Bangalore Startup Builds India’s First AI-Driven Local Shopping App To Help Small Retailers Compete With E-Comm Giants; Has 2 Lakh+ Users

In the bustling lanes of Calicut, Kerala, two college friends, Rajiv Surendran and Rahul K. C., dreamt of something bigger than their small-town roots.

It was 2021, and the world was still reeling from the COVID-19 pandemic. Locked in their homes, the duo tinkered with an idea that would spark a retail revolution in India.

Their brainchild, Nearwala, a Bangalore-based technology startup, is now shaking up the Indian startup ecosystem with an AI-driven local shopping app designed to empower small retailers against the towering might of e-commerce giants like Amazon, food delivery apps like Swiggy & Zomato, and quick-commerce apps like Blinkit & Zepto.

Identifying the Gap:

Rajiv and Rahul, both in their late 30s, weren’t strangers to innovation.

With over 18 years of experience in the IT sector, respectively, they had already tasted entrepreneurial success with Qkopy, an IT services startup they co-founded in 2018.

Qkopy made waves by developing tech solutions for the Kerala Government during the Nipah virus outbreak and the COVID-19 crisis.

But it was during the COVID-19 pandemic’s quiet moments in Calicut that the seeds of Nearwala were sown.

“We saw small shops struggling to survive. Big e-commerce platforms were eating their market share, and local merchants lacked the tech know-how to fight back,” recalls Rajiv Surendran, the founder and CEO of Nearwala, during an exclusive interview with Startup Pedia.

The duo experimented by building e-commerce apps for local kirana stores, supermarkets, fish shops, and salons. 

But they quickly realised a harsh truth: building apps was only half the battle. Small retailers didn’t have the resources or expertise to manage and promote them effectively.

This revelation led to the creation of Talking Shops, a pilot app launched in Calicut in 2021. It allowed customers to discover local shops, chat with owners, and place orders via a chatbot interface.

With over 100 merchants onboard, it was a hit. But Rajiv and Rahul saw a bigger opportunity.

“We knew this could scale across India. Small businesses everywhere were facing the same threat from e-commerce giants,” shares Rahul K. C., Nearwala’s co-founder & CTO.

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A Pivot with Purpose: The Birth of Nearwala

By December 2022, the duo halted Talking Shops to chase a grander vision.

They spent months researching the retail market in India, identifying gaps that left small retailers vulnerable. 

Their findings were stark: local merchants needed a platform that didn’t just list their products but actively helped them compete through technology.

By May 2023, Nearwala’s prototype was born—a hyperlocal shopping app designed to bridge the gap between offline retail stores and the digital age.

Launched initially in Calicut, Nearwala’s pilot phase, run from June 2023 to January 2024, was a testing ground. 

Following its success, Rajiv and Rahul officially registered their company as NearPay Innovations Pvt Ltd in February 2024 to prepare for the next rollout phase.

The app allowed customers to discover nearby stores, browse products, chat with merchants & place orders via in-app chatbot, and enjoy AI-driven discounts.

“Nearwala’s AI-powered discounting mechanism is a game-changer. It predicts shopping trends, personalises offers, and helps shops target customers effectively,” says Rahul to Startup Pedia.

This unique feature, which tailors discounts based on location and shopping patterns, gave small retailers a fighting chance.

However, the journey wasn’t smooth. Convincing small business owners to adopt a tech platform was like teaching someone to swim in a storm. Many were sceptical about payments and trust. 

“We had to prove Nearwala’s value. We targeted young, tech-savvy shop owners who already used Instagram or Google for promotion. Their success stories convinced others,” Rajiv quips.

Battling Giants in the Retail Arena:

The retail market in India, projected to reach US$ 2.5 trillion by 2035, is a battlefield where e-commerce giants and quick-commerce players dominate.

Nearwala faced stiff competition from established platforms like Magicpin, but these catered to larger chains like Burger King and Domino’s, leaving small retailers underserved. 

Nearwala filled this gap, offering tools like inventory management, sales analytics, and customer engagement features tailored for local shops.

Onboarding merchants was just one hurdle. Building trust was another. Early on, merchants worried whether payments through Nearwala would reach them. 

The founders tackled this by ensuring seamless payment systems and transparent operations.

“Once shops saw how we got them a boost in sales and visibility, doubts vanished,” Rahul notes.

Today, Nearwala serves over 4,000 clients, including local and emerging brands like La Pino’z Pizza, Five Star Chicken, Soorya Pharmacy, The Chai Wallah, etc, across cities like Calicut, Bangalore, Hyderabad, Kochi, and Coimbatore.

The founders have set an ambitious target of serving over 50,000 clients by the end of this financial year (2025-26).

The user base of the Nearwala app (available in both Android & iOS versions) is equally impressive, boasting over 200,000 customers.

The platform’s appeal lies in its win-win model: customers enjoy discounts (up to 100%) and cashback (via N-Coins) without mandatory subscriptions, while merchants gain lead generation and visibility.

“The feedback from our users has been incredible. They love the quickness, freshness, and discounts Nearwala brings to a market dominated by e-commerce,” Rajiv says to Startup Pedia.

Read More: Meet the Founder Who Left His Family’s Legacy to Build a Guilt-free Ice Cream Brand that Clocked Rs 100 Cr in ARR

Scaling Newer Heights:

Nearwala’s growth has been meteoric.

The founders are working on expanding the operations to eight more cities, with plans to enter Delhi-NCR, Mumbai, Pune, and Mangalore by December 2025, and Vizag, Chennai, Tirupur, and Trivandrum by the end of the ongoing financial year. 

The ultimate expansion goal for the near future? To be operative in 50 cities by FY 2026-27.

“Our vision has always been to create a tech-enabled platform that revitalises local economies. We want small merchants to thrive, not just survive in the digital age,” Rahul explains.

Bootstrapped initially, Nearwala raised ₹2 crore from a few high-net-worth individuals and angel investors. The founders are now in talks with venture capitalists and family offices to secure US$ 3 million more by the end of FY 2025-26.

This funding will fuel national expansion and new features, like direct order placement and micro-lending efforts aimed towards helping merchants.

“Most small retailers in India struggle with credit access due to the existing system of credit scores established by a few foreign corporations. In the near future, we want to help them grow with small loans,” Rahul further explains.

The startup’s operations are supported by a 50-strong team, with plans to double this number next year. However, building on-ground teams in multiple cities remains a challenge.

“Finding people who believe in our mission and can work at the grassroots level to convince merchants to join us has been tough,” admits Rajiv Surendran.

Yet, the team’s passion keeps them pushing forward.

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A Community-driven Future:

Nearwala isn’t just an app; it’s a movement. By fostering community engagement, the platform encourages customers to shop locally, boosting small businesses and local economies. 

Its AI-powered tools, like dynamic pricing and personalised recommendations, give merchants an edge in the digital world. 

The app’s various features—product listing, inventory tracking, CRM, GST compliance, etc—streamline operations, making it a one-stop customer lead-generation and marketing solution for small retailers.

The startup’s transaction volume flowing through its app tells a compelling success story. In FY 2024-25, Nearwala facilitated ₹4 crore in gross merchandise value (GMV). The founders aim for ₹100 crore by the end of FY 2025-26.

“We’re focused on long-term sustainability, not short-term profits,” Rajiv emphasises.

This long-term vision includes an IPO in the next three to four years, a bold move for a young tech startup.

Read More: How the Founder of Veeba Who Turned a Failed Restaurant Business Into a FMCG Brand that Clocked ₹1,000 Cr in Revenue

The Road Ahead: What’s Next?

As Nearwala eyes the next growth phase, a question looms: can it hold its fort against deep-pocketed giants like Amazon, Blinkit, and Zomato?

The Indian startup ecosystem is no stranger to fierce competition, but Nearwala’s focus on hyperlocal shopping and empowering small businesses sets it apart.

Its AI-driven platform, unique systems of discounts for customers, and a community-driven ethos offer a fresh approach to a crowded market.

The retail market in India is ripe for disruption, and Nearwala’s young entrepreneurs are betting on technology to level the playing field. 

From Calicut’s humble streets to Bangalore’s tech hub and finally to a pan-India expansion, their journey is a testament to the power of innovation and grit.

As they prepare for further expansion and dream of an IPO, Rajiv and Rahul remain grounded in their mission: to give local merchants, small businesses, and retailers a fighting chance in the digital age.

Will Nearwala redefine the future of local shopping in India? Only time will tell. But for now, this Bangalore local shopping startup is proving that small shops, armed with AI and ambition, can take on the giants—and maybe even win.

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