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India-Pakistan Rivalry Shelved In Grocery Startup’s Cross-Border Expansion

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The sixty-year old feud between two bitterly divided neighbours has not dettered Indian grocery marketplace AaramShop from picking Pakistan as the first port of call in its global expansion. The curry, it seems, is common currency between the two neighbors.

The two-year old Indian start-up launched its Pakistani service last week, via a partnership with local retail chain RedBox Groceries, who will use the back-end cloud application to manage inventory and take customer orders.

The deal was signed about six months ago, after the Pakistani retailer first reached out to the self-funded Indian start-up in early 2012, and Aaramshop CEO and co-founder Vijay Singh said the two countries — where tensions have simmered ever since the partition in 1947 — shared more similarities than differences.

“The way that we look at it is the similarities between the two markets are enormous and the model we follow in India can be replicated with relative ease in Pakistan,” Singh said of the two countries. “The biggest issue when trying something in Pakistan is that the relations between the two countries tends to move between extremes.”

“Once we talked to the locals, there is a level of optimism that the recent change of government will positively impact the economy. Regardless, the category we’re operating in, groceries, is something every household needs.”

Red Box will be responsible for promoting the AaramShop application, which allows customers to buy brand name goods online and have these delivered by their local neighbourhood grocery stores, or “AaramShops.” The inventory is aggregated across all merchants, and the nearest shop will usually deliver the goods. (In India, retailers often employ a herd of scooter-bound delivery boys.)

While Pakistani retailers will be hand-picked in the first phase, Singh believes the country will follow the adoption pattern in India, where big chains eventually started listing goods on the website. It’s free for shops to list and sell goods on the website; and AaramShop makes money by charging for premium listings and premium services.

There are about 49,000 regular online users, who shop at least twice a quarter, and the average order size is about 18 products totalling $11 (675 rupees). There are 3,600 SKUs on the site, which are aggregated across all the retailers. While he did not disclose revenues, he said the company is close to break even. The other co-founders are Ashutosh Malik and Ritesh Raj Gupta.

Apart from Karachi, Pakistan, Aaramshop already has a presence in 30 Indian cities, including its home city of Delhi, as well as Mumbai, and Bangalore, and Singh said they were able to expand because unlike other local grocery e-commerce stores, Aaramshop does not hold any inventory.

By comparison, one competitor BigBasket, which controls an entire sourcing, storage and distribution supply chain, was founded with a $10 million Series A investment by Ascent Capital, and will require another $15 million to expand across India.

[Image via Flickr]