The power is being passed from manufacturers to consumers. And the ease with which they can now compare and buy on a single device in a matter of minutes is democratising brands.
The Indian e-commerce business is going through its moments of reckoning.
The one thing I saw happening while opening the early brick and mortar stores of Foodworld and Reliance Value format, and which I see again with the online business is the incredible feeling of liberation and expression of choice that the customer are displaying to "self-help" shopping, as against the over-the-counter channel of kiranas.
The power is being passed from manufacturers to consumers. And the ease with which they can now compare and buy on a single device in a matter of minutes is democratising brands.
So, what drives online grocery business?
Need: In an Indian household, grocery is not only the largest spend but it also is important for its well-being. It embellishes the housewives' reputation as a competent home maker for the food on the table, as well as from the ingenious frugality exercised to save. It also appears every week for replenishment. Whether she loves it or not, she can't ignore grocery.
Footprint: Foodworld, More, Subhiksha, Nilgiris, Reliance and others opened hundreds of stores in the southern cities to usher in modern trade, but there are less than half of them still open today. Whilst her desire for better shopping experience has gone up, for the housewife the footprint of the number of neighbourhood stores has gone down. Driving her back to the kirana stores which can no more provide her the range, quality, and price she has come to expect.
Better things to do: Roads have become more crowded, time to shop is more than in the past, and there is desire to spend time doing more enjoyable things. In any case the in-store experience of bric and mortar is not enticing enough to keep her from going online.
Going online solves a problem for sure. "Get all I need at my door step, at my time, save money, while I spend time doing things I cherish," is the mantra for the new-age shopper.
Online grocery is a category business and not an IT project. IT is its backbone. The team that runs the business must be grocery experts. Handling grocery is not homogeneous across perishables, branded and unbranded food, and non-food; each is a vertical of skillsets in sourcing, pricing, promotions and supply chain. Grocery is a heterogeneous offering of product to the customer with challenges of varying temperatures from frozen to ambient, perishability and fragility. Clearly ,category and supply chain competence of the team is a key differentiator.
Where to from here?
Over the past two years grocery online has seen high surfboarding and deep trough trawling. How should investors look at this segment? I would say two basic things – First, what will make the customer happy? And does the company meet those requirements? These are five factors - right assortment, savings, and quality, over 98% fulfillment of order and on-time delivery. There is no need to double-guess the consumer further.
Second, is the model asset light with profitable unit economics, to give good returns on investment over three years?
Grocery can be, for all these reasons, the heir apparent of the online space. It requires the competence and passion of an experienced team and the belief and support of the early investor.
The writer is co-founder of www.grocermax.com, an online grocery retailer
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