The Aam Aadmi Party-led Delhi government is reportedly planning to partner with online grocery delivery platforms such as BigBasket, Grofers and JioMart to facilitate home delivery of rations to 1.7 Mn households in the city, who are beneficiaries of the public distribution system (PDS).
On July 21, Delhi Chief Minister Arvind Kejriwal announced that his government had approved the ‘Mukhyamantri Ghar Ghar Ration Yojana’ for home delivery of rations to the beneficiaries. Sources told Economic Times that the government has since held virtual meetings with some companies, asking them if they would be willing to partner for the scheme.
“That meeting was just to brief us on what their requirements were,” said the source cited above. “Their criteria was companies should be able to handle end-to-end logistics of the programme as they are trying to modernise the PDS.”
If the deal comes through, Delhi would be the latest among states who have partnered with private companies to modernise the PDS system. In 2015, Kishore Biyani-led Future Group tied up with the Rajasthan government to manage the state’s ration and PDS shops. In 2018, the Future Group also tied up with the Bengal government to convert ration shops into mini malls, where it sold non-PDS items at discounted prices.
BigBasket and Grofers didn’t reply to Inc42’s queries.
Earlier this year, Indian foodtech unicorns Zomato and Swiggy also started their online grocery delivery services in a bid to offset the decline in revenue from their traditional food delivery business during the Covid-19 pandemic and the resultant lockdown. However, within two months of the launch of its grocery delivery platform Zomato Markets in April in 80 cities, Zomato shut down its grocery delivery operations after finding that the business wasn’t scalable.
During the lockdown, Grofers and BigBasket too faced difficulties in running their businesses. At that time, most of the hyperlocal players were running low on stocks and with no control over inventory and timely product delivery. Moreover, the companies were facing a shortage of manpower with many of their delivery workers having left the cities for their home states during the lockdown.
Further, the commissions in the grocery delivery space aren’t as attractive as compared to what Zomato gets with the delivery of cooked food. The low order value also makes it very difficult for hyperlocal delivery players to actually make anything substantial out of it. Other problems include stock management as most of the retailers often don’t update the stock while taking orders.
Nevertheless, both BigBasket and Grofers witnessed a surge in demand and sales during the lockdown. While BigBasket reported a 35% increase in sales in April, Grofers registered a 60% increase in its gross merchandise value (GMV), compared to pre-Covid-19 levels. US-based market research company Forrester Research noted that India’s online grocery market could make $3 Bn in sales this year, representing a whopping 76% hike compared to $1.7 Bn last year. The research firm has attributed this growth to the demand for fresh produce and staples during the nation-wide lockdown.