My Blog for the week - 12DCP-052

VIRTUAL GROCERY STORES


Groceries sell irrespective of the state of the economy. You can stop
going to the cinema and restaurants, but there's no way you can live
without toothpaste, soap and, well, vegetables. Caught in the city's
fast pace, tedious commuting and long working hours, many consumers
don't have the time to buy groceries or would like to avoid the chore.

RETAIL OPPORTUNITY

With a large customer base and increasing penetration of Internet
connectivity (partly through smartphones) and growing popularity of
online shopping, some entrepreneurs have seen the potential in
creating e-stores for groceries. If you understand the retail market,
a bit of creative thinking and excellent customer service can help you
build a great business.
AaramShop.com, EkStop.com, BigBasket.com, AtMyDoorSteps.com,
MyGrahak.com, ZopNow.com, Omart.in, LocalBanya.com, RationHut.com and
SeaToHome.com are some of the online stores retailing groceries. Most
of the existing retailers offer their service in metros and major
urban centres.

CREATIVE NETWORKS

Given the nature of the business, online grocers are in a different
league from other e-retailers. Most grocery e-stores cater to a
specific city or certain areas due to the logisitic constraints.

A book or mobile phone can be easily shipped to distant locations
across the country from a central warehouse, but delivering a 10kg
sack of rice or 5kg pack of sugar to a different city is not
commercially viable.

"The grocery category is not suited for traditional e-commerce
ventures. While there have been a number of attempts in the past
decade and a half, almost all have failed. The issues are related to
low retailer margins, complex and expensive supply chain, ubiquitous
presence of brick-and-mortar grocery stores and the prevailing
consumer behaviour," says Singh.

GAUGING COMPETITION

Many e-groceries have come up, but the segment is far from saturated.
Most of such ventures are catering to a few metros and many cities are
yet to have such e-stores. The potential market size also ensures that
there would be room for multiple players, even within cities.

Though big retailers are yet to enter the segment, there is some
competition from local grocery stores that provide home-delivery
services. However, smart logistics and vendor tie-ups can help
e-stores gain customer favour by offering them a price advantage.

Local grocery stores can also be turned into business partners, as
done by AaramShop.com. It has roped in local stores to procure the
groceries to be delivered, while focusing on creating the technology
platform and the online interface.

http://businesstoday.intoday.in/story/online-grocery-shopping-vegetables-new-trend-in-india/1/197141.html

Regards,
Karthik Penmetsa,
12DCP-052