Online Grocery in India

Thought paper

Online Grocery in India

Prepared by: Ambili CK, MBA

Background of paper

• As part of my MBA studies I thought I would

do a study on the online grocery stores

present in India.

• Surprisingly I found that there are at least • Surprisingly I found that there are at least

three grocery portals from Coimbatore and

one of them BigShopIn was doing very well.

• The portal of BigShopIn looks very

professional and user friendly

www.bigshopin.com

• www.bigshopin.com is an e-commerce portal that was launched in Coimbatore.

• This is maintained by Corporate Concepts a sister concern of the 30 year old trading company Travelon.Travelon.

• Although it is a general portal the initial focus of the site has been on the online grocery sale

• The site has a tie up with the well known Pothy’sSupermarket for the delivery of the grocery products.

The front page has an option of going into the lifestyle or

grocery sections

The home page of grocery section is clutter free and

looks sophisticated – unlike many other portals which

are very gaudy

To do shopping you have to select your location. The

company has plans to go pan national and this works on

the pin code areas.

Products can be selected based on categories. The portal

has a very good range of products

You can select your specific brands also.

There is a separate section for offers.

Other Portals

Findings & InterpretationsFindings & Interpretations

Grocery: Online Business Models

BigBasket.com AaramShop.com BigShopIn.com TownEss.com Zopnow.com ChennaiOnlineGrocery.com MyGrahak.com

Unique Selling Proposition

Supermarket-like breadth of products

Online shopping from your favourite kirana

Range of products & brands

High quality produce

Discounts & fastest home delivery Best prices, best products

Family Supermarket with discounts

Geographic Spread

Bangalore, Hyderabad, Mumbai currently. 12 planned by end 2013 30 cities currently Coimbatore currently

Bangalore currently

South & east bangalore currently Chennai City Delhi - NCR region

Categories

Fruits & vegetable, staples, FMCG products, meats & fish

Product range dependent on kirana store chosen for ordering

Staples, FMCG Products

Fruits & vegetables, Staples, FMCG Products

Staples, FMCG products Staples, FMCG Products

Staples, FMCG products. Categories fish ordering Products Products products Staples, FMCG Products products.

Inventory Mixed of self & third party

No central inventory. Orders fulfilled by Kirana stores Mostly third party

Mixed of self and third party Mostly self Mixed of self and third party

Mostly self- own brick & mortar store

Deliveries

Orders delivered same day or next. Rs.20 charge for orders below Rs.1000

Done by kirana stores directly, often for no extra charge and on the same day

Done by Pothys. Same day delivery for orders before 12 Noon, or next day. Rs.50 charge for delivery below Rs.750/out of area limits.

Orders delivered same day or next day at two slots. Rs.20 charged for each order

Orders delivered same day or next day. Rs.30 for delivery below Rs.500

Orders delivered within 24 hours and no extra charge.

Free home delivery(only in Delhi-NCR) within 48 hours

Profitability

Expects to become profitable in 2013. $10 million in VC funding

Close to break even self funded Self funded Self funded Self funded

Funded by ChennaiStore, a sister concern Self funded

Points to ponder

• Launched in 2001, Sangam Direct for Hindustan Unilever was sold off in 2007 to Mumbai-based Wadhavan Retail which ran a chain of stores under the Spinach brand.

• Sangam turned out to be the kiss of death for Wadhavan too, because in 2010 it shuttered all its Spinach stores.

• For all its size and clout even big chains • For all its size and clout even big chains like Walmart have not been able to run online groceries with similar kind of success as their brick and mortar business

• Among online grocery shops still running successfully the oldest was started in December 2011.

• Currently BigBasket stocks most provisions (which it cleans and packages under its own brand) while most fruits and vegetables are sourced twice daily from wholesale mandis or Safal, and FMCGs from Metro Cash & Carry.

• Where the cookie crumbles is the cost of logistics. The margins in this category are so low that you literally run out of money the moment you’ve travelled 5 kilometres to deliver an order.

• Customers also expect 24-hour delivery. That entails maintaining own warehouses, significant inventory, and delivery vehicles and staff. A centralised Amazon or Flipkart-style warehouse using third-party couriers is out of the question. Add

Points to ponder

Flipkart-style warehouse using third-party couriers is out of the question. Add perishables like fruits, vegetables or meats into the equation and the supply chain costs and risks increase exponentially.

• Finally, the scale of FMCG distribution and the high service levels of the neighbourhood kirana (who will often home-deliver even one or two items at no extra charge) set impossibly high benchmarks to beat.

• Instead of charging a commission from either its customers or the kirana stores, Aaramshop charges FMCG brands for running promotions and marketing campaigns on its website. They believe FMCG companies don’t have the last mile connect with their customers in spite of being the largest ad spenders in the country. Aaramshop is the platform that he sells to them as the solution. Which is why they were able to break even in less than a year.

Thank YouThank You