Bhaaji on the web
Some 70 e-grocery stores have been launched over the last year. No surprise then that urban middle class Indians are shopping online for groceries. Kavitha Shanmugam checks out the action
- Published 8.03.15
The fresh spinach leaves are carefully weighed and neatly wrapped in a laser perforated Italian plastic cover. There's a plastic pack resembling an egg case for the kiwi fruit and another for the grapes. The packages are lined up on a shelf in a glass panelled room in a warehouse in Perungudi industrial estate, south of Chennai.
Business seems to be brisk on a weekday morning. Predictably so. Customers have been demanding the freshest of vegetables and fruits in orders placed from their computers and smartphones. The 15,000-sqft warehouse, with epoxy flooring and insulated sheeted roofing, has been rented by a new online grocery start-up, ibuyfresh.com.
Urban middle class Indians are buying their groceries online. Some 70 e-grocery stores have popped up in the country over the last year, according to an e-commerce tracking company. The Delhi National Capital Region leads the pack with the most number of start-ups (38 per cent), followed by Bangalore (24 per cent), Mumbai and Hyderabad (10 per cent each).
Chennai alone has 30 such online stores. Among them is ibuyfresh.com, which opened last October and delivers 600 orders a day. The orders are largely for fresh vegetables and fruits, because the online store is backed by an established local grocery chain.
"Our unique advantage is our solid background in the grocery business for many years as we directly source our products from farms," maintains Venkatesan Krishnan, co-founder and CMO, ibuyfresh.com. It plans to scale up operations to 1,200 orders a day shortly and start operations in three other cities by year-end.
The grocery market in the country is huge. The online grocery market is said to be growing by 300-400 per cent a year and by 2018 is expected to touch Rs 60,000 crore in value terms.
That explains why so many companies have jumped on the e-grocery bandwagon. Among them are localbanya.com, zopnow.com, peppertap.com, Godrej's naturebasket.com, aaramshop.com, ekstop, farm2kitchen, maligakadai.com and isupermarket.in.
The market leader is the Bangalore-based BigBasket.com, which started operations in 2011. Making 8,000 deliveries a day, valued at above Rs 1,500 for each delivery, it has attracted funding to the tune of $60 million so far. "The 20-25 per cent profit margins we make are bigger than in electronics and consumer durables," says co-founder Vipul Parekh.
The e-retail giants are stepping in, too. Snapdeal recently entered the business by listing gourmet products from Godrej's Nature's Basket. "Customers seek diversified food products not easily distributed in India," points out Amit Maheshwari, vice-president, fashion, snapdeal.com.
These companies function in different ways. Some use warehouses to store goods at a central spot, from where these are delivered. Others have tied up with local supermarket chains to deliver goods to the supermarket's customers listed on their website, or just act like a delivery service for kirana stores. The third lot comprises small e-grocery firms which deliver products directly from the farm to your doorstep.
Delivery is free only if you order products worth more than a specified floor (Rs 250- Rs 1,000 and above).
The grocery buyer's focus is on quick delivery to ensure freshness - so most e-grocery units do not dangle fancy discount deals. In some cases, their items are more expensive than those at the neighbourhood kirana (grocer) or the local supermarket.
"Our obvious challenge lies in delivering perishable items fresh," says IIM graduate Parekh. BigBasket.com operates from five cities and stores 12,000 different items in its warehouses. It refreshes its stocks every 10 days and a "quality team" monitors incoming goods.
The Mumbai-based localbanya.com has a warehouse in Kurla and can take up to 900 orders a day. "Since we are involved all the way from procurement to delivery, having a warehouse works well," says Karan Mehrotra, co-founder and CEO, localbanya.com. "It allows us to control the flow of products and enables efficient picking/packing for our orders."
But not everybody thinks warehouses help. Mukesh Singh, founder CEO, Zopnow.com, a Bangalore company launched in 2012, dropped the warehouse system after two-and-a-half years and tied up with a local supermarket chain, Hypercity.
"Our model merges offline and online buying," Singh says. "We have a counter in stores and offer to deliver goods to customers who walk in. If they visit our website first, we tell them of a 50 per cent discount deal in the offline store. That way we win their trust, and get into a win-win situation with our offline partner. "
Navneet Singh, co-founder, Peppertap.com, finds warehouses "inefficient" because they require "huge capital" and involve "wastage of perishable items". Instead, peppertap.com works as a "hyper-local grocery delivery service" by tying up with 15 stores in Gurgaon, Delhi and Noida. It delivers around 200 orders a day.
Online grocery companies function in yet another manner too - focusing on delivery services, points out Siddharth Verma, analyst, tracxn.com, a Bangalore-based company which tracks e-commerce firms. He cites the example of Grofers and jiffstore which just provide logistics services to existing grocery stores.
"These firms optimise routes and deliver on time," Verma says.
The other segment, which is relatively nascent in India, is the farm to home/restaurant service, he points out. These firms deliver products directly from farmers to online clients.
Some companies focus on exotic fare not available in local markets. Snapdeal.com's tie-up with the upscale Nature's Basket, which started its online store two years ago, seeks to meet this demand.
"The response has been overwhelming and we are growing by 250 per cent a year," holds Mohit Khattar, managing director, Nature's Basket. The company also provides foreign cheeses, bakery products, ice creams, desserts and fresh made-to-order party snacks, and promises same day delivery in the five cities it operates in.
Delivering on time is the key to their survival. Realising this, zopnow.com has invested in technology to find the best route for delivery and in software to make it easier for customers to source their products based on past purchases on the site.
Several sites have adopted innovative schemes. BigBasket.com has set up a bakery to offer fresh bread. When it enters Chennai this month, it will be selling coffee that is ground only after an order is placed. Nature's Basket helps clients to plan a party and suggests recipes, while zopnow.com offers green recycled bags and magnetic bottle openers as giveaways.
For someone like Dr Arati Rao, a Bangalore obstetrician-gynaecologist, the online grocery system is just what she needs. Tired of fighting for parking slots outside supermarkets after a hard day's work, she finds online shopping so much more convenient.
"I have been ordering online for the past one year. It is such a boon," she says.
Still, Aman Khanna, associate director, transaction services, Ernst & Young, believes that the penetration of e-grocery business within the overall or organised retailing is unlikely to reach a very high figure. "Even in the US, e-grocery is 3-10 per cent of total grocery retail; in the UK, it's 5 per cent." Only a minority, he argues, would rate convenience higher than the "cultural touch-feel" pleasure that offline shoppers experience.
Indeed, Dr Rao too adds that despite the hassles, she loves to shop offline when she can. After all, touching and feeling an eggplant, and then choosing just the right one, adds to the taste of the baingan bharta.