Thought paper

Online Grocery in India

Prepared by: Ambili CK, MBA

Background of paper
As part of my MBA studies I thought I would do a study on the online grocery stores present in India. Surprisingly I found that there are at least three grocery portals from Coimbatore and one of them BigShopIn was doing very well. The portal of BigShopIn looks very professional and user friendly

www.bigshopin.com
www.bigshopin.com is an e-commerce portal that was launched in Coimbatore. This is maintained by Corporate Concepts a sister concern of the 30 year old trading company Travelon. Although it is a general portal the initial focus of the site has been on the online grocery sale The site has a tie up with the well known Pothys Supermarket for the delivery of the grocery products.

The front page has an option of going into the lifestyle or grocery sections

The home page of grocery section is clutter free and looks sophisticated unlike many other portals which are very gaudy

To do shopping you have to select your location. The company has plans to go pan national and this works on the pin code areas.

Products can be selected based on categories. The portal has a very good range of products

You can select your specific brands also.

There is a separate section for offers.

Other Portals

Findings & Interpretations

Grocery: Online Business Models

BigBasket.com

AaramShop.com

BigShopIn.com

TownEss.com Zopnow.com ChennaiOnlineGrocery.com Discounts & fastest home delivery

MyGrahak.com Family Supermarket with discounts

Unique Online shopping Selling Supermarket-like from your favourite Range of products & Proposition breadth of products kirana brands Bangalore, Hyderabad, Mumbai currently. Geographic 12 planned by end Spread 2013 30 cities currently Fruits & vegetable, staples, FMCG products, meats & fish

High quality produce

Best prices, best products

Coimbatore currently

Bangalore currently

South & east bangalore currently

Chennai City

Delhi - NCR region

Categories

Product range dependent on kirana store chosen for Staples, FMCG ordering Products No central inventory. Orders fulfilled by Kirana stores Mostly third party

Fruits & vegetables, Staples, Staples, FMCG FMCG Products products

Staples, FMCG Products

Staples, FMCG products. Mostly self- own brick & mortar store

Inventory

Mixed of self & third party

Mixed of self and third party Mostly self

Mixed of self and third party

Deliveries

Done by Pothys. Same day delivery for orders Orders Orders delivered Done by kirana before 12 Noon, or next delivered same same day or next. stores directly, often day. Rs.50 charge for day or next day Rs.20 charge for for no extra charge delivery below at two slots. orders below and on the same Rs.750/out of area Rs.20 charged Rs.1000 day limits. for each order Expects to become profitable in 2013. $10 million in VC Close to break even funding self funded Self funded

Orders delivered same day or next day. Rs.30 for delivery below Orders delivered within 24 Rs.500 hours and no extra charge.

Free home delivery(only in Delhi-NCR) within 48 hours

Profitability

Self funded

Self funded

Funded by ChennaiStore, a sister concern

Self funded

Points to ponder
Launched in 2001, Sangam Direct for Hindustan Unilever was sold off in 2007 to Mumbai-based Wadhavan Retail which ran a chain of stores under the Spinach brand. Sangam turned out to be the kiss of death for Wadhavan too, because in 2010 it shuttered all its Spinach stores. For all its size and clout even big chains like Walmart have not been able to run online groceries with similar kind of success as their brick and mortar business Among online grocery shops still running successfully the oldest was started in December 2011.

Source: http://forbesindia.com/article/work-inprogress/groceries-online-will-it-click/33064/2

Points to ponder
Currently BigBasket stocks most provisions (which it cleans and packages under its own brand) while most fruits and vegetables are sourced twice daily from wholesale mandis or Safal, and FMCGs from Metro Cash & Carry.

Where the cookie crumbles is the cost of logistics. The margins in this category are so low that you literally run out of money the moment youve travelled 5 kilometres to deliver an order.
Customers also expect 24-hour delivery. That entails maintaining own warehouses, significant inventory, and delivery vehicles and staff. A centralised Amazon or Flipkart-style warehouse using third-party couriers is out of the question. Add perishables like fruits, vegetables or meats into the equation and the supply chain costs and risks increase exponentially. Finally, the scale of FMCG distribution and the high service levels of the neighbourhood kirana (who will often home-deliver even one or two items at no extra charge) set impossibly high benchmarks to beat.

Instead of charging a commission from either its customers or the kirana stores, Aaramshop charges FMCG brands for running promotions and marketing campaigns on its website. They believe FMCG companies dont have the last mile connect with their customers in spite of being the largest ad spenders in the country. Aaramshop is the platform that he sells to them as the solution. Which is why they were able to break even in less than a year.

Thank You