Amazon to expand e-grocery biz, take on Grofers, BigBasket
business Updated: May 25, 2016 08:29 IST
NEW DELHI: In June, the world’s largest e-tailer, Amazon, will launch its daily essentials business “Now” in Delhi, after staying confined to Bangalore for more than a year.
“By June 25, Amazon will start the grocery business in Delhi. It has already started hiring people for logistics and is also signing up retailers,” a company source said.
Amazon’s expansion of its grocery business comes at a time when many e-grocers, including Snapdeal-backed PepperTap, have shut shop. Other large e-tailers, such as, Flipkart, Paytm and Ola Cabs have also shelved their plans.
Now’s biggest rivals include BigBasket and Grofers. But unlike competition, Amazon is yet to sell fresh fruits and vegetables. According to sources, the company is waiting to build the supply chain. Fruits and vegetables contribute 30% to e-grocers’ revenues. Amazon will need to tie up with farmers to do that.
Now was in the pilot phase and was called Kirana Now for a year. Amazon tied up with neighbourhood grocers and listed the products and the shops on its platform, and delivered orders within two hours in Bangalore’s neighbourhood.
In March, it formally launched Amazon Now. “Kirana Now only tied up with neighbourhood grocers. Now has tie-ups with large format retail chains also,” an Amazon spokesperson said.
Now has tied up with Big Bazaar, Foodworld, Spar Hypermarket, Godrej Nature’s Basket, Reliance Fresh and In-&-out.
Since its for mal l aunch, Amazon has seen a three-fold growth in number of orders, sellers, and order value, the company claimed, but refused to share the numbers.
“Customers can shop for basis sellers – big chain or neighbourhood stores, or order from product catalogues,” the spokesperson said. It also has company owned brand stores, including “family essentials by Patanjali”. All put together, Now offer over 6,000 stock-keeping units (SKUs), or unique products. Grofers offers the same number, while BigBasket has 20,000 SKUs.
Amazon’s entry can become a big challenge for homegrown e-grocers, since founder Jeff Bezos is known to put his financial might behind his bets. In two years, Amazon has overtaken Snapdeal and others to become the second-largest e-commerce firm in India. It hopes to replicate a similar success in grocery.
The e-grocery market is expected to become a $15-billion business by 2020 from a mere $0.08 billion in 2014, according to Morgan Stanley.
“We will not talk in details about Now until we have expanded the business beyond Bangalore,” the spokesperson said.