Friday 10 July 2015

Convenience over Kiranas

India's online grocery retail industry is bustling with activity. With estimates pegging the business as close to $20 billion by 2020, several players are stepping up to grab a share of the bright yet challenging market.

While Indians are now increasingly confident about ordering electronics or clothes online in a market largely dominated by the three big daddies - Amazon, Flipkart and Snapdeal, online grocery retail is yet to pick up on a large scale.

What fuelled the interest among investors and entrepreneurs are the numbers. Around 67% of India's retail spending is dedicated to food and groceries. With organized retail accounting for a mere 15%, they see big moolah in online grocery retail. And they are not wrong.

According to Technopak, the market for online grocery retail is growing at a steady 25-30% in Indian metros and is driven by urban residents who are in a hurry and prefer convenience to kiranas.

An advantage of shopping online is that you get products not available in your local kirana. Amazon confirms the speculations. The company launched its gourmet & specialty food store in October last year. 

"Online grocery shopping in India is very nascent and we see potential in it, particularly for emerging segments like gourmet, organic food and specialty products which are not easily available", Amit Agarwal, VP and Country Manager, Amazon India says.

The year has seen enormous activity in the space with the success of players like Big Basket and Local Banya, and Reliance Retail planning to scale up to serve new markets.

Big Basket claims it has over 5,00,000 active customers and that its revenues are growing by 12-16% every month. Local Banya on the other hand already has over 1,00,000 users.

Many of the new players have struck partnerships with bigger brick-and-mortar retail stores like HyperCity, More and others for sourcing and storage. Solo or via partnerships, there is no stopping e-commerce trying to barge into your grocery basket.

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