Witnessing modern-day transition with eminent and visible giants differentiating themselves in terms of convenience as an adjunct to earning, are now taking a step ahead to subsume online retailers. For the next stage of evolution, money flowing into these pockets are making India the fast-growing retailer business bubbling with energy.
The grocery delivery might help these organizations get back on the delivery system that was previously in practice.
Introduction To Expansion
We have brands with eye-popping valuation counting their income in multiples of billions today. The online pantry is evolving to potential departmental store chains, which now precipitate to redefine the sectors. Although it may seem like a logical step, online retailers are gaining market share more than the market area.
The mind share has crossed all hurdles to take the lead in the retail industry. The channelization of convenience and pricing has already seeped into the minds of those practicing purchase which technology.
With digital advancement, a splendid move by online retailers to spread their wings and bring in a world without brick-and-mortar is much affected. Amazon, one of the leading distributors of the pantry and currently and the largest essential service provider has already set up its offline store in New York.
Another giant in-time retail has a lead of a 25% stake in Alibaba for expansion. The traditional retail market will soon get under the online retail giants. Investments here and there are setting up classic examples that market value can bring in drastic changes if only the current point of pressure is triggered.
With an investment of 629 million dollars, InTime had agreed to a merger with Alibaba. later, with a further purchase of a share in the company, Alibaba delisted IntIme from the Hong Kong stock market for 2.6 billion dollars, making InTime a leader in the brick and mortar operators.
Alibaba’s online marketplace Ti Mall is now offering customers the opportunity to shop Intimes online retail market, a domestic retail market leader. In-time has 36 department stores, and while you select your product within Alibaba’s online marketplace you can physically pick the purchase at any of these stores.
Following the list of online market retailers Flipkart and its fashion site Myntra are now booming with sale. Although the current situation has brought a pause, however, the acquisition of small brands with distinct presence and small offline retail footprint is of interest to the giants. Although no such acquisition can now be taking place.
Webrooming
All retail giants are flooded with turnovers. The concept of webrooming is in practice today. We have the commonest idea to research products before buying in the physical store. So before showrooming, we are webrooming to keep our prices upheld while we purchase. When we see a product in the store, we compare the prices available online.
The current fund ratio stands equal for Amazon, Flipkart, and Alibaba comparing the physical growth which Tata Group retail divisions Trent, Landmark Titan, and Croma had together boomed the revenue to 17000 crores. On the other hand, Future Retail revenue had reached a graph of 11336 crores only in the year 2014. The valuations decide the market price of a product.
The traditional brick and mortar model cannot be applied to the Indian market and online retail stores readily going offline cannot operate in the same brand model. The offline experience about concept and brand introductions along with the distribution strategy needs to be well monitored. These observations are laid by the leading giants themselves.
Acquisitions to turn into customer engagement tools require a physical store to be reformatted. Today experience is of value.
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The Elevated Demand
The concept of the online and offline brand is contradicted with the FDI laws so when a company is manufacturing and selling its online product offline, the offline brand is already established. Given the current situation, the biggest online market, Grofers, and BigBasket has doubled the number of daily deliveries. Consumers now hit online stores to buy essentials. Despite partly operating warehouses, since the 25th of March, these grocers maintained delivery although with some delay.
The demand and supply curve has hit a critical point. The operating capacity of these grocers reduced, thereby increasing teething troubles. The delivery timings depend upon the area you are purchasing in and also the quantity of product. The current COVID-19 virus outbreak has increased the delivery time with an extended number of 10 days or more.
Statistics show that only in Bangalore, BigBasket receives a total number of 2,30,000 orders a day, compared to the previous orders of 1,00,000 to 1,20,000. Grofers was previously servicing 1,00,000 deliveries a day, which has now boomed to a whopping number of 1,90,000 daily orders.
Amazon and Flipkart are masking into the horizontal marketplace of online grocery. Flipkart, a Walmart owned brand, has skilled up delivery of groceries to nearly 400 cities, compared to a total of 5 cities previously. The increasing number of groceries from 125 odd warehouses has been approved by the food safety and standards authority of India (FSSAI) through provisional approvals.
Even after having a head start over Flipkart, Amazon had paused orders for its pantry services across 100 cities. This lead to a tremendous backlash. However, when it’s Amazon, we know the situation is bound to improve. Today 85 cities are being taken care of by Amazon pantry, the 2-hour delivery service has beat grofers and a big basket by a large number. Each of the cities previously serviced had 2000 orders a day.
Outbreak & Breakout
If COVID-19 is treated as an outbreak, the daily essentials category is treated as a Breakout. It’s not the current situation that we are talking here, but over the one last year or so the essentials section has seen a flurry of activity. This action comes to both ways, players and investors. The daily essentials category accounts for the largest chunk of the online grocery market.
When surveyed among the sectors of consumers purchasing essential items frequently, dairy products have been rated the most consumed ones. Online retailing has been through its ups and downs. The rapid growth has given cases worth records. Verticals continue to grow with the help of subscription plans, express delivery systems, and assortments.
If you want to know how monetizing convenience can bring new customers, I bet online grocery is your only choice. A large amount of subscription programs has driven a huge consumer base. From Grofers premium plans to Big Basket and Amazon pantry, the ability of these platforms to drive subscription in less than 15 months is worth a study.
Previously meat from online sources was not entertained, and now players of this delivery space have spread across multiple zones. Marketers around the world include Zappfresh, Licious – one of two of the most prominent players setting goals while staying at the forefront. This has led to consumer behavior changes. The availability of fresh meat, fast delivery with discounts, has now left the offline stores to study more.
Brand Competition
With competition getting fierce in retail domain, investment competition is heading up with greater pace.
Uber and Grofers have common investor Softbank. On the other hand, Zomato and BigBasket are invested by Alibaba. To buyout BigBasket Alibaba needs to play a crucial role. Reports have suggested that Zomato is currently strategizing plans with Grofers for a possible acquisition of the market.
It is going through a hyper-competitive and low margin grocery delivery segment and set an acquisition might alter the dynamics. For the last 2 months, Zomato has been in talks with Grofers for its acquisition, which will also depend on partnership strategies.
Zomato had help online delivery of groceries and recently in the light of making the current in amidst the coronavirus pandemic. It is in talks with both BigBasket and Grofers to help the customer reach out to the best products. Because of the lack of delivery personnel, restaurants are mostly shutting down temporarily.
All these brands are shuffling the exploratory stage. These brands have not yet forecasted the budget. A handful of Sectors and a graph going upward includes the grocery section. Amazon pantry, Flipkart Supermarket, BigBasket, Grofers are all having a huge upsurge. Order from groceries apart from Zomato, and Swiggy, Dunzo is about to partake alongside these players and is trying to get engaged in the grocery play for quite some time now.
Dunzo among the high volume marketing segment, trying to cope up with innovation, experimentation, and concepts to survive the onslaught. Most of the success plans revolve around subscription and lucrative deals, a customer benefits upon making bulk purchases. Bengaluru based BigBasket and Gurugram based Grofers have been competing for quite some time now.
The overall e-commerce of the country is affected by up to 1%. Only with grofers and BigBasket playing all by themselves, the compounded annual growth rate of 52% between 2018 and 2022, will, however, change market predictions. Flipkart supermarket and Amazon pantry are pulling out all buffers to convert the hurdles into challenges and challenges into a win-win situation.
The previous concept of grocery being a low margin business is now what full of frequent transactions. Because of an increased purchase in the essential section, it has driven a large customer base and now e-commerce revolves around staples more than fancies.
With the super backup from Walmart, Flipkart is gulping business in Bangalore and slowly paced over the average 300 orders per day, to over 50,000 orders now.
How Competing Are These Strategies?
To begin with, Flipkart Supermarket has set up a warehouse network to complete last-mile delivery logistics. It has also come up with the idea of open boxes where customers will be given the option to return the product on the spot if it has reached them by mistake, or the product has some sort of discrepancy.
The grocery spread of Flipkart is across 1,50,000 square feet in Bengaluru. Total units keeping Flipkart Supermarket stocks include a whopping number of 10,000 units. Flipkart Supermarket operating in India is expanding still. Whereas Amazon has reached peaks of success in the US market already.
The grocery section of Amazon has been in business since 2015. Aggressive marketing began once Amazon rebranded the prime option. Amazon pantry venture initially had a commitment of 500 million dollars for the approval of brick and mortar stores in India. This action led to BigBasket and Grofers to foresee challenges and speak better.
The two companies are now using the funding raised from Alibaba and Softbank to carve out their niche marketing. Shopclues.com, Snapdeal.com, Paytm Mall, and other E-Commerce estate firms such as No-broker and Meesho has also diversified into the grocery space.
If you have noticed Zomato and Swiggy are also delivering grocery items from nearby malls within 2 hours. While Swiggy was the first one to include a grocery segment Zomato, tied up with Grofers to launch its services. With a limited dent in the market, the hyperlocal grocery business is growing aggressively.
The segment leader in terms of online grocery, BigBasket has a 35% market share. The company is now focused on inorganic growth to keep its position. With three consecutive acquisition of Morning Cart, RainCan, and Kwik24 for milk delivery and smart vending machine respectively.
It is capturing the delivery section for micro-sized orders as well. BigBasket is all set to leave its presence in the offline space with offline kiosks. A new application called BB Instant is conducting the pilot program for BigBasket.
The two-hour service of BigBasket is being carried by BB Express. BB Express is carrying its occupation where orders are placed at BigBasket and have developed a functional presence. BB Express carries the intime delivery of 2 hours.
On the other hand, Grofers has focused on a high margin plan. Instead of private business, the company is now marketing detergents, tools, tomato ketchup, cornflakes. It has tied hands with private brands such as HaveMore, SaveMore, G Happy Day, etcetera. With an increase in the number of daily orders, the average cart size of Grofers is nothing less than 1100 rupees.
Despite the power struggle Amazon and Flipkart have not lost sight of customers’ needs. It is not a cakewalk for these brands to carry business in a challenging situation with low margins predictable. They are on a clear dedicated focus point offering quality alongside treating assets.
Grocery business looks forward to quality and in time delivery. Any brand focusing on these two aspects rise high above the brands already struggling for power with the greatest marketing team and strategy players present in the organization, these players are aware of the challenges.
Their deep pockets help them adjust the issues whilst preserving technology assets. Several failures have been the stepping stone and other brands failing have given them their winning plans. For example, 2015 and 2016 witnessed the closure of LocalBanya and Peppertap respectively, after inconsistent delivery of the product along with poor quality.
The Bottom Line
All these giants are fighting themselves and for the sake of their assets. Their investors have put clauses that bind them along with the company’s internal decision making. For example, Tiger Global and Softbank have strong terms added in contracts and call upon when required. This gives the investors priority in the decision making process.
They keep their positions from being eroded in case scenarios of industry downturn hits during a crisis. We look upon a bigger consolidation in the food and grocery segment given the economy is having its ups and downs. Although the ups are more to set the economy on a bigger graph.
With multiple startups shutting down, for example, Zopnow, Tiny Owl, EatFresh, India has somehow recovered the backlash. This marked the beginning of another era in which technology and innovation will better-set standards and help people of all the sectors equivalent.
Micro delivery systems are all set to be the next adopting strategy for this phase of expansion. BigBasket will soon be seen fending off Amazon India and Flipkart with their strategic planning. The billion-dollar valued grocery space is gearing up hard. Online business spells comfort. However, comfort brings demands to meet and supplies to cater to.
Time is constantly evolving. Man is more career-driven than eve. Apart from the essentials, we have a smartphone, internet speed, and savings account added to an idle mind daily workshop. The chance of saving money and saving time acts as the icing on the cake.
These days online grocers are aiming at the fresh produce and less middleman involvement. This will help enhance concepts of the hyper-local market and ensure vendors and farmers have ongoing sales with a steady income.
Great article…very relevant in the current scenario.
Thank you. I hope to keep you updated with such articles. Appreciate your feedback.