E-Grocers sharpen their game to cash in
With the government’s push for a less-cash economy and digital payments, online merchants are looking to cash in on changing purchasing patterns as more Indians have begun shopping online over the last seven weeks.
One segment that is tweaking strategies and looking to cash in is e-grocers, who have hitherto been a victim of the online conservatism of the Indian buyer.
Consider this: Amazon India has expanded its e-grocery segment, Amazon Pantry, to six more cities. Grofers, which had closed operations in nine cities in January 2016, has increased capacity by almost 40% in Delhi-NCR alone post demonetisation, and re-opened Ludhiana. It plans to add three more cities within this quarter.
Key to success in the grocery game is delivery speed.
Albinder Dhindsa, co-founder and CEO of Grofers, said express delivery was not profitable. The firm‘s ticket size for standard delivery is ₹1,100 and for express delivery ₹700. With cost of delivery being too high, Grofers has “partnered with local retailers for same-day delivery of products, which makes it profitable for us,” Dhindsa said.
Market leader BigBasket, on the other hand, doesn’t partner local retail partners, and has mini-warehouses.
Global leader Amazon too has an express two-hour delivery service, Amazon Now, for daily household needs. Its e-grocery segment, Amazon Pantry, has next-day delivery at competitive prices.
Vipul Parekh, co-founder of BigBasket, said customers buy a high percentage of fruits and vegetables and private labels like ready-to-eats on express orders. “These two categories are high margin categories which see an overall contribution of 45% to our express orders,” he said.
According to RedSeer Consulting, an advisory firm that tracks internet businesses, hyperlocal grocery saw 30% to 40% increase in transaction volumes, post-demonetisation.
“In hyperlocal groceries, essentially the supplier and customers are in the same vicinity and a typical average order delivery distance is between five to 10 kilometers,” said Gagan Chauhan, senior business analyst at RedSeer Consulting.
A survey by Cashback and Coupons site Cashkaro show that compared to last year, 75% have started shopping for daily items/groceries more online now.