Dairy 2.0 – A Consumer Story with Paytm Leading the Digital Disruption

Dairy 2.0 – Consumer Story

Dairy industry in India is one of the largest & most essential consumer categories. Dairy is also the largest agricultural commodity contributing 5% to the national economy, with India leading the world in milk production. The dairy industry employs over 70 million farmers with 6 million women members and more than 1,90,000 dairy cooperative societies across the country.*

Dairy belongs to a daily usage category and hence, is pivotal from a payments ecosystem perspective in terms of consumer engagement & building a loyal customer base. Yet, it is one such category which still largely operates in a traditional manner, both in terms of day to day operations and consumer interactions. Hence, there is a lot of scope of technological advancement & building / implementing new age digital solutions in the dairy sector.

In this article, we’ll be focusing on the consumer side and in subsequent articles we’ll talk in detail about the merchant side of the story.

Since Dairy is a commodity, it touches people from all strata of the economy, be it rich, middle class or poor in different magnitudes.

While the urban population has majorly moved towards ordering dairy products online either through aggregators / D2C brands or dairy co-operative apps, the other 2 classes still majorly rely on offline purchase.

Paytm, as one of the largest Payments players in the country started introducing digital payment options in this category way back in April 2016, much before demonetization. The first product that Paytm introduced was the QR code payment mechanism through the Paytm wallet which became a huge success in the market for the following reasons:

  1. Ease of payment
  2. Customer convenience
  3. Hassle-free reconciliation for merchants

Paytm introduced this solution at more than 56 dairy players PAN India and digitized a good chunk of dairy consumer payments.

However, one problem that few booth owners / merchants started facing with the huge surge in digital payments was in terms of queue management and customer frauds. This is because during peak hours, there is generally a long queue at the booths and hence, the booth owner requires quick & authentic confirmation of orders.

Paytm Soundbox solved this problem through audio notification. Paytm Soundbox has since become a blockbuster product in the market and now a number of payments players have introduced their version of Soundbox in the market.

Paytm payment gateway, which is one of the largest in the country also tied up with several dairy players powering payments happening through their websites & apps both for end consumers & channel partners.

As the business grew, another focus area that emerged was facilitating high ticket value purchases and introduction of catalog / inventory management, especially at large company owned booths and ice-cream parlors. Paytm solved this problem through the introduction of Paytm Smart POS in 2019 with the dual purpose of payment collection & building value added services for merchants as per their business needs.

In 2020, the world was jolted with COVID-19 restricting public movement across the world. This was the time when companies started realizing the importance of knowing their customers and building a long term sustainable engagement with them. This is what also led businesses to start realizing the importance of loyalty programs.

Paytm was one of the early movers in this regard and started working on loyalty solutions for dairy brands. These solutions were tailor made as per their specific business problems. In the last 2.5 years, Paytm has built engagement with several dairy brands through loyalty programs, gamification, building Paytm Mini Apps (alternate entry point for merchant apps within Paytm app) and launching specific marketing campaigns.

Being in the dairy category for more than 6 years now and having our share of learnings, following are the key trends that we foresee happening in this industry in the near future:

Integration of payments, loyalty & inventory / catalog management on a single platform which will mostly be a Smart POS machine.

This will have the following benefits:

  1. Unified view of consumer spend pattern
  2. Knowledge of consumer’s preferred purchase modes
  3. Better consumer engagement
  4. Checks on pilferages (leakages)
  5. Efficient management of demand supply gaps
  6. Targeted promotions of specific products in specific markets by analyzing consumer purchase trends

Loyalty Programs will play a major role in building long term consumer engagement

This will happen through the following:

  1. Points issuance & redemption
  2. Gamification
  3. Bundling high selling products with low selling products basis consumer purchase pattern
  4. Promotion of seasonal / new / lesser market share products to specific segments of customers through both offline & online mediums

Subscription Model

This is already proving to be a game changer for dairy aggregators / D2C brands (such as Country Delight, Milk Basket, etc.) as they’ve been able to engage mostly all of the apartments’ consumers including a large population of urban customers.

This can also pose a threat to the legacy dairy players in the near future. Today, most of these aggregators are only acting as distributors of the existing dairy brand’s products. They have already created a loyal consumer base through their subscription model. If & when they start doing backward integration (which means selling their own white label products), this will pose a big threat to the existing dairy players.

Therefore, it is the need of the hour for all dairy players to expedite on the above 3 fronts in order to be competition ready. Paytm can play a pivotal role in this regard as Paytm not only has an understanding of the end consumers but is also a market leader in building the right set of solutions around loyalty, subscription, inventory, catalogs, etc.

Paytm Loyalty, Mini Apps, Paytm Ads, Payment Gateway, Paytm Soundbox & Smart POS and Paytm First Games are few of the Paytm products and services aimed at solving specific consumer & business needs.

For further engagements please drop a mail to kaustubh.rana@paytm.com / udit1.bhatnagar@paytm.com

*Source – investindia.gov.in & insightsonindia.com

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