I write on India's well-established entrepreneurs and corporate houses, covering a range of sectors. In a nutshell, I'm the Jack of all business news beats. In addition, I am the go-to reporter for aviation news at Forbes India.
Rural India has a unique problem when it comes to shopping online: Every village does not have a pin code, which makes deliveries difficult; moreover, most people cannot write their addresses in English. As a result, despite having the money and the intent, people living in small towns and villages are unable to shop online.
Gundaiah’s father grew up in the Karnataka village of Hanchipura, 110 km from Bengaluru, before moving to the state’s capital. Gundaiah grew up in suburban Banashankari, and graduated in computer science from BNM Institute of Technology, while working part-time as a programmer at ProInt Software in Bengaluru. After graduation, he took a loan of Rs 6 lakh and went to the University of Greenwich, London, for a master’s degree in internet technology and ecommerce. By this time he had also worked as a programmer at Yellowtag in London. In early 2007, he returned to India and got a contract job with IT services company Mphasis.
“After my master’s degree, I was very sure that connecting people by using internet as a technology layer was very important,” he says. With this in mind, Gundaiah founded his first startup Yulop WebSense in mid-2007. The startup, of which 65 percent was owned by angel investors, provided local content to Navteq, a US-based company (which had been acquired by Nokia), that provided geographic information system data and electronic navigation maps. With 260 employees, Yulop, using mobile technology and GPS navigation systems, collected photographic data as well as the latitudinal and longitudinal coordinates of places in India. He exited Yulop in 2010, but continues to hold a small stake in it.
It was during these years that Gundaiah’s connect with rural India began to get stronger, aided by his frequent visits to Hanchipura. “I clubbed my understanding of what is rural and my experience with small tech startups, and I said, ‘Why don’t I solve problems for rural India?’” says Gundaiah. “In StoreKing, that’s the bottomline: How do you take technology to rural India.”
The idea of StoreKing, however, was born out of another startup, via.com (formerly known as flightraja.com which was incorporated in 2007), an online travel bookings portal where Gundaiah worked at after exiting Yulop. StoreKing’s model of partnering with traditional retailers was at the heart of via.com. At via.com, Gundaiah was looking to expand the company’s profile beyond travel, but its investors and promoters didn’t want to diversify. That’s when he decided to go solo.
Via.com, says Gundaiah, is all about connecting a retailer, who is ambitious enough to become a travel agent. And this is how StoreKing operates. From a logistics perspective, StoreKing has created a network of master and regional franchise partners, who are typically the big local distributors in the FMCG industry and courier companies. This entire franchise network runs on a tech-enabled StoreKing platform. “Everything has been insured and responsibility has been equally shared,” says Gundaiah. He claims the rate of lost shipment is 0.2 to 0.3 percent.
Ecommerce player ShopClues, which is valued at over $1 billion, has recently partnered with StoreKing. ShopClues’ online catalogue can now be accessed at the StoreKing kiosks. When a customer places an order, ShopClues ships the product to the StoreKing warehouse from where the delivery is made. Raunak Raheja, senior director, categories, at Shopclues, is happy with the results of the company’s 40-day pilot project with StoreKing. “I believe the team [at StoreKing] is doing a phenomenal job,” he says.
And it’s not just ShopClues who has an eye on India’s rural market. Amazon India’s rural reach initiative, internally called Project Udaan, has been in the works since mid-2015. It appoints associates across retail outlets and provides them with a PC-based website. The associates train store owners to help customers find and buy products online and earn a commission. As part of Project Udaan, Amazon India has tied up with StoreKing (in a manner similar to Shopclues’ partnership).
Kishore Thota, head, consumer marketing, Amazon India, says, “StoreKing has laid out a way to reach those stores in remote areas very effectively and we want to leverage on that network.”
Sreedhar Prasad, partner, ecommerce, at KPMG in India, believes rural India has a “large set” of customers with “high” disposable incomes. In context to StoreKing, he says, “Startups are focusing on this market through unique business models wherein variety and access to products precedes discounting.”
StoreKing’s independent board member Kanwaljit Singh thinks the startup has just about scratched the surface. “They could become the largest distribution pipeline into small-town India,” he says. As validation, FMCG companies such as HUL and P&G have already begun to use the services of StoreKing. “Despite the best efforts of the largest consumer companies in India, their reach to these markets would still be more restricted than what StoreKing can achieve,” says Singh, who was a former high-level executive at Hindustan Unilever. StoreKing also has “the power of data”, he adds. Given that StoreKing knows what is being ordered on their platform from where, “think about the kind of analytics that is possible.”
Gundaiah has set his sights on the moon: “I want to conquer India. We want to be another [distribution] channel, apart from ecommerce.” In a bid to broaden his retailer base, he has partnered with Indian Oil, which has 27,000 petrol pumps across the country. The StoreKing kiosks are expected to augment the revenue of petrol pump owners.
Moreover, he is also thinking of replicating the StoreKing model across Southeast Asian markets such as Indonesia and Malaysia. This is where the funding from Axiata Digital would play a vital role. “StoreKing has created a platform that solves the fundamental constraints in our markets with last-mile logistics and payments, while building trust among mass market consumers,” says Mohd Khairil Abdullah, CEO, Axiata Digital. Gundaiah is also looking at another round of fund raising of more than $100 million, six-months down the line.
“He is a fantastic entrepreneur, modest and humble. He doesn’t necessarily seek the limelight of the press or public recognition, which we like a lot,” says Schmitz.
(This article is excerpted from the latest Forbes India 08 July, 2016 issue which is now available at news stands and book stores. You can buy our tablet version from Magzter.com)