As Indian cities are getting increasingly digitised and mobile penetration increases, e-shopping is picking up steam across the urban-rural divide. One other arm of e-retailing is grocery. And it is looking like a good prospect.
As per an Economic Times report quoting data from Euromonitor International, India’s was the fifth biggest online retailing market at $135 million. Quite obviously, China tops the list, followed by Japan and South Korea.
In India, apart from the traditional Kirana stores, the e-tailing sector consists of players like BigBasket and Grofers. But now it may well soon see one of the relatively newer players, Amazon, step up its game big time.
There are reports that the company has received a huge cash injection into its transportation service arm. There are also reports that the company may be in talks with India’s biggest e-grocer, BigBasket.
The e-commerce giant is expanding fast. In the US, it has already ventured into the offline sector with opening physical shops and acquiring grocery chain Whole Foods.
It is also expanding its grocery arm, Amazon Pantry, in India. The company had sought a licence for food retailing from the government. The process is expected to be expedited now that Foreign Investment and Promotion Board (FIPB) has been disbanded. The sector is expected to see even more competition. So what is the market really like?
Unlike other countries, the Indian grocery scenario is an unique one. Unlike other countries, the local grocerywala remains a formidable competition to the e-tailers.
Unlike the mom-and-pop stores, they have changed the game by offering services by the e-tailers, with a personalised touch. One of the biggest factors when it comes to fruits and vegetables is freshness, and that is one area where local stores score a big hit over online retailers.
Secondly, the focus of e-tailers remains largely the urban areas. There is a sizeable customer base in the tier-2 and 3 cities which remain untapped due to various reasons.
One of the factors is delivery charges. While the companies offer free delivery at certain rates, what if the customers’ purchase is below that amount? Will he be ready to pay delivery charges or go for commodities available at the local kiranawala?
Then again, there is also the problem of inventory. The e-tailer may run out of stock on some items.
In this case, the customer may go over to another platform or opt for his local store.
All these and more challenges face the players. It will be interesting how the market shapes up in the coming months.