There was frantic activity in Flipkart’s Bengaluru office on 25 March, the first day of India’s originally 21-day nationwide lockdown to stymie the spread of Covid-19. All employees were scrambling to bolster the grocery operations of India’s biggest homegrown e-commerce retailer. While all other units—like smartphones, fashion, furniture—had to be shut down, its grocery business, Supermart, qualified as an “essential service” that could continue to operate. 

The scene was not too dissimilar at rival Amazon, which has its own grocery units, Amazon Fresh and Amazon Pantry. Or even at pure e-grocers like Bigbasket and Grofers. 

As the lockdown progressed, orders surged 2-3X across the board, according to executives at all four companies, as Indians started stocking up on essentials. Everything, from perishables like milk and vegetables to non-perishables like flour and oil, was flying off the e-shelves. At Flipkart, for instance, about 60% of its inventory was booked in two days, said an executive at its grocery unit, requesting anonymity since they are not permitted to speak to the media. 

Grocery has been a notoriously difficult segment to scale online for two major reasons. First, its margins are among the lowest—about 2-4% compared with 15-30% in categories like smartphones. Secondly, the supply chain has to work like a well-oiled machine given the perishable nature of items like fruits and vegetables, which are ordered more frequently. This surge in demand is likely to last for two-to-three months, several executives from Bigbasket, Grofers, Flipkart, and Amazon said. More so, since India extended its lockdown by 19 days to 3 May. 

However, the companies have been unable to capitalise on this surge in demand. The supply chain simply was not geared to scale up fast enough to match the orders pouring in. “Our infrastructure is built to handle 10-15% increase in demand,” a senior executive at Bigbasket said. “This is way higher and has broken the chain. It is hard for us to expand the market and grow.” 

Hard, but not an opportunity to be passed up. Especially since customers are coming on board of their own accord, bringing marketing costs down to zero. The companies are now investing in a host of measures to bolster their supply chain across the board. From sending their own pick-up trucks to suppliers to ensure inventory, to scrambling for licences to store groceries in existing non-grocery warehouses, to tying up with cab companies like Ola and Uber for home deliveries. 

Flipkart has been ramping up on-ground support and hiring in response to a “significant spike in demand”, a spokesperson said. Bigbasket co-founder Abhinay Choudhari said his company doesn’t have a supply chain problem, but a manpower issue. He added that Bigbasket’s recent bridge round of $50 million is to increase scale. Amazon and Grofers did not respond to questions emailed by The Ken


Abinaya Vijayaraghavan

Abinaya is a Bengaluru-based writer, covering the sprawling and exciting world of Indian e-commerce. When she is not trying to understand alpha sellers and complex supply chains, she enjoys travelling and playing badminton. Abinaya was previously a reporter at Reuters.

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