Strategy Uday 1

8/15/2019 Strategy Uday 1

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INTRODUCTION

E-grocer is an online platform for ordering groceries online with online

payment and cash-on-delivery options. There might also be a delivery charge on the

service, subject to the volume of purchase. The delivery type is personal delivery

with very fast and ecient same day or early next day delivery. Customers areincreasingly becoming comfortable with online buying which now includes groceries.

or the sellers also it is becoming relatively easy due to easy online payment

options and improving delivery services. !nd if one understands the online retail

mar"et through consumer buying behavior patterns one can build a great business.

Grocery e-tailing is challenging, but it also has the advantage of high percentage of repeat

orders. All you need to do is impress a customer with the first order. Once a customer is

satisfied, you can have one more regular in your clientele.

The world has changed radically for online grocery startups in #ndia in the past

few years. Three to four years ago the bu$$ was around grocery sites shutting

down. %ow, the survivors and new entrants are thriving.

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. Timehas 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 &igbas"et, 'epperTap, (op%ow 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 millionsinto this space and big corporates like Tata and Reliance and commerce giants like

!lipkart, "mazon # $napdeal foraying to capture this multi billion dollar market. %ut the

million dollar question is&

WHY biggies have started entering into online grocery space?

http://inc42.com/tag/bigbaskethttp://inc42.com/tag/peppertaphttp://inc42.com/tag/zopnowhttp://inc42.com/tag/peppertaphttp://inc42.com/tag/zopnowhttp://inc42.com/tag/bigbasket


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'espite 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 e)pensive 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.

Qic! "acts #bot Indian $rocery %ar!et

The retail market in India is e)pected to hit *+- %n about I/R 01 lakh crore2 by 34+.

Retail consultancy Technopak estimates online grocery business to grow at a rate of &'(

)* per cent y(o(y basis in +a,or cities o- India.

• #ndia is the /th largest grocery mar"et in the world• )nly '(01 o- grocery stores are organi2ed corporations.

The vast majority are *mom + pop type shops that are similar to

convenience stores in the and are referred to as *"iranas

• The online grocery mar"et is growing at &'()*1 annally in

+etropolitan areas and large cities

• %argins are belo3 4*1

• /01 of the country2s roads are not suitable for vehicles. 'aired

with chec"points, and duty collection points that slow down trac,

infrastructure is an obstacle


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$ro3th Drivers

In developed countries like :$, driving9walking to the grocery store, park, shop for

yourself, load up your car, and drive home, it is very doable. ;owever, India= of all grocery

stores in the country are organized corporations or entities. In terms of demand, growing

younger population, rising internet penetration, increasing disposable income, quality

products and customer driven mechanism are some of growth factors. "nd in terms of

supply, multiple channel distribution, fle)ible delivery options, presence of ma5or players,

convenience and multiple mode of payments like ?redit ?ards, 'ebit ?ards, /et

%anking, @obile 7ayments are important growth factors.

Players in online grocery business and their strategies:

The top 3ve online grocery startups in #ndia have raised over 4567 million just

this year. our years ago, a number of startups had come up in this sector but

most shut down pretty soon mostly due to lac" of investment and customer

base.


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*)ut of about /7 beginners, we are among the very few who survived, says

8ari 9enon, Co-founder of &igbas"et, which was founded in 6755.

%ow &ig&as"et, along with other survivors (op%ow and :ocalbanya, and the new

"ids on the bloc" li"e ;rofers, 'epperTap, and e are changing the way people shop for grocery, says 9u"esh ingh, Co-

founder and CE) of (op%ow. The startup was founded in 6755 and had an

inventory model. (op%ow changed this model earlier this year and now partners

with hypermar"ets to source products and is targeting over 4?7 million in

revenue this 3scal. *The increased consumer traction has helped attract

investment in this category which further accelerates the process.

http://yourstory.com/2014/08/zopnow-omni-channel/http://yourstory.com/2014/08/zopnow-omni-channel/


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The -ood and grocery indstry in India is no3 3orth 6)0) billion and is

e7pected to toch 64 trillion by &*&*8 according to a stdy by advisory

9r+ Technopa!. This is the +ar!et these startps are targeting.

@espite the large mar"et si$e, experts li"e !rvind inghal, Chairman of retailadvisory 3rm Technopa", say the growth these startups have registered has

been surprising. This is because grocery is a tough segment to crac" online even

globally. 'oor execution had led many an e-grocer in the A>ebvan,

8ome;rocer and 'ublix@irect=to ban"ruptcy in the last decade.

*This is a complex, execution-oriented businessB understanding the execution

and supply chain ma"es the real dierence, says 8ari of &igbas"et, the only

major player that still maintains inventory. The company, the largest in this

segment, operates in seven cities and is targeting 4 5 billion revenue by end ofD 675.

:ast-mile logistics and procurement are the two areas that complicate

operations in this segment and each startup is tac"ling these challenges

dierently.

&engaluru-based &ig&as"et is expanding its warehouse networ" and going to

smaller towns. (op%ow2s new model has seen them partner with hypermar"ets

li"e 9ore and 8yperCity. &engaluru-based (op%ow and its customers have real-time visibility of this inventory. (op%ow handles the pic"-up and delivery.

The new companies have opted for a hyperlocal model. ;rofers, which has

raised 4/F million in funding just this year, started out as a provider of on-

demand delivery services to local stores. :ate last year, the company launched

its mobile app through which consumers can place their grocery orders.

The initial stages were tough as the e-grocers needed to educate and convince

merchants of the advantages of coming on an online platform. 8iring and

training the wor"force=71 of which is delivery boys=was challenging too.

#nventory-model vs hyperlocal-model

http://yourstory.com/2015/09/bigbasket-growth-story/http://yourstory.com/2015/04/grofers-raises-35-million-round/http://yourstory.com/2015/04/grofers-raises-35-million-round/http://yourstory.com/2015/09/bigbasket-growth-story/http://yourstory.com/2015/04/grofers-raises-35-million-round/http://yourstory.com/2015/04/grofers-raises-35-million-round/


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Chandigarh-based


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pro3t. 9erely being a logistics 3rm does not help you beyond a point. #ntegration

of bac"end services is very important.

:ocalbanya2s Iaran 9ehrotra believes that hyperlocal is one part of the

ecosystem. *Dou must build the product that best 3ts the mar"et. 9ost recently,we started oering grocery shopping plans via subscriptions which have been

well received by our customers, says Iaran.

&iggies enter the fray

Competition has increased for the online grocery-focused startups with biggies

li"e )la, lip"art, and !ma$on entering the space. 8owever, the category-

focused players seem unfa$ed. e have tested and optimised our service in the last three years. imply

entering a mar"et with brand and resources is not a factor for long-term

success, says Iaran of :ocalbanya.

:ogistics in grocery is a dierent beast. *Their Je-commerce biggies2K logistics

and supply chain won2t help here. Their orders come to the warehouse, they

plan and go. &ut groceries should be delivered immediately, says aurabh of

;rofers.

http://yourstory.com/2015/03/localbanya-raises-funding-shrem-strategies/http://yourstory.com/2015/03/localbanya-raises-funding-shrem-strategies/


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Who Is :hopping $rocery Online

The online grocery delivery market in India has some very unique demographic statistics

A

• >omen ages 07-0F are the largest adopters of online grocery

shopping

• 551 of orders are done in 57pm A midnight slot.


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• #nstitutional clients ma"e up 6L1 of orders for select major

retailers

The report suggests that that women(influenced sales will be 1-= of Indian ecommerce

by 34B. The rise of women in ecommerce has been attributed largely to convenience, as

well as increased privacy and safety. The middle class is also e)panding in India and

these consumers will subsequently find that grocery shopping via the internet is a high

value(add service.

Challenges "or Ne3 ;layers In Online $roceries

%ar!et• !lteration in &usiness 9odel or @ierent Cities

• Competition from :ocal tores

• @icult for %ew 'layers to !ttract #nvestments

• :ac" of Trust in )nline 9ode of hopping

• Existing 'layers in the City

C!resh is an entirely different category from standard ecommerce $D:s since it is

perishable, sourcing is not standardizedE there is also a lot of local and seasonal

variability. @aintaining consistent quality is a huge challenge. "ny company in this space

has to build its own brand of staples and other items. "gain this requires deep sourcing

e)pertise on where and how to source the best products at a competitive price The

company


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;ositive :ide O- Online $rocery ;lat-or+s

Frequent Buyers A 6rocery etailing has the advantage of high percentage of repeat

orders. "ll you need to do is impress a customer with the first order. Gnce a customer is

satisfied, you can have one more regular in your clientele.

Limited Area To Focus On A 6iven the nature of the business, online grocers are in a

different league from other eretailers. @ost online grocery e(stores cater to a specific city

or certain areas due to the logistic limitations.

Advantage Over Giant Online retailers A 7erishable products are also a challenge for

online retailers. Hegetables, dairy and meat products cannot be stored for long. $o many

etailers stick to packaged food items, giving room to grocery platform to perform.

You an !tart "it# Bare $inimum ost A The cost of owning a domain and hosting

an online store is negligible when compared with the investment in its physical

infrastructure.

Gffline 6rocery market&

Grganized vs. :norganized $ector& !uture of retail sector in India is swerving( on one side

organized retail is marching into life of urban consumers, while on the other our own

neighborhood 6rocery stores< are resisting fiercely with their e)isting strong foothold. India

today is at the crossroads with regard to the retail sector. " shift between organized and

unorganized retail sector is evident, which has led to a number of speculations on the fate of

Indian retail. :norganized sector cannot ignore. In any newspaper or television channel, we find

hordes of news about happening in organized retail sectors, which is indeed fairly real situation.

While the role of organized retail sector in growth of economy cannot be denied, but one thing is

also of e)treme importance that unorganized retail format is a support to a large chunk of

population( providing direct employment to 1J,-33,333 individuals. $o there is no way that

government or anyone can discount these foundation stone of Indian economy.

Can an oMine retailer build any source of competitive advantageN


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Yes8 by +a!ing -ollo3ing strategies=(

9a"e Customers >ant to &uy )Mine

or retailers, this has implications not just for the expertise you need in problem solving, but

also for the products you stoc" and how they are displayed.

?

?

CONC>U:ION

The research shows that increase in purchasing power, ease of shopping,

Ouality delivery, convenience and growing internet penetration is fuelling the e-

grocer mar"et. Customers loo" for deals with $ero delivery charge but they don2t

mind paying delivery charges of up to #%G F7. :abor and logistics costs are much

cheaper in #ndia than in western mar"ets, so e-grocers here can ma"e money faster.

Gight now, it2s a growing mar"et and there is place for everyone. &ut in time we will

see a sha"eout and mergers and acOuisitions.

“Labor and logistics costs are much cheaper in India

than in western markets, so e-grocers here can make

money faster.”

Re-erence=

http=yorstory.co+&*4'*@online(grocery(ta!es(oA

http=333.bsinesstoday.in+oneytodays+art(spendingonline(grocery(

shopping(vegetables(ne3(trend(in([email protected]+l

httpPQQinc/6.comQbu$$Qreali$ing-the-huge-opportunity-in-online-grocery-spaceQ

httpPQQwww.iamwire.comQ675FQ55Qgrocery-startups-ecosystem-india-challenges-

threats-competitionQ56R67L
http://yourstory.com/2015/09/online-grocery-takes-off/http://inc42.com/buzz/realizing-the-huge-opportunity-in-online-grocery-space/http://www.iamwire.com/2015/11/grocery-startups-ecosystem-india-challenges-threats-competition/126209http://www.iamwire.com/2015/11/grocery-startups-ecosystem-india-challenges-threats-competition/126209http://yourstory.com/2015/09/online-grocery-takes-off/http://inc42.com/buzz/realizing-the-huge-opportunity-in-online-grocery-space/http://www.iamwire.com/2015/11/grocery-startups-ecosystem-india-challenges-threats-competition/126209http://www.iamwire.com/2015/11/grocery-startups-ecosystem-india-challenges-threats-competition/126209

Strategy Uday 1

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