The parameters of online shopping have expanded to groceries over the last five years. And the response people have shown gives Indian ecommerce yet another victory. It seems like the street hawkers, vegetable and fruit sellers that once defined Indian bazaars could one day become extinct. But we are far away from that reality at the moment.

 Online Grocery Stores in India

Out of the country’s total retail market share, the grocery segment makes up 60%. What does this mean? People shop more for groceries! It makes perfect sense because groceries are a daily necessity. So online sellers have a ready market available, all they need to do is tap into it. And that’s exactly what a couple online grocers did:

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According to Technopak in 2014, online grocery was growing at 20-30%. And by the end of the year, the Internet and Mobile Association of India reported a 40% growth in the online food delivery market. The fact that grocery goods do not always need to be tried or felt before buying makes this category of online business so amazing. The biggest advantage is people do not need to exit their homes to buy groceries with online shopping services. They can also place an order for their groceries at 12 a.m. or whenever they are free. Picking up groceries is more convenient this way. Only you don’t have to do the (physical) picking!

Online Grocery Shopping – Business Model

HyperLocal Delivery Players – do not investment in inventory. These online grocery stores only provide front end services and logistics management to supply chains and independent grocers. For which they charge a commission or fee.

Pure-play Online Grocery Retailers – These guys have warehouses and distribution centers just outside major cities. They also own vehicles to deliver on demand.

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The Progress

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People are getting better at using the internet. As a result everything ecommerce is taking off the way it is. Including mcommerce in grocery shopping

In January last year PepperTap received only 50 orders each day. Come October and the online grocery store was rolling in 12,000 to 15,000 orders a day. They managed to increase their numbers by building their network of local grocers. Now they have 140 retailers in their resources.

During an interview in 2013, Farm2Kitchen’s Seema Dholi said their sales weren’t encouraging in the begining. But the quality of their products and services got people excited and talking about them. And their consumers became their brand ambassadors. By late 2014, they started catering to more than 250 cities across the country.

BigBasket is a favorite among the public and we are hearing more about it every day now that Bollywood superstar Shah Rukh Khan is their brand ambassador. But before bringing out the big guns, the online grocery store tried to secure its delivery dominance. About, 20-30% of grocery shopping needs are urgent. So being able to provide express delivery within an hour can encourage more people to buy. ZopNow and LocalBanya were trying to speed up delivery too by September last year. This year, BigBasket set up operations in Kolkata in an attempt to expand its ecommerce empire. And, existing online grocery store from Godrej, Nature’s Basket, took over Ekstop in 2015.

The Challenges

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Online grocery stores have a different set of complexities in comparison to e-stores that sell non-perishable items. Despite the progress made so far, these challenges cannot be ignored.

– Preserving quality and freshness

Food items like fresh fruit, vegetables and dairy products spoil easily if not stored under the right conditions or if kept for too long. This is an issue for those who follow the pure-play business model. As they maintain inventory.

– Lack of product differentiation

You cannot really differentiate potatoes, tomatoes, apples and pears. There are certain specialized categories of food in which it may be possible (like organic produce, gourmet food and special beverages). But that’s it. If you sell regular groceries, you will need to differentiate yourself with your services and product quality.

– High distribution cost

When grocery shopping people don’t buy large quantities. They prefer purchasing small portions. Again, because of perishability. This means the cost of distributing tiny quantities will be more.

Marketplaces Selling Groceries

Grocery shopping is time consuming and hectic. Most offline stores do not have sufficient parking. This makes going to the store tedious. Yet, presently India ranks sixth in the world, for its large sized grocery market. That is mainly because Groceries are not a onetime purchase. The need for them keeps arising. The main online grocery shoppers comprise of the working crowd, women in particular. Online grocery shopping has shown enough potential to entice online retail giants like Amazon, Snapdeal and Flipkart. And since it is this same working crowd that relies on online marketplaces for their big purchases, they can benefit from buying groceries from there as well.

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Askme.com recently got into the game by acquiring the grocery store Bestalowest.com in 2015.

Conclusion

Despite the nation’s grocery market size and its online potential, only 1% of groceries are bought online. It tells us e-grocery stores have not attained their potential. We are just in the initial stage waiting for a push that leads to success.

To learn more about the ways of ecommerce or try your hand at it, get in touch with an ecommerce specialist at Browntape. We are India’s leading ecommerce experts and we are ready to help you take your online retail business to the next level.

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