New Delhi: Lately the grocery segment and more precisely delivering milk at everyone’s doorstep as a business opportunity has been creating a lot of interest among the likes of Future Group, Amazon and Flipkart. The latter is testing the potential at its home-turf though.
According to a leading media report, Future Group may announce its plan to start hyper-local milk-delivery in all metro cities soon. The Group plans to test water to see how this model works initially and later on may add other products including vegetables, fruits, and grocery. The report said Biyani calculated as if the model works, it will add Rs 20 lakh revenue per Future Group retail store, per month.
Also, we have seen e-commerce giant Amazon to rebrand its grocery service Amazon Now to Prime Now. Clearly, it makes sense for Amazon to capture the consumers who have evolved in ordering milk and bread online.
“Speed of delivery and convenience is of prime importance to customers especially when it is to do with grocery items. We are scaling up and investing in our infrastructure and delivery network, so that we can increase our speed of delivery and provide a superior experience to customers, including those shopping on Prime Now,” said Sameer Khetarpal, Director, Category Management (Grocery), Amazon India.
To carry forward this agenda, Amazon already launched a specialized network of 15 dedicated Fulfilment Centres (FC) for Prime Now to increase the speed of delivery and provide a better experience. These fulfillment centers are equipped with temperature-controlled zones, a first for Amazon in India to store and deliver perishable products such as fruits & vegetables (F&V), dairy products, chilled & frozen products.
Another brand, Keventers too has joined the bandwagon by expanding its product portfolio with the launch of The Milk Co which is a mobile application based premium milk delivery service across Delhi/NCR. With the addition of The Milk Co., Keventers is also aiming to produce and deliver up to 20,000 litres of milk per day by the end of this year. The Milk Co. by Keventers will be a wholly owned subsidiary of the brand and will be run and managed by the team internally. The company said, with the launch of this vertical, Keventers is keen to capture 20% of the premium milk market in Delhi/NCR and to become one of the leading players in the segment by end of this financial year.
The Keventers premium milk will currently be available only in Delhi/NCR with plans of expanding to other states as well in the coming years.
According to Keventers, once packaged, the premium milk will be delivered to consumers within a timeframe of 9 hours by an expert line of runners, maintaining purity and freshness of the product.
“The dairy industry in India is one the fastest growing segments and has been witnessing a consistent growth rate of 6-8% annually. With this new app-based milk delivery service, customers across Delhi/NCR will now have access to pure, unadulterated and nutritious premium milk right at their doorstep” said Aman Arora, Managing Director, Keventers.
As per Arora, India is a significant contributor of dairy products and the country’s per capita consumption has been witnessing a steady growth. Increased awareness about quality products, rise in disposable incomes, increasing urbanisation and changing consumer lifestyles is driving rapid expansion in the segments.
Presently Keventers has over 250+ outlets across the country in cities like Delhi NCR, Bangalore, Mumbai, Pune, Kolkata, Hyderabad, Chennai, Goa among other. The brand is on its way to opening more outlets across India as well as overseas.
Areas to look after
However, the online milk-retailers will have to bear warehouse operational cost. Specifically, labor cost of picking and packing orders where kirana shops and supermarkets don’t fall into. In supermarket or kirana stores, we consumers go and pick our preferred milk pack.
Another area to optimize resources is delivery. As per industry experts, even after optimised route planning, every delivery to a household costs is Rs. 50-60 to your e-grocer. This includes the salary of delivery boys and fuel costs.
Moreover, there is constant pressure to be competitive with supermarket and kirana store prices.
Good part is that these challenges can be sailed through. As Amazon.com has put in a practice to customize delivery by robots in several Amazon warehouses. Likewise, logistics costs go down as order density (number of orders per square kilometer) increases.
Keventers said since it has a subscription based model it is already aware of the deliveries for the next day in advance which gives it the freedom to produce and pack only the milk which is scheduled for delivery the next day.
“Although we will keep some buffer stock to counter any unforeseen incidents, damages etc. but we ensure 100% deliveries to customers. Milk being a highly perishable product if not being managed intelligently might land you in heavy inventory losses therefore our backend system has been designed to effectively counter such challenges,” added Arora.