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E-Grocery To Become The Next Big Thing In Online Space

by Kishore Ganji, CEO & Founder, Zip.in December-2015

Hawking Groceries Virtually
Groceries are commodities that sell irrespective of the state of the economy of a country. People can choose to avoid going to cinemas, restaurants and malls, but their survival depends upon essential grocery items. Consumers today are pre-occupied with tedious travelling and long working hours caught in the fast pace of the city. These consumers often don�t have the time to go shopping for their groceries or would like to avoid the mundane chore as a tiresome task that demands both time and physical exertion. Buyers today are getting more & more inclined to the idea of ordering everything from apparel, shoes and electronics to their vegetables and cereal online. Moreover, the online payment technology has evolved steadily to make the buying and selling of groceries relatively easy. Thus, e-grocery is emerging as the next big thing in the online space.

Many e-Commerce startups are tapping into this window of opportunity. They are procuring vegetables directly from the farmers and delivering them right to your doorsteps. India is the sixth largest grocery market in the world, evaluated to be worth Rs.21, 60, 000 crore of which, the online grocery stores account for around 20 percent. With the growing popularity of the online grocery stores, more and more people acclimatizing to the idea of grocery shopping online, the sector is expected to create a potential market size of around Rs.60, 000 crore. This niche segment is expected to contribute 10 to 20 percent of overall e-Commerce jobs, with each warehouse of online grocery companies employing around 50 to 100 workers depending on the scale of operations, according to Randstad India.

Customer experience is imperative for e grocery players and it ends when the product is delivered to the customer. However, as the industry is in its nascent stage, it is faced with lots of challenges. The foremost challenge is to maintain the freshness of the items, as this segment deals in perishables. This is followed by the increasing demand for experienced supply chain management professionals, including procurement, inventory management, cold storage management, quality and logistics. Additionally, being largely localized, players are facing challenges in attracting the right talent. Over and above this, another most difficult task is to stock and market those perishables. These problems seem small as compared to the overwhelming task of changing consumer habits. To get people to try e-groceries and to win their faith and trust, that the products will be delivered fresh, on time and with post-purchase service if need be, poses as a serious challenge.

To counter these issues, a way out could be to include niche ancillary products. One should focus on scaling each category instead of products which are eventually of low value individually. Another way could be to promote differentiated or under distributed food products as compared to selling over distributed food and grocery brands. It is important for the portal to realize that in order to survive it has to go beyond just aloo-gobi and stock exotic fruits and vegetables, kitchen ware, breakfast items and many more. These portals could try vegetables such as asparagus, artichokes, leeks and zucchini. They can even provide categories like dry fruits, cooking oil and ghee. Apart from focusing on just the products, the sites can adopt various marketing techniques like offering loyalty or reward points and prepaid vouchers to ensure customer retention. Furthermore, the portals could also enlighten the consumers on the nutritional aspects of these fruits and vegetables, have interactive forums and share recipes for a quick meal using these items. Focusing on customer satisfaction and working towards meeting their demands is one of the key to retention.

The newcomers in the segment must understand that online grocery is a local, city specific operation. Expanding the business to newer cities would mean starting everything afresh. This makes grocery a more difficult category to go national with and more challenging in terms of operations. The existing players of the segment have understood that e-grocery is profitable with localized operations and a scaled up version of the same could be distressing. Therefore; my suggestion for the new comers would be to go hyper local with e-grocery, even while acquiring businesses.