Who could envisage that grocery retailers would ever raise fund? Nobody did, but, this is what we all are witnessing & experiencing. Grocery retailers are raking in more moolah than apparel retailers. With the online grocery market growing at 25-30% annua
Here was a time when the online grocery thing was a talk of the metros only, but, now it has also penetrated into the smaller towns too. One such brand is Pinkcitykirana.com that was launched in April 2014 and follows a hybrid business model that is it keeps its own inventory for grocery, FMCG products and household articles and has tie-ups with local vendors for vegetables & fruits. A well known name in the same space, PepperTap.com has a business model that differentiates them from most of the other players in this segment. It works on a hyperlocal model with zero assets as against the brick and mortar players. The inventory based model fundamentally requires more upfront capital expense, have higher fixed running costs, higher working capital needs, are more prone to wastage losses, and have sub-optimal logistics and limited delivery slots.
LocalBanya.com retails around 14,000 products across various categories and has adopted a lean business model that relies on a convenient mix of warehousing and cash-and-carry. The company believes in acquiring a very small inventory, and has forged tie-ups with wholesalers and cash-and-carry partners across the city. This asset light model brought down its capital intensive investment by 70 percent and enabled them to put up an efficient supply chain. Unlike other players, started in 2013, Greencart.in acquires fresh produce directly from farmers, with whom it works on a contractual basis. Through this, it can acquire products in large quantities, which are then sold to customers at competitive rates. Greencart.in runs full-fledged sustainable operations across the value chain, from sourcing products to packaging to showcasing and finally, delivering thus adding value by eliminating middlemen, minimising wastage and reducing overall cost
So, how do they operate?
One question logically that arises here is how these e-grocery stores actually operate? We tell you. Few of the brands have tie ups with local Mandi's for fruits and vegetables while others have a host of suppliers like supermarkets, distributors or local vendors. Launched in 2012, LocalBanya.com has a procurement model that is a mix of warehousing and just-in-time (JIT) deliveries from a host of suppliers including FMCG companies, cash-and-carry outlets and other distributors. The brand procures very limited number of products from its vendors and stores it in their warehouse, whereas the rest is directly procured from cash-and-carry vendors or distributors, as per the requirement. Pinkcitykirana has its own sourcing, stocking, order placing and delivery mechanism. It has a warehouse spread over 2500 sq. ft. of area. Inventory for grocery, FMCG and household articles is managed at one place. Tie up with local Mandi's is only in place for vegetables & fruits. PepperTap sources from its partners who are large supermarkets. Navneet Singh, Co-founder, PepperTap.com shares: “The deliveries are taken care by our own delivery boys who are stationed outside these partner stores, the moment a customer makes an order, the delivery team at PepperTap gets a notification instantly on their phones. They fulfill the order from the partner store and deliver it to the customer's address. The hyperlocal trend is a win-win for both buyers and physical retailers.”
Greencart sources its products directly from the registered vendors and suppliers which go through extensive quality check process post which it is temporarily stored in their state of the art warehouse.
Bagful of opportunities for investors
E-grocery trend has brought baskets of opportunities not just for the local hypermarkets but for individual vendors and prospective investors too.Greencart.in has a network of vendors and suppliers and it is looking to expand the delivery service in Mumbai and other cities too. Rajiv Tevtiya, Co-founder & CEO, Greencart Ventures Pvt Ltd says: “We are open to partner with vendors as long as they can match our quality and hygiene standards. We provide a strong support for our vendors in terms of branding & marketing and provide them with opportunity to reach large consumer base spread across vast geographical region with minimal distribution cost. Investors who believe in growth story of Indian Food & Grocery segment and our fresh philosophy are more than welcome.”
On the other hand, for PepperTap an ideal partner is someone who has a good width and depth of inventory and is strategically placed in terms of the location and reach. The brand usually maps an area of about 3 km radius to a partner store for smooth deliveries. Greencart.in looks for someone who matches up to their quality and hygiene level and fits into their philosophy of adding value to the customer and long term relationship. For Localbanya.com, in every city, a vendor is shortlisted on the basis of its array of products and profit margins they offer. The brand ties-up with one or multiple cash-and-carry outlets that will best serve their operations in a given city.
Soaring revenues from small towns
Online shopping is growing rapidly in India and smaller towns are playing a lead role. They match metros when it comes to transactions, whether they are buying groceries or non-food items. Rashi Choudhary, Co-founder, Localbanya.com says: 'With the young working population being familiar with the online grocery shopping trend, it is possible that the online F&G will click in smaller areas as well. If we are able to develop an entire eco-system that will support online grocery there is absolutely no reason why this cannot happen.' Pinkcitykirana.com is one such example that operates in a comparatively smaller town like Jaipur and is doing great.
Sandeep Agarwal, Co-founder of the brand says: 'People are usually less busy in smaller towns and they can find time for grocery shopping. But, there exists a potential market in smaller towns. After all, who does not want convenience, especially when things are delivered at lower prices and on time?” For Greencart, Metro cities definitely have huge potential however with increasing reach of internet, affordable smart phones and convenient payment options, tier I and II cities also offer great opportunity in the future. The smaller towns are catching up very fast with the metros in terms of living standard and exposure to the global products.
After successfully delivering their services in Pune, Hyderabad, Delhi, Gurgaon & Noida, Localbanya.com will be rolling out additional cities every month if all goes well as planned. They have also launched Instabanya across limited cities. Customers can now have their orders delivered within 2 hours.Greencart.in focus is going to be in the western and southern India. PepperTap.com started off with itsoperations on November 28th 2014 in Gurgaon, Harayana. Within a span of seven months it spread all across Delhi NCR, Chandigarh, Mohali and Panchkula, Jaipur, Pune, Hyderabad, Bangalore, Chennai and Kolkata. By the end of this year, it aims to be present in about 30 cities of the country.