In February 2018, when Future Group CEO Kishore Biyani met Amazon Chief Jeff Bezos in the US, it looks like a partnership is brewing between the two companies. However, it seems that Biyani’s purpose was more inclined towards evaluating Amazon’s business tactics. As per an ET report, in line with Amazon’s paid subscription service, Prime, Future Group is launching a grocery delivery app.
The app will route the deliveries through Future Group’s neighbour format stores, EasyDay. The stores’ service customers within a radius of 2-2.5 kms. The Easyday Club membership will cost INR 999, allowing consumers to buy from the convenience of their home and avail the membership benefits of faster delivery, and great deals.
Future Group further plans to increase its network of Easyday to 10K by 2022 from the present 950 stores. “Fruits and vegetables are a great way to get customers frequently. They are daily products. We want the first mover advantage. Delivering fresh fruits and vegetables from a central warehouse to customers’ house (which most ecommerce players do at present) is unimaginable,” said Vinay Bhatia, CEO — group loyalty and analytics, Future Group in a media statement.
To be noted, both Flipkart and Amazon India-two of the leading players in the Indian ecommerce space are looking to take a share in the rapidly growing online grocery market in India. As per a February 2018 CRISIL report, “the online grocery will be a fastest-growing segment (around 65-70% CAGR between fiscals 2017 and 2020) in e-retail and almost quadruple over the next three years to INR 100 Bn in terms of revenues.”
While Amazon is already active in the segment with Amazon Pantry and has been gearing up to sell locally made and packaged food in the country from March this year, Flipkart is piloting its grocery delivery services in Bengaluru.
Vinay’s thoughts align with Kishore Biyani’s earlier statements where he had termed ecommerce as stupid business and had decided to stay away for atleast two years.
“It’s stupid to be in the online space. In lifestyle, the ecommerce industry revenue in India will be around $387.14 Mn (INR 2,500 Cr) and losses too will be of an equivalent amount. Mobile and electronics, too, do not make money online. Having burnt our fingers, we have decided to take a break of at least two years before even thinking anything remotely about online,” as Biyani said in an earlier media statement.
In line with his plans to capture the Indian retail market, both online and offline way, earlier Biyani also announced the launch of Retail 3.0 business model ‘Tathaastu’ which would blend technology with brick and mortar. Under this model, it plans to become Asia’s largest integrated consumer retailer by 2047 with revenue in excess of $1 Tn.
With Walmart-Flipkart deal in place, it is also a crucial time for local biggies like Future Group in the country. While the online grocery penetration is just 1% as of now, Morgan Stanley predicts it to reach 4% by 2020, touching $19 Bn in GMV, making it the most sought category after electronics and apparel. In such fast pace environment, how well Biyani’s plan to go Amazon way of subscription model achieve success in a price sensitive market like India, will be interesting to watch.