Questions. When was the last time you needed grocery supplies at two hours’ notice? What was it you really wanted to order and what did you do about it?
- Popped in at the neighbourhood kirana store and got it
- Called the local store to deliver it
- Looked for an online app which would deliver at a short notice
Chances of it being ‘a’ or ‘b’ are high. If it is ‘c’, you are among a handful of consumers in urban India living in a locality which is well-ringed by multi-brand outlets and serviced by concierge apps and the on-demand players. As for what you could have possibly needed at such notice, the majority would have fallen into the basket of chips, beverages, packaged edibles—staples to satisfy cravings or entertain unexpected guests.
These do not an online grocery delivery business make. “These are products ordered typically two to four times a month,” says Anant Goel, founder of grocery delivery service Milkbasket in Gurugram. If you didn’t notice, Milkbasket is a funny name. That’s because the company started with the idea of delivering milk to a user’s doorstep every morning, before 7 AM. This was back in 2015. Soon after, the company added grocery items.
Delivering grocery to your doorstep at a price where a business can make money is tough business. Simply put, the last four years have seen a wave of businesses high on venture capital money, hoping to steal you away from your nearest kirana store. They’ve thrown everything at the pursuit. Money. Strategy. Marketing. Celebrities. Discounts. Promises of a smile at your doorstep. Companies like Grofers, bigbasket, Peppertap (dead), LocalBanya (dead), ZopNow, Milkbasket, and of course, the deepest pocket of them all, Amazon.
It will be fair to say that when Amazon enters a business, you expect some fireworks, the semblance of a workable business, but in just under a year, Amazon is nowhere close to solving for grocery. And we mean Amazon Now.
Grocery accounts for Rs 120-130 crore of business for Amazon every month, as compared to Rs 150-160 crore per month done by bigbasket according to Shubham Anand, head of retail, consumer products and goods at RedSeer Consulting. However, the contribution of Amazon Now, which is a separate grocery delivery app, is a fraction of the total number for the segment. The online market for grocery is growing 60% year-on-year and is set to touch $1 billion (Rs 6468 crore) by the end of 2017, according to an industry report by RedSeer consulting.
With Alibaba throwing its weight behind bigbasket, and Flipkart attempting an inventory model-based second coming, the online grocery segment will continue to be a potential area of growth. “Close to 65% of purchases are made in the food and grocery segment and it cannot be taken lightly by any of the players,” says Anand, adding that no single player can be said to have cracked the model for the online market.