Living without vegetables just can’t be imagined and India is the 6th largest grocery market. Industry reports suggest, food and grocery segment constitutes about 70 per cent of the $470 billion retail market in India. The share of organized market is just around 5-8 percent and the remaining part is dominated by small sized mom and pop stores.
However, the trend is changing rapidly, as more and more organized players are entering in this segment. And, now with recent e-commerce buzz along with growing number of internet friendly shoppers the number of e-grocers is also increasing quite rapidly. Speaking with Indian Retailer, Rashi Choudhary, COO and Co-founder LocaBanya.com, said, “We expect a large percentage of people to change their shopping habits and as that happens this market is set to grow in leaps and bounds.” Presently, Localbanya covers over 600 deliveries a day. It has generated user base in excess of 40,000 and list around 14,000 products for sale with an average bill size of 1400 Rs. .
It is proving be a boon for time-pressed office goers. Owing to these factors companies like Aaramshop, Farm2kitchen, Mygrahak, Callandorder, Freshdaily, Shopveg, Localbanya, Bigbasket are cashing big by operating in this niche category of e-commerce.
However, most of them are catering only local markets following infrastructure and cold chain constraints. But, Aaramshop has its offerings on pan India level. This Delhi based e-tailer currently operates in 30 Indian cities with more than 3,000 partner retailers, and offer product delivery on 24 x 7 bases. Most of the e-grocers offer same or next day delivery, while some of them do delivery between 10 AM to 7 PM on regular week days.
"The spending on grocery and daily essentials is the largest and most consistent share of the wallet for any household. However, it is still out of the ambit of online shopping and, therefore, represents a huge opportunity,"says Vijay Singh, Chief Executive and Managing Director of AaramShop.com.
Rush from VCs
Internationally, e-grocery is already a successful model. Though, in India it is in nascent stage, but it is growing category. So; the core segment is catching the eyes of venture capital firms for acquiring the stake in the e-grocers.
Recently, localbanya has received undisclosed amount of fund from Springboard Ventures (part of BCCL). Karmvir Avant Group which has resulted in creating a very strong value proposition has enhanced its offerings. The company is using the received fund in the infrastructure enhancement and better supply chain management.
Yet another e-tailer BigBasket, has secured Series B funding of around $3 million( 30 lacks) from a Singapore based private investor. “We believe it has huge potential, with gross margins of nearly 20 per cent. Every order is profitable for us on BigBasket,” K Ganesh, Co-founder, BigBasket, said.
Catching the eyes of International players
After its high profile exit from Bharti Retail, world’s largest grocery retailer Walmart is planning to venture into e-commerce business. Apart from 20 cash-and-carry stores, Walmart plans to launch its B2B e-commerce platform across all its centres over the coming months. As media reports have indicated, MartJack, a multi-channel commerce platform provider, is already helping Walmart India power its online store for registered buyers in Lucknow and Hyderabad.
In addition, Online and telephone business listings service JustDial had also introduced grocery shopping as part of its search plus services last December. HomeShop18 had introduced a food and groceries category last July, which focuses on packaged non-perishable food products.
Clearly, selling groceries and other house hold items online has opened new avenues for generating revenue for retailers. All it requires an effective inventory management and smooth logistic management.