Online grocery business surges on lower prices, hassle-free purchases

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Aparajita Gupta | 14 Sep, 2015
Shopping for vegetables, fruits or bread wasn't fun - not as a regular chore in the least. But online grocery marketplaces are fast changing the habits and mindsets of people, especially the young urban professional, on what was once mundane into fun. Plus, no more scurrying around for parking space, small change or wading through dirty marketplaces.

In the past year or so, India has seen a virtual mushrooming of such online grocery portals - with some even promising free delivery on the same day, if ordered within the first half, not counting the attractive discounts and promotional offerings they excite you with.

"This was almost the last piece of the parcel that was left," said 23-year old, Harvard-educated Pratik Jindal, chief executive of SRSGrocery.com, speaking about the online market. "The main reason behind grocery portals is: People are getting more tech-savvy," Jindal told IANS.

Names such as Zip.in, SeaToHome.com, AaramShop.com, LocalBanya.com, EkStop.com, BigBasket.com, AtMyDoorSteps.com, MyGrahak.com, ZopNow.com, Omart.in, RationHut.com and SeaToHome.com are just a handful of such stores that have set up shop -- some with deliveries at multiple locations.

Let's take the case of Zip.in, which New Jersey-based Kishore Ganji started in December 2014. "We ventured into this area as the food business in India is very large but fragmented as well. Our main operation is in Hyderabad. But now we have also started in Vizag," Ganji told IANS.

The numbers and the growth potential also seem to add up in favour of such stores.

As per the latest data released by the Internet and Mobile Association of India, the online food delivery market saw an impressive 40-percent growth in 2014 and reached Rs.350 crore by the end of December.

"The online grocery market garners six percent of the total online services pie."

It's also not that big physical retailers or the small kirana shops in the neighbourhood are scared. This is primarily because the online stores need them.

"We already home-deliver goods to our customers in the locality - only that we take orders over the phone. If the big chains or online portals tieup with us, then I think that will help in our business," Yadav Kumar, who runs a kirana store in Mayur Vihar in east Delhi, told IANS.

Even big retailers like Future Group, which owns Big Bazaar, are planning to go online sometime soon. To converge its digital and physical channels, Big Bazaar it has roped in SAP company Hybris, which helps transform businesses to meet the demands of the digital age.

With Hybris solutions, it plans to give customers thje flexibility to buy anywhere, pay anywhere and get things delivered anywhere. It had also launched Big Bazaar Direct where it is partnering with mom-and-pop shops and even individuals.

With this, the franchisees can sel both their own and Big Bazaar products, through a tablet provided to them. So far, there are some 700 franchisee uner this concept.

Globally, as per a Nielsen Global E-commerce and the New Retail Survey released a few months ago, a quarter of the respondents said they were already ordering groceries online for home delivery and more than half were willing to use it in the future.

The majority of the 30,000 respondents in 60 countries felt physical shopping had its charm. But the study added: "Research also shows clicks do lead to bricks and this is an important take-away for retailers and manufacturers who must engage the consumer early on the path to purchase."

A study on online grocery done by the US Department of Agriculture (USDA) also predicts strong growth. "The availability of multiple payment methodologies such as online banking, credit cards, debit cards, and cash-on-delivery have meant that it is convenient for urban Indian consumers to shop online while saving both time and money," the study said.

Navneet Singh, chief executive and co-founder of PepperTap, told IANS that growth has been rather good for his portal. "We are now present in 12 cities and will be present in 35 cities by year-end. It is a capital-efficient model. Logistics is provided by us," he said.

In January, Singh said, the company saw only 50 orders a day, which is now touching 12,000-15,000 orders. He said, their mantra was to partner with local stores and put their catalogues online. "We have tie-ups with 140 retailers so far."

Jindal of SRSGrocery said the venture -- which is a part of SRS Grocery stores spread across the Delhi NCR region in the name of Value Bazaar -- started in January this year. The company has 45 stores.

"Our thought was why not provide everything to the customers at their doorsteps? We have added two crucial things to our existing retail business -- procurement technology and a logistics team," he said, adding: "We do not have any minimum order specs and no delivery charges."

Stakeholders like Jindal also explained there were also attractive captive shoppers in working couples and even old people. Plus, another attraction is that the number of products available in the online format is much higher than neighbourhood mom and pop shops.

"We have a wide range of products. Now we have our own logistics team. We follow the hybrid model - where we have tie-ups with large retailers, wholesalers and vegetable markets. Capital cost is less since we don't hold inventory. We pack products well and ensure quality," Ganji added.

But the final say in all this, the stakeholders concede, has to be the price.

Ganji says it is but natural for online grocery stores to be cheaper. "We are not into price war with other portals. But things are much cheaper online. We don't have to set up a shop in a high street mall. We don't have decoration cost or any such recurring costs."

The USDA report also gave a risk-benefit analysis.

"Compared to these (physical) stores, online retailers will need to overcome delivery challenges (traffic, poor roads, greater distance, cost). Nevertheless, online retailers enable consumers to bypass parking and traffic congestion in most Indian cities while providing better selection than a neighborhood store."