Online grocery retailing is a capital intensive channel. It needs a sufficient amount of capital for cold storage to keep groceries hygienic and retain their nutritional value. Despite this challenge, the industry is growing at a rapid speed.
When it comes to online grocery business in India (we’ll discuss the global market later), India was the fourth largest market in Asia Pacific, after China, Japan, and South Korea for online grocery retailing that accounted US$135 million in 2016.
Image credit: ETRetail.com
Indian online grocery stores are driven by either of these three models, namely – the inventory model, the hyperlocal model, and the mixed model.
The inventory model focuses on monthly orders and requires the least manpower to handle, whereas the hyperlocal model is purely demand-driven where it can provide the product of any brand, as long as they can source from another store based retailer. On the other hand, as its name suggests, the mixed model combines the inventory model and the hyperlocal model and spends less on inventory management since its inventory is generally smaller in size.
Despite the trust retained by Kirana stores, online grocery retail will soon be considered as a prominent distribution channel. This channel achieved a progressive growth of 44% on a year on year basis in 2016 and is expected to keep up its momentum as the fastest growing market for the next five years as well.
The Government of India’s initiatives and work towards building a cash-less economy will pave the path for this channel. Subsequently, there will also be an increased demand for mobile application development companies who develop user-engaging grocery apps. In fact, the scenario already has made them busy.
About existing grocery players in India
While BigBasket.com is leading the industry, Grofers.com, ZopNow.com, GrocerMax.com, NaturesBasket.com, and Liscous.com are contributing to the growth of the Indian online grocery space.
Big Basket is driven by the inventory model, whereas other players who are mentioned above are driven by the hyperlocal model. With their own inventory, Big Basket has the convenience of displaying and delivering the products that they have. But the hyperlocals take the order and purchases items from store based retailers, get them in one place and deliver it to the consumers’ doorstep. The hyperlocal model is less capital intensive, but they are suffering from the unavailability of all items in the order.
Companies like LocalBanya.com have adopted the mixed model and their inventory is relatively a smaller in size in order to combat the costs.
Global grocery players
Let’s go global. Amazon recently bagged America’s leading supermarket chain, Whole Foods. Analysts predict Amazon’s acquisition of Whole Foods could bring down prices and make quality food more readily available.
According to Bloomberg.com’s post, Amazon.in is likely to acquire Big Basket, as the info gained from people familiar with the matter.
On other hands, according to New York Times, Amazon is operational on setting up physical stores for grocery in India, apart from its online grocery division AmazonFresh. This is aimed at people who might not always be willing to purchase online. This would not just be for groceries, even for electronics and Amazon’s other product portfolios.
Amidst of competition, the Indian online grocery market is still huge and open for newcomers who venture out with fresh and innovative ideas. If you are looking to develop a grocery app to drive your venture towards success, it would be prolific if you collaborate with the experienced mobile application development company who has the required expertise.
First, let me list out the trends
Priyanga, an experienced content writer working in a mobile app development company in Oman. I like to write content based on technology, Startups and latest technological innovations that people like to know and share with others.