The E-commerce Boost: Remodeling of Organic Food Business

The organic food industry started to boom a decade ago and there has been no looking back ever since then. Rising consciousness amongst people about the side effects of artificial chemicals in food production has further boosted the growth of organic food in recent years. Given the kind of innovation coupled with this rising demand, the organic food industry is yet to witness a full-fledged evolution. But one can safely assume that the organic food sector is here to stay.

Effect of Pandemic

The ongoing pandemic has raised awareness of the importance of nutraceuticals and organic herbs to improve immunity and build better health. People around the world are harping about the medicinal value of herbs like Turmeric and Ashwagandha. During the global lockdown, the only way people could buy these products was through ordering them online. This has given an additional boost to organic foods in the e-commerce sector. This phenomenon has led to a new way of living. An organic, natural, and healthy lifestyle are the new normal.

As far as the e-commerce sector is concerned, the Indian e-commerce market has been one of the biggest beneficiaries of the pandemic, as containment measures introduced millions to the convenience of online shopping, and prompted seasoned online shoppers to buy more.

Government Initiative

The Government of India is recognizing the growing demand for organic products in the pandemic and according to the Indian Organic Market Report 2020, the GoI has recognized the scope of organic farming and within the next 5 years plans to increase the area of organic farming by 100 percent i.e. making it 4 percent of total agricultural land in the country. This substantial growth has opened avenues for many new startups to boom in the industry. Simultaneously, it has provided small and medium players in the organic food industry with an opportunity to tap into a wider section of the audience by selling on e-commerce platforms.

E-commerce is the Right Choice

Selling on e-commerce seems to be a perfect choice because the Indian e-commerce companies are deepening their impact across most sectors from agriculture to health with the right intervention of innovative technologies to bring in much-needed democratization and efficiencies. According to a news report, India's e-commerce is expected to reach 99 billion dollars by 2024, growing at a 27 percent CAGR over 2019-24 with grocery and fashion/apparel likely to be the key drivers of incremental growth. 

Players like Amazon, Flipkart, Big Basket, and Grofers have revolutionized grocery shopping in India. A report on the India Online Grocery Market estimated the growth of the e-grocery market from US$ 2.9 billion in 2020 to US$ 4.3 billion in 2021. This presents a gateway of opportunity for small and medium players to go online. 

Another lucrative benefit of selling organic food online is the reach of these e-commerce platforms. The segment seems to be dominated by value-first buyers and the majority of these buyers belong to Tier II and III cities in India. These platforms are widely used by convenience first customers as well and the strong logistics only add to their USP. Therefore, the penetration of these platforms cannot be challenged or compared with any offline store. 

These platforms experienced a temporary glitch with tightening of the supply chain and distribution network during the lockdown, but as most of the organic food categories are labeled as essential goods, the hit was not as hard. 

The Way Ahead

Organic food companies must take advantage of the growing demand for their category on e-commerce platforms and strategize their growth plans keeping the trend in focus. Another challenge that these companies must combat is the never-ending price war. As the popular e-commerce platforms generate maximum sales from the value-first customer, it is important to note that price plays a major role in customer buying decisions. It is only wise to suggest that new-age marketing strategies are the only way to convince the smart online customer to choose you over your competition.