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You are here: Home / Uncategorized / Amid high demand, e-grocers delay and cancel orders as more consumers shop online

Amid high demand, e-grocers delay and cancel orders as more consumers shop online

March 20, 2020 by cbn Leave a Comment

Illustration: Rahul Awasthi
Illustration: Rahul Awasthi

Unable to handle the sudden surge in demand, India’s two largest grocery players, BigBasket and Grofers, have started delaying orders by days and in some cases cancelling those, while also selectively shutting down certain delivery pin codes.

On Friday, raging consumers took to microblogging site Twitter to complain as more people opted to shop online for essentials and food items.

“We’d like to inform you that, due to a sudden surge in orders, our concerned operations teams are trying their best to fulfil as many orders as possible; seeking your extended support in the time of crisis,” BigBasket’s Twitter handle responded to a customer.

Grocery delivery companies are seeing as much as a fivefold increase in order volumes as many large format stores remain shut and people choose to stay indoors due to the Covid-19 outbreak.

Read: Consumer goods flying off the shelves

Swiggy’s micro delivery service, Supr Daily, as well as rival Milkbasket are facing fulfilment challenges in certain localities. In a message to its customers on Friday, Supr Daily nudged them to order early as demand was high. Swiggy also has a grocery delivery arm – Swiggy Stores.

BigBasket is taking at least three days to fulfil deliveries while Grofers is on average executing orders in four days.

“While moving fast is a priority, the bigger issue is to ensure that we don’t keep a large set of people in a warehouse and follow all safety standards for on-ground staff as well as the delivery workforce. This may also increase timelines for delivery, or lead to cancellations,” said a top executive at an online grocery delivery firm, who did not want to be named.

The average order value for e-grocers has racked up by 20-25%, executives at these companies said.

“The next two weeks will see some panic and bulk buying, especially as cities announce lockdowns,” said Pinakiranjan Mishra, partner and leader, consumer products and retail, EY.

On Thursday, both Grofers and BigBasket faced brief outages amid panic buying.

The disruption in the online grocery supply chain, or e-grocery players, comes at a time when the government is looking at such platforms to step up and service the needs of consumers. The Ministry of Consumer Affairs on Friday directed state government and local authorities to exempt e-commerce services — warehousing, vendors, suppliers and on-ground delivery staff — from any imposition of Section-144.

This came after ecommerce warehouses in Maharashtra were being forced to shut down when the state imposed restrictions on the running of businesses. Grofers has to temporarily stop its operations in Pune after warehouses were shuttered, but is now getting back to normal.

“We are prioritising essentials such as staples and groceries and other high-demand products … Promotions for essential commodities are being discontinued,” Grofers cofounder and CEO Albinder Dhindsa said.

Grofers has witnessed a 93% increase in the sale of floor cleaners, followed by personal hygiene products at 90%, and groceries and staples at 74%, in comparison to the previous month.

While there are several companies operating in the grocery delivery space including Amazon, Flipkart, Swiggy and MilkBasket among others, BigBasket and Grofers are the two largest in this space with the two controlling around a 60% market share, according to Forrester Research.

They, however, address a different target consumer with BigBasket offering a wide assortment of products for the top 20 million Internet users and Grofers providing affordable products in select categories, similar to D-Mart in the organised offline space.

The situation is similar in several other countries. In the US, Amazon Pantry halted its operations amid massive demand. In the UK, Ocado has shut its app and Sainsbury’s, Tesco and Morrisons are sharing vans and depots for deliveries.

“There’s a fixed amount of output for any warehouse or hub and once that is reached, it’s very hard to scale deliveries … it’s hard to ramp up at such short notice,” said a senior executive of an ecommerce marketplace who spoke on the condition of anonymity. The most businesses will be able to achieve is scale a facility by 20-30% in the short term and by 50-60% over a period of a few months, he said.

Flipkart said it has appealed to the seller community to ensure that products like masks, sanitisers, antiseptic liquids, and handwash are made available at all times at the best possible prices. “They have been advised to dispatch these products on priority,” Flipkart said in a statement.

The company has also initiated business continuity planning for its supply chain organisation and is ensuring that its staff follows precautions and preventive measures, said Amitesh Jha, senior vice-president – eKart & marketplace. “We are also keeping a thorough and regular track of the affected areas through our centralised security team to avoid exposure of our employees in those regions,” he said.

Grofers said it was closely working with additional manufacturing partners to scale the supply based on demand while requesting customers to opt for considerate shopping so that shelves remain stocked. “We are further bumping up capabilities and hiring more people to ensure availability and access of critical goods,” said Dhindsa.

“I don’t expect this demand to last forever since it’s primarily hoarding and once families buy, they’re not going to come back for at least 2-3 weeks,” said Satish Meena, senior forecast analyst, Forrester. “These platforms were not prepared for the spike in orders, especially on certain items, which is why there are stockouts.”

Meena added that there was absolutely no shortage of supply in the market, and the breaking of supply of e-grocers had more to do with unprecedented demand.

Read: Zomato forays into grocery delivery, in talks to partner with Grofers & BigBasket

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