Here is what a retail consultant told me a year ago: “The next war of e-commerce will be fought over food and groceries.” His words have proved prophetic. With China’s Alibaba investing $146 million in BigBasket, Amazon committing $500 million to food retail, and, most recently, US giant Walmart’s $16 billion Flipkart buy, the online grocery war is no secret.

In the shadow of these big-ticket moves though, a dark horse is stirring. Over the last 18 months, the RK Damani-promoted Avenue Supermarts has been discreetly experimenting with the e-retail space. Focussed primarily on food and grocery, the company looks set to be the latest addition to an increasingly crowded online grocery sector. That this has been relatively under the radar is a feat in itself—the company, which operates the D-Mart supermarket chain, is the largest Indian retailer by market capitalisation. Its roughly Rs 90,000 crore ($13.2 billion) market cap is more than triple that of its closest rival, Future Retail.

While D-Mart was incorporated all the way back in 2000, the Mumbai-based company has been the toast of the town ever since its stock exchange debut in March 2017. In a trading debut not seen in years, Avenue Supermarts opened at Rs 604.40 ($8.89) on the Bombay Stock Exchange, more than double its offer price of Rs 299 ($4.40). Since then, it has grown, with its shares more than quadrupling in value. This meteoric success lies in the innovative business model of its D-Mart chain. Unlike rivals who offer promotional discounts, D-Mart uses an “everyday low cost, everyday low price” strategy. It retails goods at lower prices consistently, much like what Walmart does globally. D-Mart keeps its prices low by minimising its operating costs. For instance, D-Mart owns the real estate for the majority of its stores, procures goods directly from vendors and manufacturers, and minimises inventory build-up.

D-Mart ventured into e-commerce in December 2016 with a separate arm called Avenue E-commerce Limited under the brand D-Mart Ready. Now, the company wants to scale D-Mart Ready. Obviously, it is not alone. There are other offline food and grocery retailers like Future Group, Reliance Retail and Spencer’s Retail who are also taking a stab at e-commerce.

While various players may be vying for a slice of the online grocery pie, the segment is perhaps the riskiest in the e-commerce business. With every single venture in the online food and grocery business losing money, what are D-Mart’s chances? Will it, like many others before it, fall short?

Groceries: A game of convenience

First, some industry updates. In the same timespan that D-Mart Ready has been in existence, Grofers, the online grocery delivery platform, powered by SoftBank, has had to change its business model entirely. It would be futile to put a number to the experiments or pivots.


Harveen Ahluwalia

In her last assignment, Harveen was at Mint, the business daily published by HT Media. At Mint, where she spent about two years, she wrote stories on retail, food and the media business. Harveen is a B.Com (H) graduate from Shri Ram College of Commerce, University of Delhi. She has a diploma in journalism from the Times School of Journalism. Like many folks at The Ken, Harveen talks and tweets a lot. When she isn’t writing or reading, she likes to sketch and doodle. She can be reached at harveen at the-ken dot com.

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