this will shake things up in the industry, and be a boon for all the neighbourhoods that find themselves with an Apni Dukan.
This article has been produced in partnership with 24SEVEN Apni Dukan