For a small retailer in India, installing a digital weighing scale and electronic billing machine may often seem the very bleeding edge of technology.Burdened with a disorganised back end, unstructured inventory and resultant stock-outs, these kirana store owners are fighting against the current in an industry where larger format businesses are growing and ecommerce too is eating away at their business.Operating on wafer-thin gross margins of 6-8 per cent, these businesses are increasingly embracing solutions from startups to try to squeeze more revenue and profits from their apparently chaotic operations.From simply organising their back end, to supplementing existing supply chain networks and even building loyalty programmes for these kirana stores, startups hope to help a sector that still accounts for 90 per cent of all retail purchases in the country and hopes to keep larger (better-funded) competitors at bay. At stake: bragging rights for a sector set to tip the $1 trillion mark by 2020, according to management consultancy BCG.“The challenge is to sell a technology platform to a most tech-averse community,” says Tanutejas Saraswat , CEO and cofounder of ShopKirana , a year-old startup providing a technology platform to help small retailers enhance their offline and online presence.According to him, store owners are saddled with dead inventory and slow-tosell products since they don’t have a means of tracking product sales and trends. “Every location and city has local preferences and brands,” he adds.“Few retailers have a way of leveraging this knowledge. For example, in Indore, where ShopKirana is based, some 200 tonnes of atta or wheat flour is sold daily, but a top national brand like Aashirvaad atta came in at No. 5, with a local brand leading the way.”ShopKirana also found that Parle’s ubiquitous biscuits were unavailable in over 350 stores in the city. Other brands have also struggled to extend their supply chain into the hinterland.These data nuggets are only a hint of the promise — and peril — facing both small businesses and startups trying to mine the eight million plus stores in operation across India.Not only are they disorganised, they also operate on lean margins and pushing them to invest in these platforms remains a hard sell. “It is hard to sell to small retailers, since they operate on margins and are cautious with their investments in technology,” says Pragya Singh, vice-president, Technopak , a retail consultancy.Small retailers offer several compelling reasons to be a target market. Besides their sheer numbers, they are also well known within a specific locality, enjoy patronage from a loyal clientele and are trusted by customers.“These kirana store owners must see the benefit of investing in this technology,” she adds. “Either in the form of better inventory, by squeezing out more margins or strengthening the supply chain.”Startups believe that they may have the ingredients to this secret sauce. “We can provide a 20 per cent increase in gross profits,” says Prem Kumar, CEO and founder of SnapBizz , a retail technology platform provider to small businesses.In the last four years, this venture, which was spun off from a pilot project initiated at chip giant Qualcomm, has signed on 1,500 retailers across three cities, with ambitious plans to reach up to 20,000 in the next two years.“The goal of our solution is to transform small retailers into a virtual supermarket,” he adds. SnapBizz wants to do this by organising small retailers’ inventory, reducing excess stock, using analytics and data mining and providing targeted advertising to brands.According to Kumar, small retailers are getting to grips with some of the changing trends — not just with the arrival and expansion of big box retailers but also the sharp growth of ecommerce too.“The next generation is more technology-aware than their parents who have built the business,” he contends. With over 18,000 retailers aboard and $21 million in funding from the likes of Mangrove Capital and Axiata Digital, StoreKing is laying down the gauntlet to its rivals in this field.It has also leveraged its experience dealing with disconnected small retailers to tie-up with online commerce majors such as Amazon and ShopClues to aid their push into the hinterland.“Our vision is to become India’s largest retail company by 2018,” says Sridhar Gundaiah , CEO and founder of StoreKing. “We want to become the final frontier… we hope to reach 500 million people in a couple of years.”The company will lean on its growing network, specifically in the hinterland, to drive growth and is building up a nationwide presence. “We have a strong foothold in tier-2 and tier-3 cities in Karnataka, Kerala, Tamil Nadu, Andhra Pradesh, Telangana, Gujarat, Maharashtra, Goa and Madhya Pradesh,” he adds. “We are also working on establishing ourselves in Rajasthan and Orissa.”Merely digitising small retailers may solve only one part of the puzzle. According to other entrepreneurs, these kirana stores are blighted by other issues too.For example, the supply chain feeding these units is broken, with under a third of them having access to the distribution network, with the rest leaning on an informal arrangement with wholesalers to stock their stores.Anurag Agrawal, founder of StockIn, is bridging the gap these retailers face and hopes to narrow the stock-outs they routinely suffer from. The company works with retailers to assess and monitor their stocks and has set up two distribution hubs to help them restock their wares (primarily across grocery, hardware and pharmacy) more quickly than through the legacy distribution system.“We are creating a new framework for distribution for the small retailer,” he says. “They are under served by the current subpar system and we think we can sign up with up to 20,000 stores in two years across Mumbai and Indore to tap this demand.” Not everyone thinks these businesses are yet onto a winning idea. In a muted investment climate, investors are wary of this opportunity.“Many ventures have come and gone, trying to build businesses around small retailers... startups are still figuring out the right business model for this space,” says Sajid Fazalbhoy , principal, Blume Ventures, an early-stage investor.While the vastness of the small business space affords a large canvass for startups to build their ventures, trying to squeeze profits from them remains a work in progress.Currently, entrepreneurs are targeting different parts of the market (payments, supply chain, loyalty) and figuring out business models in each of them, Fazalbhoy adds.“The big opportunity for these companies is to access shopping data for 700-800 million people who visit these mom-and-pop retailers,” he contends. The biggest challenge is to convince entrenched retailers (who have often operated for decades in the same location and monopolised customers from that locality) to do business in a different way.Not everyone thinks these businesses are such a hard nut to crack. According to Krishna Lakamsani, CEO and founder of iPay, a twoyear-old startup in this space, shop owners can become technology converts rather quickly.“Our platform allows retailers to virtually add 19 different categories to their business,” he claims. He does this not by physically expanding the store, but by virtually extending its reach to new segments.“We can serve them items they don’t stock (think of a grocer selling mobiles, electronics and shoes on demand) and increase footfalls and revenue and profits for them,” he adds. Brands would be interested in working with these stores because they have a strong, trusted clientele which can be most easily accessed through their trusted retailer. Already, iPay’s Lakamsani says, he works with 13,800 retailers and is adding more each week.“We are providing shop owners with a new way to look at their business,” he contends. Opportunities for startups may also arise from changing industry contours. As small grocers worry about the advent and rise of ecommerce, some companies such as Tarnea Technology Solutions in Bengaluru want to help kiranas embrace rather than fear this new trend. “We want to bring offline retailers online in 20 minutes,” says Suresh Satyamurthy, CEO of Tarnea.“We want to help customers engage with customers digitally and directly.” Already, Tarnea’s customers serve up a million transactions a month across 11 cities in south India. Satyamurthy wants to expand nationwide in the next 12 months.While he admits that the fear of leaving a digital footprint and the costs in investing in new technology worry many small retailers, these concerns are often outweighed by the gains from using these platforms.“We want to help retailers, especially those in small towns, not just track payments and credit from their customers, but embrace and extend the reach of their business,” he adds. Even as these companies detail ambitious plans, they would probably have a nervous eye out on the elephant in the room — online giant Amazon has big plans for kirana store owners.It has launched KiranaNow, an express (two-hour) delivery platform from mom-and-pop stores. It is also expanding the reach of its core ecommerce business with StoreKing, as it now seeks to take its dominant online presence offline. The war to network India’s small retailers may have just begun.