Studying business model, challenges and penetration of online grocery companies in India

Abstract

India is one the fastest growing economies in the world and is moving towards a digital economy to accelerate its growth. Internet retailing is plays key as the internet penetration grows in India with players like Reliance Jio which aim to provide robust internet services even in rural India. It is further driven government’s effort to educate Indian consumer about benefits of using smartphone and internet with an increased focus on rural India. Internet retailing valued at ?1,449.5 billion in 2016 is expected to grow with a CAGR of 29%. Flipkart, an Indian player is current leading the market with 44% value share and is giving tough competition to global giant Amazon. From car to jewellery, everything is now available in the comforts of our home on a single click with the help of online shopping. Internet retailers offered deep discounts online when they entered the market to incentivise consumers to buy online. Another key benefit they offer consumers is the vast range of products which is generally not available in offline stores. Apparel and footwear was the most popular product category sold via internet retailing in 2016. Other categories like grocery and home improvement are little less popular category as these are sold in highly fragmented unorganised market and are relatively available at lower prices. India’s grocery market is one of its kind, as it is still dominated by mom & pop store. The supermarket chains like Big Bazaar, Reliance Fresh, More etc. have failed to penetrate in tier 2 and tier 3 cities. However, need for online grocery portal has risen in urban Indian and especially dual income households where people want to save time by avoiding traffic jams and long billing queues. This sector recorded a current value growth of 43% in 2016. BigBasket, Nature’s Basket, Grofers, and ZopNow are just some of the most popular players in online grocery retailing. There companies follow inventory or hyperlocal model or a mix of both. Desktop and mobile versions of these website are equally used by consumers. However, none of these companies are profitable. In or report, we ould try to understand the competitive scenario, challenges and future opportunities of these companies in India.