A slew of internet businesses have diversified into the groceries space, a category deemed tough to crack for e-commerce players, in the wake of the Covid-19 pandemic.
Social commerce startup Meesho, etailers like Snapdeal, Paytm Mall, Perpule and Shopclues as well as food delivery app Zomato, and real estate platform NoBroker have all launched delivery of essential grocery products on their platforms, in a bid to keep operations running and tap into rising consumer demand.
The foray into grocery and delivery of essentials have also been also pushed by local governments and allows these businesses to get curfew passes to stay operational during the lockdown period — a significant incentive at the moment, a policy executive told ET.
Zomato said its grocery service Market had gone live within two weeks across more than 80 cities. Snapdeal has expanded its reach to 96 cities, and Paytm Mall said it was signing up merchants across the top 10-12 cities. Meesho said its pilot is less than a week old and live in a few cities. Swiggy said it has enabled groceries delivery across all tier 1 & 2 cities and is in discussion with multiple national and regional (FMCG) brands for a partnership.
This comes at a time all these platforms have seen core earnings drop sharply due to the Covid-19 crisis, and startups are exploring various revenue streams to allocate resources, including on-ground workforce and logistics personnel.
Most of them have partnered with local manufacturers, kirana (corner) stores, local modern retail outlets like Nilgiris, and Modern Bazaar, startups like NinjaCart, Gully Network, Jumbotail and supermarket chains like Spencer’s Retail, Vishal MegaMart, More, Metro Cash & Carry, as well as FMCG companies like ITC, to fulfil orders.
“When we tapped local wholesalers, they were happy to sell online (also) because payments are quicker via e-comm than through traditional retail channels where extending credit is often the norm,” Rajnish Wahi, senior vice president of Snapdeal said.
In fact, others who are already in the business including Swiggy Stores, DealShare, Dunzo as well as Flipkart, Big Basket and Grofers are aggressively looking to expand by forging partnerships with brands, kirana stores, last-mile delivery companies and are setting up new warehouses to cater to a surge in demand.
DealShare, which is present in Rajasthan, Gujarat, and pockets of Mumbai, said it plans to penetrate deeper at a district level in these geographies, and open in Bengaluru next week.
“We are a mass ecommerce platform…we depend on local manufacturers for our supplies,” said Sourjyendu Medda, cofounder of DealShare. “As we cater to lower-income households, it becomes even more important to control pricing, especially at a time when only a tenth of kirana shops are open,” he said.
This is starkly different from India’s three largest grocery players BigBasket, Grofers and Amazon which store inventory in their warehouse. All three grocers have been struggling to fulfil orders citing workforce shortage.
Consumers are equally keen to shop online and scout for essentials, especially in categories where they are fine waiting for between four and twelve days. “Adoption towards grocery and essential products like masks, sanitizers, health products, liquid hand wash among others is very high,” said Srinivas Mohety, senior vice president, Paytm Mall.
However, it won’t be easy for these new entrants to crack supply, as most kirana stores told ET that they continue to prioritize walk-in customers.
“Today, small retailers don’t have supply … production has taken a hit … manpower is not reporting to work…it is difficult to manage walk-ins, so why should we focus on delivery?” said a Bengaluru based retailer. “Distributors are preferring modern retail shops with big volumes… hence, most small kirana shops are either shut or open every alternate day as and when they get supplies,” he said.
While some players including Paytm Mall and Zomato are confident of scaling up this vertical in future, others like Meesho and Snapdeal says it will take time to run experiments and evaluate. “Depending on what we learn during this time, we may or may not continue grocery delivery in the near future. In the long term, however, grocery on Zomato will definitely happen,” said Mohit Sardana, COO – Food Delivery at Zomato.
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