Tired of standing in long billing queues? Can’t find a parking spot outside your favourite departmental store? Unable to keep track of discounts and deals on grocery items? Buy your kitchen needs on the internet! Online grocery shopping is a trend that’s fast catching up in India. Two recent pieces of related news make for some interesting observations and speculations.
International Players Aim at India
After three successful years of selling home needs online in Singapore, RedMart is looking to set up a wide technological base in India now. The online grocer isn’t selling in India just yet, only employing capable engineers to boost RedMart’s ecommerce skills. This isn’t the first instance of Bangalore being chosen as the hub by an international player.
In July this year, RedMart raised US$23 million in a series B funding round led by Garena, with participation from Facebook co-founder Eduardo Saverin, SoftBank Ventures, and Visionnaire Ventures. It then announced that the fresh investment will be used to “build operational capacity for future growth and expand its product range.”
In the words of Sanjeev Bijapur, who is the head of RedMart’s India operations, “Tapping the local talent will give us an opportunity to build a high performance team, enable us to work on disruptive technologies, and be part of an exciting working atmosphere.”
Indian Biggie Plans to Get Bigger
India has its own share of online grocers. Among aaramshop, localbanya and several departmental stores with an online presence, BigBasket, a two year old startup with an annual revenue of Rs 250 crore, is on its way to becoming the largest player in the online grocery space. Venture capital firms Helion and Zodius Fund II with Avendus have given a Rs.200 crore funding to BigBasket. With these funds, it plans to expand operations to 10 cities. Currently BigBasket operates only in Bangalore, Hyderabad and Mumbai. Next in its implementation scheme are Pune and Delhi.
With a growth rate of 10% each month, BigBasket boasts of over 1000 brands providing over 12000 products that cater to the food needs of Indian internet users in three cities. “This is a billion dollar opportunity, you need to have depth of funding to do full justice to the market,” said VS Sudhakar, cofounder of BigBasket. Whether “full justice” would translate to BigBasket attempting something beyond groceries or not remains a mystery still.
What We Are Wondering
Considering both these announcements, one thing has emerged for sure – online grocery shopping has come of age. But we also have a curious cat purring in the wake of these announcements. Will BigBasket have to accelerate its expansion to establish itself before RedMart forays into selling in India? Should BigBasket use the funding to strengthen its technological base rather than in expansion? Is RedMart merely outsourcing its technical base to India because of relatively cheaper? Can RedMart, a foreign brand, enter the Indian market and earn credibility over its more-desi counterparts? Is this competition going to result in better, more compelling deals for buyers? Does the current market have space enough for all of these players, or will a biggie be forced to back off?
The answers to these only time will tell. But meanwhile, if you have an opinion, do share with us in the comments section.
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