There’s so much ongoing buzz in the online grocery segment. No doubt, everyone wants to scale up, everyone wants to be the fastest to deliver to customers. Godrej’s Nature’s Basket is the first to launch pan-India operations with its omni-channel strategy. But many are establishing dominance in their operational areas.
Shortening delivery time
Just like ‘deep discounts’ was a differentiating factor in online retail last year, shortest delivery time seems to be the differentiating factor in online grocery now. Here’s why it’s critical for an online grocer:
In online retail, when a customer wants something he will opt to purchase from the etailer giving him the best price, even if delivery might take longer. Whereas, in online grocery, customers are looking to get their orders as soon as possible. If one can’t deliver in their preferred time, they will just go to the next one who can deliver at the convenient time.
Online grocery is getting popular but still face stiff competition from kirana and local corner shops. So if not an online grocer, customers can turn to one of these options in a minute.
According to industry experts, order dropout rates are as high as 50% if orders are not delivered to customers on time.
“In general ecommerce segment, the price differentiation is so high that the consumers are ready to wait as they won’t get such an option outside. But in our case, if we don’t deliver it when consumers need, they will go to the next kirana store even if there is Rs 20 discount on our site,” said Mukesh Singh, cofounder of ZopNow.
So how are these online grocers trying to beat competition?
After the acquisition of hyperlocal delivery startup, Delyver, Bigbasket has recently introduced one-hour delivery in Gurgaon.
“There is a part of the basket that the customer buys on a higher frequency basis. These are smaller order values and these can be delivered efficiently through Express delivery,” said Vipul Parekh, chief finance officer at bigbasket.com.
Last week, we heard how Zopnow and Peppertap are requesting offline retail partners to set up exclusive warehouses so that sourcing products would be as quick as possible. Apparently, delivery boys sometimes get stuck picking out products and making payments. To ease this kink, these warehouses would be the go-to point with POS points just for these delivery boys.
Also, Peppertap is trying to decrease delivery time even further to less than an hour when possible. In contrast, Mumbai-based Localbanya doesn’t plan on reducing delivery time further. It already operates on the 2-3 hour delivery model in five cities, which was introduced around two months back.
“The issue is that most of this is done on a bike and hence, there is a limit to how much a biker can take along and how much orders we can accept for a particular time. Hence, we will not reduce the time any further for now,” said Karan Gonsalves, head of marketing at Localbanya, which is present in six cities.
Beating kiranas- possible?
Despite the efforts out in by these online grocers, industry experts believe that it will be very difficult to topple over and replace kirana stores.
“Over the years, grocers have built a relationship with their customers. All you have to do is call them up and they will deliver the products to you in 30-35 minutes,” said Devanghsu Dutta, CEO at Third Eyesight.
Could this be the reason why Amazon India, which started Amazon Kirana services earlier this year, chose to tie-up with kiranas instead of ignoring them? Apparently, it plans to tie up with more kiranas and shorten delivery time further to 2-3 hours. Is it another example of foresight from the global ecommerce giant?