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Online shopping options for even groceries have made life so much easier. How and why did this change come about? The author speaks from personal experience.
School has just shut down the previous day for the summer vacation. It was time to climb sturdy tamarind trees, pluck guavas and hit at the bull’s eye – the mangoes, pick them up and run before getting caught by the neighbor’s gardener. All done in one breath, I rush into the kitchen with my assorted collection of tamarind, guavas and mangoes, to be cut into small pieces and dipped in a pinch salt, and ready for chunky juicy bites!
Soon my mother finishes her chores, picks up her wire baskets meant for shopping at the market fair (santhe) and drags me from my half-finished luscious treat. Firmly holding her hand, I follow her into the noisy market, filled with loud callouts for the best vegetables “available only out here and at cheapest prices”!
As I look around, my young mind is fascinated by the voluminous display of nature and the splash of colors around me. I seem to be in the midst of nature – green, orange, brown, purple hues everywhere. Above all, the aroma of Mother Earth and freshness- so pure, so untouched was truly eternal!
I sit before my laptop connected to my soulmate – The Internet.
Working hard and busy on an Excel spreadsheet, and in between catching my breath to cart my list of groceries on an online store, I place my order (I pitched the nonstick tava too) with a click, and receive a confirmation on my phone with the total amount too. Almost three hours later, the doorbell rings and I find a young, uniformed, cheerful salesman offloading my wish list at my door step. I swipe my card and am done with grocery shopping for a whole week!
Welcome dear reader to online shopping – a market at your fingertips.
From 1990 to date, it has indeed been an era of burgeoning retail hyper markets, and also the takeover (almost) of the online shopping experience. The key drivers to shopping online are:
Traditional habits of what to eat, how to and when to eat are being deviated to shift to convenience foods.
Traditional families had their first generation ladies cooking meals and snacks. Today the nuclear family believes in investing their time in a wide range of activities that yield income, and without gender bias, members invest their time in earning and other activities. Hence a balance between cooking time, leisure activities, and office hours has to be accommodated, with shopping time for groceries cut down to a minimum.
Many giant online grocery dealers like Big Basket, Amazon, Zopnow, Grofers, Nature’s Basket, Reliance Fresh, Bazaar Cart, Naturally Yours, Spencers, etc have tempting discount offers that are key drivers to fetch tradition bound customers to online shopping. The fierce competition that rages between online grocery suppliers have forced cost cutting to a large extent in order to capture consumer’s wallet, and the market share on the internet space.
Time is of the essence, and more so when one is tied up with a multitude of work and family time. The cost of running your car and burning fuel, the time spent in standing in long queues awaiting your turn to pay the bill, certainly screams to opt for online shopping. Needs are delivered at our doorstep!
Online markets are viewed as a good business opportunity with millennials rushing for the option. Tier 1 cities like Bangalore- Delhi- Chennai- Mumbai have a large millennial population. They are attuned to the net and are the tech gen. They source all their needs on the net.
An add on attraction to online shopping for groceries is the recent decision by the Govt. of India to allow for 100% FDI in the domestic trading of foods produced or manufactured in India. This attracts global retail houses to set up their infrastructure in India and also sell only Made in India products. This move combines the best of home produce and foreign technology to propel trade in E-Commerce and industry.
The traditional setup of brick and mortar cost for retail outlets is absent in online sales. The infrastructure cost is minimum, while the supply chain, transportation logistics, and the storing facilities have to be super-efficient.
Mobile apps are a favorite in drawing huge and immediate sales from customers on the go. Online grocery sales leans heavily on apps development and the internet.
The food and grocery industry in India is business worth $383 million currently, and is expected to touch $1 trillion by year 2020. This stupendous growth in the market share is attributed to the customers’ change in buying habits – from buying from grocers traditionally to online shopping.
Technopak, the retail advisory firm, opines that online grocery business survival is tough and it is attributed to the complex execution and supply chain upon which depends the success of this business. Procurement and supply logistics are tough challenges to be faced, and along with this come the problem of warehousing or storing.
Big Basket has successfully handled this problem by expanding its network in smaller cities and localizing its delivery. It has a presence in over 20 cities. It has achieved its revenue growth target by $1 billion, and is a host to 18,000 products and 1,000 brands. It has adopted the ‘Just-In-Time’ model to execute its delivery, especially in case of perishable goods. It sends its delivery boy upon receipt of the order to the vendor, to pick up and deliver the same to the customer. Progressing in business volume, Big Basket has also adopted the ‘Inventory Model’ for delivering most of its orders. The strategy consists of buying directly from suppliers like farmers, mills, HUL, P&G. Before selling them, Big Basket adds its margin to the purchased price and sells.
Grofers, the Gurgaon based grocery store for online shopping also feels that the initial boom in this business was the impetus of the Internet touching common lives. The business of Grofers escalated due to its partnering with local stores to source its supplies. The challenges faced by most online suppliers is the problem of supply logistics and not as much assigned to procurement. Founded in 2013, Grofers revenue is 6.5 billion INR and has its presence in 17 cities.
The rollout of GST has favored the online customers in that they will receive their deliveries much sooner than prior to GST implementation. The seller had to fill a separate document each for sales tax, transport way bill and so on. GST ends this extra paperwork and ensures deliveries earlier. However, with GST, the freebies, discounts, returns and cancellations are not easy.
Pepper Tap has a different story to tell. This Delhi based online vendor was fast and enthusiastic in its growth and approach. The fast growth rate was however not competitively handled. The online vendor partnered with small local stores who were not largely app based, and did not update their catalogues with brands and prices to online visibility.
The smaller partners had to be encouraged to adopt electronic billing systems and inventory management, while the larger retail houses had database that had to be plugged in at least thrice a day. Adding to these owes, customers had to be attracted with huge discounts since the prevailing customer psychology was that online shopping meant purchase at huge discounts. The promise to deliver within two hours was another commitment that was dependent on a whole load of factors such as inventory backup and efficient delivery logistics. This was amply available in tier 1 cities, but in tier 2 and tier 3 cities these factors posed a challenge. Eventually, Pepper Tap had to shut down its operations in tier 2 and 3 cities while leveraging the advantages to maintaining its market with tier 1 city customers.
The success or failure of online shopping for groceries depends largely on the customers who favor online shopping (mostly the millennials). Alongside, a bouquet of factors like a well-developed network of transportation and supply logistics, warehouse facilities and trendy brands especially in fashion foods and products who rule the customer wants, and of course apps and network development.
Give me a break dear reader – The doorbell is ringing.
I am surprised. The grocer down the road stands with her hands full of fresh coriander and mint leaves sporting a broad smile. She extends it to me saying “Madam! This bunch is farm fresh. I am now launching my new door delivery convenience. I promise to deliver your order within 10 minutes of receiving your phone call. All vegetables and fruits are farm fresh at discount price. You can also return them if you find them unfit for consumption. No problem. Fresh masala is free.” (She meant green chilies, mint, coriander and a piece of ginger).
Market on my fingertips – The choice is yours and mine dear reader, to choose the grocer online or the one down your road.
Image source: By Ask27 (Own work) [CC BY-SA 3.0], via Wikimedia Commons and Pixabay
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