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Hit by cash crunch, buyers opt for online food delivery and e-grocers

While the e-tailing business as a whole contracted by a fifth in November, online food delivery startups and e-grocers emerged winners, as the cash crunch made it difficult for offline purchase of items of daily need.

business Updated: Dec 06, 2016 14:24 IST
Sunny Sen
While the e-tailing business as a whole contracted by a fifth in November, online food delivery startups and e-grocers emerged winners, as the cash crunch made it difficult for offline purchase of items of daily need.
While the e-tailing business as a whole contracted by a fifth in November, online food delivery startups and e-grocers emerged winners, as the cash crunch made it difficult for offline purchase of items of daily need.

Demonetisation has been a mixed bag for e-commerce.

While the e-tailing business as a whole contracted by a fifth in November, online food delivery startups and e-grocers emerged winners, as the cash crunch made it difficult for offline purchase of items of daily need.

Online grocery business, according to RedSeer Consulting, an advisory firm that tracks internet businesses, grew by 30% to 40% as demonetisation sucked out 23 billion bank notes, or 86% of the total bills in circulation.

Food delivery, too, grew by 10% to 15%.

“Grocery and food-tech are clear winners as customers don’t have any ready cash (in hand) to conduct daily offline purchases,” said Anil Kumar, CEO of RedSeer.

That’s a welcome change considering these businesses have not done well in recent past – companies have shut down, employees have been laid-off, those who kept their shops open had trouble in expanding their businesses.

Online grocer Grofers, for example, shut down its operations in nine cities. However, things are slowly changing. “Delhi and Mumbai are the two places where growth was higher. Online orders grew 40%... our business grew 25%,” said Albinder Dhindsa, CEO and co-founder of Grofers.

For BigBasket, Grofers’ rival and the country’s largest e-grocer, the number of deliveries shot up to 1.5 million per month. “We would have grown more if we had the capacity to handle. Our business is not elastic. Can’t give to Blue Dart to deliver grocery. We have to do it ourselves, and that takes time,” said Vipul Parekh, co-founder, head of marketing and finance, at BigBasket.

Grofers, too, is running out of capacity. At its peak, the delivery slots were full for three days in advance, Dhindsa said.

Both Grofers and BigBasket also witnessed a large number of buyers coming in for the first time.

There was a 30% to 40% growth in new users in November. For Grofers, it was 50%.

The traction is a relief for online food delivery companies, too.

Foodpanda, the largest in the food ordering space, has seen a 50% to 60% growth in the number of orders. That would mean a significant jump in revenue in 2016-17, compared to last year‘s R37 crore. “80% to 85% of our orders were paid online before demonetisation, which shot up to 95%,” said Saurabh Kochhar, CEO, foodpanda.in.

RedSeer’s Kumar also pointed out that after demonetisation a large number of customers are getting comfortable with digital payments, which will be beneficial for companies in the long run.