The tedious commuting, long working hours, rising internet penetration and of course smartphone wave are giving space to online grocery players to serve the consumers. Time has changed and buyers are now quite comfortable ordering apparel, shoes, electronics, among others, online. With improving comfort with online payments, selling groceries online has become relatively easy.
Though the challenges of selling groceries online remain in place, however startups like Bigbasket, PepperTap, ZopNow are using combination of different business models and technology to overcome them. The buzz around online grocery space in India has reached new heights in the past few months with investors started pouring millions into this space and big corporates like Tata and Reliance and Ecommerce giants like Flipkart, Amazon & Snapdeal foraying to capture this multi billion dollar market. But the million dollar question is:
WHY biggies have started entering into online grocery space?
Despite knowing the fact that selling perishable goods online is far more difficult than selling non-perishables items. It is an entirely different ball game with low-margin and requires expensive investments to build high-end IT infrastructure, an efficient supply chain, quality warehousing and storage facilities, and an efficient delivery system, which is again varies from place to place.
Quick Facts About Indian Grocery Market
The retail market in India is expected to hit $725 Bn (about INR 43 lakh crore) by 2017. Retail consultancy Technopak estimates online grocery business to grow at a rate of 25-30 per cent y-o-y basis in major cities of India.
- India is the 6th largest grocery market in the world
- Only 5-8% of grocery stores are organized corporations. The vast majority are “mom & pop” type shops that are similar to convenience stores in the US and are referred to as “kiranas”
- The online grocery market is growing at 25-30% annually in metropolitan areas and large cities
- Margins are below 10%
- 43% of the country’s roads are not suitable for vehicles. Paired with checkpoints, and duty collection points that slow down traffic, infrastructure is an obstacle