There was a time when ecommerce was looked upon with scepticism in India. As a customer I remember ordering a toolkit in 2004-05 from Rediff Shopping, and when I received it, it was nothing like I had imagined. Back then there were no options to return the product or get a refund, so obviously the experience was not a favourable one. The box still lies somewhere in the attic; maybe I should try selling it on Olx or Quikr.
Since the toolbox, I have done a number of transactions online, but am I an ecommerce convert? I don’t think so. And I say it will be impossible for me to be a complete convert.
As a customer, I am very comfortable straddling the three avenues I have at my disposal for buying things I want – the supermarket, the e-grocer and the neighbourhood grocer. What does this mean for each of these businesses? Is co-existence the way forward for retail in India? My thoughts.
Just earlier last year, my wife suggested we goto Big Bazaar to shop for cutlery to use in my new office, and I actually did that. Why? Well because everyone listens to their wives :) But also because I wanted to “touch-and-feel” the cutlery before I paid for it. Big Bazaar is within a distance of 2 kms of my house – which also helped influence my decision. Therefore do I go too often into Big Bazaar? Not really. Its become a choice for me. But compare that to earlier visits to Crawford market to shop for cutlery, then yes supermarkets still figure in my list of choices, but Crawford market has long disappeared from the list.
Super-markets give me the convenience of buying bulky products with variety to choose from, at a location near my house, thereby eliminating the need to travel to market some 50 km away. What grocers do in a small way, supermarkets can do on a large scale, their bulk stocking pattern makes it possible to offer discounts and schemes to end consumer – either by marking down the prices or offering freebies. Super markets are still preferred for bulk monthly shopping by customers which makes it possible for them to avail discounts, and make most of the schemes they run.
Just like super-markets made long distance shopping redundant, e-grocers like Big Basket, LocalBanya, etc have made grocery shopping in super-markets redundant. I don’t really need to check my pack of tea or sugar that I buy -- I just need to buy it. So if I can do it from the comfort of my home, without having to endure the hassle of standing in a queue to pay. And not having to lug it back home, I am happy about it.
Immediate next day delivery, coming to my doorstep makes me a happy customer. E-grocers have cash-on-delivery option, which is convenient – incase I cant remember my card number, or the netbanking password.
However e-grocers are today mostly a big city phenomenon, I still don’t have the luxury of getting my groceries delivered to me at my doorstep in a Tier 2 or 3 city in India. Thankfully, the neighbourhood grocer is still there to service me in these geographies. E-grocers bring in scale driven by technology; however they rarely care about quality in quest of volumes. It is possible that people who get comfortable and satisfied with e-grocery shopping may become patrons of the medium in future, probably even replacing super-markets in the process.
So therefore will small grocers disappear from big cities because of e-grocers and super-markets? I don’t think so.
Even in small towns, grocers are very important to customers to supply them their daily bread. Where ecommerce kicks in is when electronics, apparel, shoes, etc need to be bought. A Louis Vitton or Apple is never going to open shop in Rai Bareilly. But at the same time, customers in Raebareli have the capacity to purchase and use those brands. And therefore ecommerce is the answer for them.
The small grocer
Coming back to the small grocer; housewives and house helps are still more comfortable picking up the phone and telling the neighbourhood grocer to send across some milk, rather than switching on their PC or launching their mobile app to place an order. The neighbourhood grocer is a familiar person, sometimes upsells an additional product, gives quick delivery and in many cases also gives a long line of credit – none of which ecommerce companies can match. And these days grocers are offering convenience to their customers to order on WhatsApp.
Today if all the MNC food chains and ecommerce firms in India do free home delivery, that is because our neighbourhood grocer has made us used to this convenience. He did this, so that customers don’t crowd his 200 sq.ft. retail shop, but at the same time they got what they wanted in the comfort of their homes. A low cost bicycle, driven by his shop-help could easily deliver to atleast 100 houses in the neighbourhood.
When malls and supermarkets came into the picture, all they had to do was replicate the model created by the grocer and throw in a few more goodies. Did this affect the grocer? Yes, very much. His sales decreased, profits went down, stocking reduced, and he surely experienced a crunch. The rise of supermarkets in India and decline of grocery stores happened between 2006-2010 in India. Big Bazaar, Reliance Fresh, Spinach, More, Subhiksha , Hypercity, etc are among the few that entered the space. Even within this list, Spinach, More and Subhiksha downed shutters long time back, and today Big Bazaar and Reliance Fresh outlets are past their hay days.
Spare a thought for the grocer who still services the customers who come to him. Grocers who have survived through the churn of supermarkets and aggression of egrocers are ones who have a longer staying capacity, and those who have innovated in their business. So it is not rare to see the grocer sell mobile phone recharges, accepting bill payments, having a telephone booth and in some cases even added new category of products like stationery, mobile phone cases, etc.
While the local grocer lacks in scale, he can make up through his service offering – by customizing his services for customers and adapting to local requirements of the neighbourhood that he operates out of.
As the nation grows, customers will continue to have more options to choose from. But unlike the West, where grocery shopping meant driving 5 kms to goto the nearest super-market and stocking up for the week, in India grocery buying is still on a day-to-day or very short term basis. We are a country that likes fresh food, and have never subscribed to the frozen food/packaged food phenomenon. Too much stocking is not in our DNA, we like our food and the raw materials for preparing it – all fresh.
A long staying power will be needed by e-grocers, before the next generation of customers attain independent purchasing power. And even longer time is needed for them to turn into household managers and order grocery online. Can investors back Indian e-grocers till then? Will Indian e-grocers be profitable by then? How much room is there at the top for ecommerce companies vying for the space? No one has answers. Probably time will tell.
Posted In: Business Transformation