India’s online grocery market is still in a nascent stage and primarily confined to Tier 1 cities, says New Delhi-based market intelligence centre 6Wresearch.
And the hyperlocal model (which usually features on-demand delivery) is growing faster than the ‘pure-play’ one (such as businesses that focus only on e-commerce) in India, it says in a recently published report summary.
“(The) pure-play business model requires heavy investments and warehouses, which pushes the overall operating cost. On the other hand, hyperlocal model saves cost and time of delivery due to the support from the local merchant,” it says.
6Wresearch predicts India’s online grocery market will grow at a CAGR of 62.7% over 2016-22.
“India is the sixth largest grocery market in the world, which is majorly dominated by the unorganized sector with over 12 million pop and mom stores all over the country. Online grocery market is one of the fastest growing markets fueled by the intensifying e-commerce industry.”
But senior research analyst Avishrant Mani said the fruit and vegetables segment is growing sluggishly compared to other grocery segments, “since (the) consumer prefers to purchase fruits and vegetables in fresh condition, favours touch and smell of the items to judge the quality.”
Otherwise, the grocery and staples segment is contributing major revenue share in the online grocery market, followed by the FMCG segment.
“Bengaluru from southern region is the key market for online grocery, followed by Mumbai from western and Delhi from northern region. Online grocery companies are mainly operating in metropolitan cities due to better infrastructure facilities and higher internet penetration as compared to tier II and tier III cities.
“However, online grocery firms are now targeting tier II and tier III cities to expand their presence on a pan India level. BigBasket, one of the key players of the market, is planning to enlarge its operation to 50 cities by the end of 2016.”
Australians are curious about the benefits of buying their groceries online, but the majority don’t feel the need to make a permanent transition as they remain content with the current offerings provided by the bricks and mortar stores, reports customer satisfaction research and ratings business Canstar Blue.
Based on a survey of 6,014 Australians, it said consumers often prefer to physically inspect certain grocery items before purchasing them, particularly when it comes to fresh fruits and vegetables, dairy products and meats.
“However, 42% of the 1,474 adults who have bought groceries online in the last six months said they expect to do the majority of their shopping this way in future. And as online grocery retailers continue to develop their services, it seems a reasonable assumption that more and more consumers will choose to shop this way in the coming years, even if it is only occasionally.”
Of those who had ordered groceries online in the last six months, just one in five choose do all of their shopping this way, Canstar Blue said.
Its research also found:
Who buys their groceries online?
women (27%) are more likely than men (21%) to have bought groceries online in the last six months
but of those who have done so, men (22%) were more likely than women (18%) to do all of their grocery shopping this way
adults aged in their 30s were most likely to have bought groceries online in the last six months (37%), followed by 18-29 year-olds (30%) and consumers in their 40s (29%)
Why people buy groceries online
35% of consumers buy their groceries online because it’s easier than shopping in a physical store
24% struggle to find time to shop in-store
17% believe it’s cheaper buying online
7% don’t like visiting supermarkets
the majority of survey respondents (55%) always use the same website when they buy their groceries online, but 36% have tried more than one online grocery store
most consumers (64%) are inclined to click onto the website of the supermarket chain they usually buy from in person
What people don’t like about buying groceries online
30% of online shoppers cited delivery costs as the biggest cause of complaint
18% said their greatest issue was receiving replacement items for products that were unavailable
15% found uncertain delivery times their main bugbear
How much people spend when buying groceries online
More than half of consumers (58%) said they tend to spend less online than they would if they bought their groceries from a bricks and mortar store.
While a previous Canstar Blue survey found consumers spend an average of $138 per week when they buy groceries in-store, the average for respondents in this survey was a $130 spend on their weekly online shop.
“It’s worth remembering, said Canstar Blue, “that buying online arguably makes you less likely to impulse buy other products that perhaps weren’t on your shopping list in the first place. Shopping online could also make you more price-conscious and willing to select a cheaper option if it’s available. You could argue that shopping online allows you to pay closer attention to your spending, when it’s easier to get carried away in store.”
One of Spain’s first exclusively online supermarkets, Tudespensa.com was launched in October 2012 and now has 80,000 registered customers with 30% growth expected this year.
Tudespensa– which translates as ‘Your pantry’ – aims to set the benchmark for quality and freshness in fresh produce e-commerce in Spain. Head of fresh produce procurement and pricing, Juan Carlos Chillaron, explains how.
What is your fresh produce strategy?
Fresh produce is the most important part of the www.tudespensa.com online supermarket and so we always aim to exceed our customers’ expectations in terms of the quality of our produce. This applies to all kinds of fresh produce, but in the case of fruit implies achieving this amid the idiosyncrasies of these products, where the quality perceived by the customer is not just influenced by freshness, but by other factors such as the calibre of the fruit and, above all, the ripeness of each piece fruit, as well as the packaging and labelling. For all our fresh produce we aim to keep the supply chain as short as possible, selecting and packing the product for delivery the same day or at the most the next morning, giving the customer the maximum possible product life – these are our competitive advantages.
How are you able to offer competitive prices, particularly when you have to factor in delivery costs?
You have to bear in mind that all our products arrive in fully labelled packaging, ensuring product traceability, and via refrigerated transport. They are kept in conditions of maximum food safety until they reach our customers’ fridges. Also, the formats for each of our products are adapted so they meet the needs of all our customers, without having to buy too little or too much of something, with the above-mentioned food safety guarantee, and every tray must carry full product information, such as on origin, category and weight. As well, every product has its own information sheet customers can view online while making a purchase. Taking into account all these factors, our pricing policy is based on a comparison with our online competitors selling comparable – of the same quality and calibre – labelled and pre-packaged products. We try to keep a balance, as do all retailers, in trying to offer the best prices while also achieving the margins the company needs.
What is the biggest challenge in selling fruit and vegetables online?
It’s the same for all online food retailers, it’s getting consumers to change their shopping habits, with the additional factor that we will be selecting their fruit and vegetables for them. The immediacy expected of online sales adds other challenges, such as the need to not only have the produce available, but of the desired quality and as soon as possible, as well as to offer a very wide range. For all these reasons, the rigour we require of ourselves at www.tudespensa. com must reflect that demanded by the customer, but without incurring very high costs as they also want competitive prices.
How many of your first-time customers return?
Nearly two-thirds of customers stay with Tudespensa after trying us the first time and we are especially pleased that 9 out of 10 customers recommend us to their friends and acquaintances. Another positive aspect is that our most loyal customers are those who buy fresh produce from us. Indeed, 81% of all orders include something from the fresh produce department, and 28% involve something from every section. We think this indicates that most of our customers understand and appreciate the complexity of doing their shopping for them, and the daily effort that goes into picking and delivering the best products in a timely manner, and their loyalty is the best possible response and biggest asset we could have. Although there will always be some consumers who want to keep buying these products in a traditional way, we have developed different ways to show them how much more convenient it is to not have to go to a store and carry heavy weights. One is the site www. valoratutiempo.es (assess your time), which we launched to prove to customers that doing their own shopping ends up being more expensive, and which has already been used by 8,500 people.
Where is your logistics platform?
For fresh produce, we are strategically located right near Mercamadrid, one of the biggest fresh produce markets in Europe, where our partners in the supply of meat, fruit, vegetables and fish are also based. Every day before 9am they deliver produce – packaged and labelled – to our automated warehouse, where it is soon dispatched to fulfil our customers’ orders.
Turnover 2014: €8.9 million (expecting +30% 2015) Expected to break even for first time this year Average customer spend: €115 Total assortment: more than 7,000 products Fruit & vegetable items: 158 (including pre-prepared products): fruit 69, vegetables 89 Current top-selling fruit: bananas, oranges, mandarins Current top-selling vegetables: potatoes, onions, courgettes Fruit & vegetables imported: 25% of total (due to off-season produce & big tropical range) Orders including some fresh produce: 81% Delivery: 98% of orders delivered within customer’s chosen 2-hour slot Logistics base: more than 8,000 m2 (incl. automated warehouse) beside Mercamadrid Coverage: Madrid, Barcelona, Toledo, Guadalajara Main competitors: Ulabox (100% online) plus retail chains Mercadona, Carrefour, El Corte Inglés Forecast growth in food e-commerce in Spain: 18% by 2017