Unpacking Supply Chain Digitization for Micro-Retailers
It is estimated that 95% of retailers in Bangladesh have been affected from supply chain, inventory, and working capital issues. To solve this, PriyoShop has enabled micro, small and medium enterprises (MSMEs) by building a full-stack technology where wholesalers, retailers, manufacturers, and customers can connect with each other through marketplace, logistics and working capital.
In the latest episode of our “Unpacking E-Commerce Logistics'' series, we sat down with Asikul Alam Khan, Founder & Chief Executive Officer of PriyoShop. With decades of experience in the retail industry, he addressed all questions about supply chain digitization for micro-retailers. What is the digital supply chain and what is its role in the retail industry? Let’s find out!
What Is Digital Supply Chain?
According to Asikul, micro merchants and traditional distribution channels are modes of business that date back for centuries. Under the model, sales representatives travel to micro merchant sites to gather data from paperwork manually, before submitting it to distribution points for brands to retrieve. This method typically takes seven to twelve days for one micro merchant to fulfill their demands. It was hence common in the past for brands to miss out on business opportunities and sales, more particularly for smaller businesses that rely heavily on their loyal customer base to generate revenue.
Today, however, many Asian countries including Bangladesh have opted for digital supply chain solutions in response to the COVID 19 pandemic. In reality, the digital supply chain is a system that enables micro merchants to make orders with leading brands and distributors directly through an app or a social media platform. This way, they are able to place purchase orders automatically or track the status of their order on a digital platform. Following that, the platform will deliver the order to the micro merchant point after collecting it from brands and distributors.
Asikul also gave an example about PriyoShop. An automatic purchase order is generated and transmitted to the distribution point whenever a customer puts an order using their app or platform. The product will subsequently be prepared at the distribution point and sent to the micro-merchant point. Asikul stated that they can increase sales of distribution brands and micro merchant points through this digitalization journey. After digitizing their supply chain process, PriyoShop noticed a 20% increase in sales. Additionally, proponents' effectiveness levels, customer satisfaction, and business performance all increased.
The Role of Digital Supply Chain in Retail and E-commerce
E-commerce has advanced and digitized many parts of the supply chain and retail operations in Bangladesh, where the e-commerce market exceeds $3 billion. Without a digital supply chain, the procurement process is still manual, and shops are unable to provide good customer service. Asikul contended that enhancing customer service is the main objective of supply chain digitization in the retail industry. Supply chain digitization is also integral to gaining a fair overview of demand data for business owners to analyze the performance of their supply chain and procurement strategies.
Micro Retailing in Bangladesh
In 2018, Priyoshop came to the conclusion that urban and semi-urban locations are where digital commerce genuinely thrives. 65% of the world's population lives in urban areas, which means that just 4.5 million micro merchants are able to serve 170 million people. In Bangladesh, this market represents about 97% of total sales, but e-commerce accounts for less than 1%, indicating that micro-merchants are very much still in control of the entire retail market. However, due to ineffective sourcing, micro retailers have yet to reach their full potential.
Retailers must go to the wholesale market to collect the goods, but they do not get the right price because of distributors. More often than not, distributors may give varied pricing to different merchants depending on the quantity of items or the relationship they have with that particular merchant. Micro sellers occasionally need to purchase far more things than they actually need because distributors only provide discounts for large orders. Asikul claimed that in order to address this issue, all conventional distributors have been linked up with micro shops. Retailers may now instantly place orders using a single app, and the products will be delivered the following day, thus giving them greater control over their supply chain.
Moreover, distribution is also a major problem for micro sellers as it requires a lot of manpower. With the help of digitalization, however, micro-merchants can now deal with the problem of price transparency, allowing them to place orders at the same price and in the precise quantity they require.
For the full discussion, check out the video interview here. You wouldn’t want to miss it!
About Asikul Alam Khan
An entrepreneur since 2006, Asikul Alam Khan is passionate about people, businesses and highly scalable ideas. With expertise in growth & strategic marketing in the retail Industry, he is currently the Co-Chairman of Digital Commerce Standing Committee of Bangladesh Association of Software and Information Services (BASIS), the largest national trade body for IT and ITES in the country.
Asikul will also be speaking at Home Delivery Asia, the event that will bring you insights from more than 60 experts in the retail logistics, fulfillment, warehousing and ecommerce space. Join the virtual event on 6 and 7 July. Best part, it is free for all to attend! Get your pass here.
About Unpacking E-Commerce Logistics Series
Unpacking E-Commerce Logistics brings together some of the best experts in the e-commerce logistics and supply chain space to unpack key concepts from a variety of trending topics, ranging from the use of Artificial Intelligence in the industry to embracing hyperlocal delivery in the e-commerce world. An integral part of this series are our 30-minute long Fireside Chats where we ask our thought leaders questions about not just the topic at hand, but also their career paths, challenges they have faced, and even their future plans.
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