by Sumaa Tekur
Online grocery shopping is poised to shake up the traditional brick-and-mortar retail market in India, bringing much-needed convenience to time-stressed urban Indian consumers. The online grocery market is already crowded with startups like BigBasket, ZopNow, Local Banya and AaramShop, but these delivery platforms operate only in select Indian cities and have not yet gained mass traction. Enter India’s e-commerce biggies, Flipkart and Amazon.
In the last week of March 2015, Amazon announced its foray into grocery delivery with a Bangalore pilot project called Kirana Now, in which Amazon is partnering with kiranas (mom-and-pop stores) to offer express delivery of groceries (TimesOfIndia.IndiaTimes.com, 26 March 2015). A week later, Flipkart, India’s largest e-commerce site, announced that it would sell groceries online from the second half of 2015 (IndianRetailer.com, 8 April 2015).
The Indian consumer’s relationship with e-commerce started with low-risk purchases (like books) that didn’t require a see-and-feel experience. They were also considered acceptable online buys for Indians, a majority of whom don’t like using credit cards and instead used the cash-on-delivery option to ensure that the ordered product reached them before they paid for it. Online retailers gained consumer confidence by offering prompt service and multiple payment options, including consumer-favorite cash-on-delivery. The wide choice in online stores, competitive pricing, free exchanges and returns, flexible payment options, and reliable delivery have all contributed to consumers’ growing preference for online shopping.
Now, retailers are set to transform even the humdrum experience of grocery shopping into a pleasant, hassle-free one. Groceries account for 60%-70% of India’s traditional brick-and-mortar retail in India, which is worth $2.3 billion (Forbes.com, 23 September 2014), and business advisory firm Technopak reports that India’s online grocery market is growing by 25% to 30% annually (FoodNavigator-asia.com, 2 October 2014). This category is ripe for success among stressed-out urban consumers who are sick of dealing with potholed roads, heavy traffic and pollution, and a lack of parking space at brick-and-mortar stores.
But while these consumers might accept online shopping as a practical alternative, they also demand innovation. Smaller online grocery retailers have paved the way, and now larger brands must follow. For example, Big Basket saves on shopping bags: The delivery person brings the groceries in a red basket and leaves them on the kitchen counter for the consumer to store as they like. And ZopNow.com promises three-hour delivery free of cost, regardless of the size of the order. In contrast, Flipkart uses elaborate packing, with layers of cardboard and plastic for even relatively small products like books or headphones, and it charges for next-day delivery (along the lines of the Amazon Prime quick delivery service).
Indians make frequent (almost daily) veggie purchases, primarily to ensure freshness. And since freshness is non-negotiable, the kiranas, with their fresh goods, win over large supermarkets. Along with offering fresh fruits and veggies, e-tailers also need to consider the quantity that a household needs. Household size is decreasing in urban India — the average is 4.8 persons per household in 2011, down from 5.3 in 2001, according to the decennial Indian national census (Cmie.com, 23 June 2014) — but there are a large number of one- and two-person households as well (nationally, there are 10.1 million single-person households) (IndiaTimes.com, 15 June 2014).
Single-person households would likely prefer to buy 250 g of carrots, not 1 kg (often the only option available while online shopping). Smaller-size households with young adult singles or couples are also the most likely to shop online by virtue of being tech savvy and seeking convenient solutions for household chores. For large-size families, grocery shopping is still a weekend outing that’s combined with other weekend chores; not so for single working professionals who prefer to keep the weekend to meet friends and indulge in social activities.
Despite how quickly online grocers are refining their business model to better suit the new and demanding Indian consumer, all formats of grocery business — kiranas, supermarkets, discount stores and hypermarkets — are coexisting, at least for now. Meena Ganesh, co-promoter of BigBasket.com and online jewelry store BlueStone.com was a panelist in the retail discussion at the Times Literary Festival 2015 in Bangalore on 1 February. How much did the most expensive jewellery bought on BlueStone.com cost, the session moderator asked Meena. Without batting an eyelid, she responded: “A diamond ring for Rs 20 lakh ($32,000).”
Whether it’s onions for Rs 20 (30 cents) a kg or a diamond ring for Rs 20 lakh, one thing is for certain: A growing number of consumers are ready to click to buy.