Grocery Shopping Is Now Just A Click Away

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Published On June 25, 2014, by .

Amazon warehouse - Milton Keynes

Amazon's replenishment center in the USA. Amazon generated $ 34 billion in revenue in the year 2012, a figure greater than the GDP of half the countries in the world combined. Photo Credits: npr.org

Gone are the days when we would find it difficult to buy products with good quality, dependability and more importantly one that suited our needs. Today, with the convenience of just a click of a button we can order anything our imagination desires. Almost everything can be purchased online today. From stationery to electronics to apparels to travel tickets to your favorite fiction novel. The whole world is buying online through various online shopping portals such as eBay, Amazon, Walmart and Alibaba and many more. In India as well, one can see a radical shift in the number of orders being placed online through the various e-commerce portals in the last decade. As of 2013, India is the 10th largest e-shopping market in the world!

India and the Internet

It’s only recently that the arrival of Broadband and 3G services have made shopping on the internet more convenient and reliable. Better smartphone technologies are helping to evolve this industry thus encouraging consumers to shop while on the move. Today, India has an internet-user base of around 240 million people and the figure rises by 28-30% each year. Around 7.6 million Indians visit these shopping portals each day to look for products and offers. Source: The Hindu Business Line, Assocham

Online vs Offline

In the $490-billion India retailing business, organized brick and mortar retail and online shopping account for less than 10%, about $35-40 billion of the total market combined. Consultancy firm Technopak estimates organized retail — both online and offline — will be a little over $200 billion within the next decade. In an expanding market, there is sufficient scope for both online and offline models to grow. Snapdeal is one of India’s largest online marketplaces. It is funded by eBay, Temasek, Black-Rock, PremjiInvest and other venture funds and has over 30,000 sellers on its platform today, a number that the company predicts will cross the 1,00,000 mark soon. Kunal Bahl, Snapdeal’s co-founder believes that online retail will over-take organized offline retail by the year 2015. Organized offline retail has not yet expanded beyond the top 10 cities in India. It is in these Tier 2 cities that Online retailers see a great scope of finding business. While online retail occupies only a small part of the retail market yet, its success and rapid growth have definitely made traditional retailers rethink their model. Source: ET Article on e-Commerce

Ease of Shopping

Online shopping is different from traditional shopping as the customer doesn’t approach the retailer when he wishes to make a purchase, rather he visits the retailer’s website. Online shopping is a lot more convenient for consumers who may not find the time to visit a shopping mart or mall to make their purchases on a regular basis. Purchases can be made effortlessly while sitting at home or while on the way to work. People over the years have grown to prefer online shopping, widely because of ease in the process. No more moaning because you forgot to buy groceries while on your way home from work. Just order it online! It’s that convenient.

ecommerce workflow

The e-Commerce Supply Cycle. Photo Credit: blog.ctnews.com

Of the total e-commerce transactions in India, a small but rapidly growing part is the online grocery shopping business. Online grocery shopping consists of a supply network of food products from the point of production to the customer who makes an order on an online purchasing portal maintained by the retailer. Online retail has its own set of advantages and facilities that are unique to it. Online portals offer discounts, combo-saver-options, credit coupons and discount vouchers among a wide range of value added services to attract customers. Facilities like Cash-On-Delivery find great use in the Indian market where a majority of the customers either do not have credit cards, or they fear using credit cards for shopping online. While other newly introduced options like Same-Day-Delivery make it easier for customers who want to receive their order in a short period of time. Retailers are also adding features on their websites that allow for people to view website pages in Hindi, Telugu, Tamil or other Indian languages, which  make it easier for a wide variety of shoppers to explore online shopping.

nielsen-online-grocery-shoppingIn the Nielsen Global survey, a whopping 77% of the consumers from the Asia Pacific region said that they would use online grocery shopping portals. Densely populated cities, heavy traffic, in-convenient travelling and the lack of good supply of products are the reasons given for the same. India is firmly poised to grow in this sector due to its large population size and dense city environments as pointed out in this report.

BigBasket.com, LocalBanya.com, NaturesBasket.co.in, Retailopia.com, EkStop.com and IndiaPlaza.com and a plethora of others are some of the grocery retail websites that have emerged in the last few years. All of these companies are well known for offering professional service and delivery of quality groceries. Customer response to these websites has been fairly positive thus far. AaramShop reports that “Cash on Delivery” and “Same day delivery” are the two options that 80% of the customers choose while ordering. While most of the orders are given between 12pm and 4pm, atta, dal, rice, edible oils, tea and coffee are the top categories that sell. These websites are concentrating on metro cities for now, with AaramShop delivering to all areas in Delhi while another portal, LocalBanya.com is finding increasingly better business in Mumbai and its suburbs. The range of services offered by these e-retail websites coupled with building trust of quality service is facilitating the shift of consumers from offline to online.

e-commerce city

Top Online Grocery Retailers In India. Photo Credit: Business Standard

Maintaining the Cold Chain is one of the biggest challenges that online retailers have to face. A majority of the items that are sold include perishables such as fruits and vegetables, dairy products, seafood, frozen eatables and frozen vegetables. These products need continuous refrigeration throughout the supply chain. Refrigerated warehousing and transportation costs are higher on a firm that is in its early stages. While maintaining warehouses is extremely capital intensive, it is difficult to sustain higher sales without suitable marketing and promotional campaigns.

Regardless of all the problems that online retailers face, it is true that the potential market for online groceries is large. As much as Rs. 400-500 crore per month is spent on grocery sales in Indian metros. Of which Rs. 150 crores is spent at modern retail stores annually(Source:  Business Today: Virtual Grocer). This is the prospective market for the online grocery retailers. It is the premium stores and local well established shops that these portals have to compete against. Customers that shop at major chains like Reliance Fresh, Adani marts and Food Bazaar need to be persuaded and told of the ease and convenience that online grocery shopping has to offer. New companies are always forced to choose between the development of their supply chains and the usage of better promotion and marketing mediums.

Maintaining the Cold Chain is one of the biggest challenges that online retailers have to face. A majority of the items that are sold include perishables such as fruits and vegetables, dairy products, seafood, frozen eatables and frozen vegetables. These products need continuous refrigeration throughout the supply chain. Refrigerated warehousing and transportation costs are higher on a firm that is in its early stages. While maintaining warehouses is extremely capital intensive, it is difficult to sustain higher sales without suitable marketing and promotional campaigns.

The online grocery space is still under-penetrated and lacks portals that serve on a pan-India level. Warehousing, supply chain, inventory management, portal maintenance and marketing costs are some of the factors that existing players will have to constantly monitor and invest in. Considering fresh investments in this industry it is imperative that these problems will soon be resolved. Many of these firms now have enough capital to overcome just about any hurdle.

grocery-shopping-online-21

Picture Credits: blog.slice.com

Being new brands, the online retailers will have to ensure that they offer hassle free, safe deliveries coupled with excellent customer care services, because the customer is not seeking to purchase groceries on the internet, as much as he’s seeking ‘Convenience’.

It won’t be long before India will see the online grocery business taking up a bigger share in the country’s grocery sales. Online retailers are expected to expand and offer services to an even greater number of cities. With India’s internet user base of a quarter of a billion people, online retail is sure to find bigger growth and success. Although the existing grocery-websites have only just begun operations one can only expect the range of services improving from here on.

References: Aaramshop SOGS Report 2012Business Standard

ColdStar delivers customized solutions for Refrigerated storage&Transportation across INDIA & is the fastest growing INTEGRATED Cold Chain logistics SPECIALISTS

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