With every intention of leveraging the increasing number of online grocery shoppers, Amazon is planning to re-launch KiranaNow, its online grocery store, in a few weeks. Amazon’s KiranaNow webpage has a teaser poster that reads, “We are launching an improved KiranaNow experience for our customers shortly! Stay Tuned for more information.”
Amazon is reportedly planning a hybrid sales model, where customers can also pick up their orders, apart from the inventory-based mode of operation. This might be required to rake in the moolah.
Experts at Kotak Institutional Equities say, “At the current scale of 10,000-20,000 orders a day, the inventory-led model seems to have a better margin profile. However, if the scale rises by 10 times, the inventory-less model could yield better margins as delivery costs could reduce dramatically.”
Amazon’s approach to the new KiranaNow
Amazon has reportedly tied up with leading supermarket chains in Bangalore including Big Bazaar, Amex, Reliance Fresh, and Nature’s Basket. Amazon employees familiar with the developments have said that the company plans to have about fourteen collection points in the city.
However, Harish HV, a partner at Grant Thornton, a consulting company opines, “Tying up with local merchants may result in quality issues. When placing orders on Amazon, people would expect reliability, quality, etc. But if because of the partners they don’t meet that expectation, it would reflect badly on the overall business. Naturally, when a big player enters, it may kill other smaller players.”
What are the problems blocking the way?
High rate of attrition among the delivery personnel is a major cause for concern in the hyperlocal industry. And KiranaNow’s new launch requires a sizeable number of delivery personnel.
“Right now we require 130 delivery boys for 14 collection centres around Bengaluru. Kirana Now will pay anywhere between R10,000 and R16,000 including incentives to delivery boys,” said an employee who did not wish to be named.
Great possibility, thought and planning required
Amazon has picked a growing field of grocery shopping to expand its operations. Likewise, rivals like Flipkart, Paytm and Snapdeal are also exploring options in the online grocery vertical. However, one has to tread carefully, because dealing in perishables is always a tricky ball game.