NO WORKING CAPITAL ? NO FIXED CAPITAL ? A TRUE GAME - CHANGER

Tuesday, 17 July 2018

MA = DA x 4,000,000 ?

MA  =  Mukesh Ambani

And you guessed it right . DA stands for Dhirubhai Ambani

Here is why

In 1990 , Dhirubhai was Chairman of L&T , I was GM ( Planning / Export ) at L&T

In Feb 1990 , I went to meet Dhirubhai in his office at Maker Chamber IV and said ,

“ Sir , I have resigned from L&T after serving for 30 + years “

I thought he would try to dissuade me from leaving a great company like L&T (which, L&T continues to be )

Instead , he said :

Well done  !

Despite being son of a Bania, how did you suffer to serve someone else for 30 years ?

Do some dhandha ( business ) of your own . Start a factory

Then he went on :

I will supply you with Plastic Processing machinery .

My Hazira factory will deliver plastic raw materials to you and trucks from my Patalganga factory will pick up the processed goods from your factory 

This way , you don’t have to worry about ( purchase ) of raw materials , nor worry about ( sale ) of your finished products

And you will need very little ( working capital )

All you have to do is to manage workers ( human resources ) and ensure daily ( production )

In 1990, Dhirubhai had time to motivate a professional like me to become self employed

In 2018 , Mukesh Ambani does not have to motivate 4 MILLION “ Kirana Store “ owners to become self employed

They are already self employed !

He is trying to motivate them to join Reliance Eco System

So , in last AGM of Reliance , he told them :

If you join Reliance Eco System , here is what I will do for you :

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SALES :

All of your merchandize will be available for selection / ordering on our ONLINE web portal 

This online presence of your merchandize will expand / extend your " reach " to thousands of consumers in your neighbourhood

You will need to only focus on OFFLINE ( across-the-counter ) sales to consumers who walk into your store

For OFFLINE sales , we will install in your stores , all the necessary Computers / POS terminals / Routers / Internet Connections / Mobile Wallet Payment systems and an end-to-end , RETAIL MANAGEMENT software 

All of your OFFLINE sales data will get transferred to our Central Server

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SUPPLY  :

We will deliver to your store , all merchandize on " Consignment " basis

This means , you do NOT need to pay us for what we deliver to you store !

Till sold , all goods in your store will be our " stock "

This way , you do NOT need any " Working Capital " as far as your stocks are concerned 

We will also tie-up with the manufacturers

You don't need to have any interaction / dealing with the manufacturers

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INVENTORY  :

On a continuous basis , our web server will keep a track of each and every item of merchandize sold from your stores

Our Server will calculate , your " Stock Movement " 

Based on this data , our Server will compute / set for each item :

#   Minimum Stock Level

#   Alarm Stock Level

#   Stock Re-Order Level

#   Re-Order Quantity ( Minimum Batch Size ) 

Based on this logic , our Server will instruct the relevant " Merchandize Manufacturers " ( or their dealers / stockists ) , to deliver the stipulated " Re-Order Quantities " to your stores

A " Re-Order Instruction intimation " , will get delivered to your computer

Upon arrival , you will need to update the data

From time to time , our Software will also figure out your current stocks of " Extremely Slow Moving " and " Obsolete / Expired " items , and arrange for " Return Delivery " , which you will need to enter in your database

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DELIVERY  :

Not only we will deliver the merchandize to your store , but we will also pick up " Ordered Items " ( for ONLINE orders only ) , from your store and deliver the same to your customers  !

Initially we will employ manual " Delivery Persons " for this but , before long , we will deploy a fleet of autonomous DRONES for this purpose 

This fleet will cover " Kirana Stores " and " Online Customers " , located in pre-designated areas , covering 4 sq km ( 2 km x 2 km )

We are in talk with www.What3Words.com , to enable precise delivery through your 10th floor window  !

These drones will get their " Delivery Instructions " directly from our Web Server , for all ONLINE orders

When these drones arrive at your Store to pick up the items ( to be delivered ) , they will transfer ( Blue Tooth / NFC ) and display on your Computer screen , following data :

#  Online Order Number / time / date

#  Items covered with description / value of each

#  Customer Name / Address 

#  Mode of Online Payment / Bank Details 

#  Your online account CREDIT details , giving,

     ( Sales Value ) - ( Purchase Price )  

    " Purchase Price " of goods in your stock will be

     based on FIFO method

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FINANCE  :

As explained earlier , you will have a bare minimum need for " Working Capital " , since all of your stock will be on " Consignment " basis

We will collect the " ONLINE  PAYMENTS " directly from the customers and " Credit " the same to your " online sales account " with us

Against same account , we will " Debit " the " purchase price " ( price at which you purchase the merchandize from Reliance ) of the goods sold

Our server will also take care of all GST payments and filing of GST returns

As far as OFFLINE sales is concerned , all the data captured through POS terminal will get transferred to our Central Server


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MARKETING  :

Not only will we carry out all marketing for your ONLINE sales , we will help you with your OFFLINE marketing , through introduction of the following technology-enhanced features :

#   Arranging a better display of merchandize on your shelves / re-arranging of shelves


#  Introducing Augmented Reality ( AR ) for clothes / fashion goods in " Trial Rooms " for giving the customers , an experience of " touch - feel - looks "

#   Introducing Robots to answer customer inquiries

#   Eliminating " Check Out Counters " , based on " Payments through Bio-metric Recognition " of customers

#   Embedding RFID sensors in each item of merchandize and RFID readers embedded in Shopping Carts

#   Improving your window display thru rotation

#   Introducing music

#  Eventually replacing " Physical " merchandize with " Holographic Display " of merchandize on your store shelves !

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Our 7500 Reliance Retail stores witnessed 35 crore footfalls last year


When all of the 4 million kirana stores join us , we expect this number to go up by more than 500 times !


And I am not restricting my invitation to the " existing " stores only


Reliance has plans to take on lease , thousands of premises and offer the same to " unemployed graduates ( preferably , tech savvy )" to set up such retail shops 


Without need for " fixed " or " working " capital , we hope to be able to attract many to become our franchisees  

Jai Hind !

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I have no doubt Shri Dhirubhai is proud and happy - wherver he is 


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18  July  2018

www.hemenparekh.in / blogs