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    Investments into retail-tech startups treble to $843 million in 2021 so far

    Synopsis

    More than 200 companies offering digital ledger to payments solutions and AI-driven logistics raised a total of $843 million over the past nine months, according to Tracxn. That compares with $235 million raised in all of 2020.

    kirana storesETtech
    According to experts, the future of retail in India includes digitally connected stores.
    Mumbai: Companies making technology solutions for retailers, both online and offline, have received three times more funding so far this year compared to all of 2020, underscoring the pandemic-induced surge in adoption of tech solutions.

    More than 200 small and mid-sized companies offering digital ledger to payments solutions and AI-driven logistics raised a total of $843 million over the past nine months, according to Tracxn. That compares with $235 million raised in all of 2020.

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    Funding from January to September this year equaled the amount raised in all of 2019, despite a crippling second wave of Covid-19 infections. While 90% of India's retail market is still brick-and-mortar, more than three-fourths of the funding was in firms that provided tech solutions to online retailers.

    Still, retail tech makes up a small portion of the investment flowing into the retail sector at large—the industry has attracted $7.49 billion so far this year compared to $6.13 million in the last two years.

    “The pandemic has expedited technology adoption. At this juncture, retailers have to up the ante to earn the first-mover advantage and a larger market share among new users," said Vamsi Udayagiri, founder at rural-tech firm Hesa Technologies that received $2 million in a seed funding round led by Venture Catalysts. "In the last two years of the pandemic-induced online purchasing, a new segment of consumers and retailers have been added to the retail ecosystem.”

    The Covid-19 pandemic also sped up adoption of digital technology among kirana stores, neighbourhood mom-and-pop shops—from billing to customer service and procurement to logistics.

    "These tech firms are solving a big problem in the country, and with over two crore retailers in India, retailers' competitive advantage is completely dependent on technology solutions," said Gaurav Singhvi, cofounder of We Founder Circle, an early stage investor.

    "Due to the pandemic, buyers stopped visiting retail stores for their needs and instead migrated to online platforms. This resulted in almost a 50% revenue drop for retail," said Shivam Varshney, cofounder of Kiko Live, a live video commerce platform.

    According to experts, the future of retail in India includes digitally connected stores with customer data integration, real-time inventory management, mobile point-of-sale, and store operations. More kirana stores are going online, providing app-based ordering and last-mile delivery, offering a variety of payment options and automating their bookkeeping, invoicing and inventory management processes, according to a recent report by Deloitte-FICCI.
    The Economic Times

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