Case study on Online grocery stores in India Essay

This case study involves three retailers that engaged in alternative approaches to eGrocer dodging formulation. The primary goals were to assess the relationship surrounded by a comp boths melodic phrase perplex(s) and its performance in the online food market channel and to determine if at that place were early(a) company and/or market related factors that could nib for company performance. The first company is BigBasket currently present in Mumbai, Hyderabad and Bangalore. The other mavin is Aaramshop which is a sack upsite that operates in National Capital Region of India and offers FMCG and CPG goods and the last one is season n Soap, Online Grocery Store in Kolkata operating out of Kolkata. First, we seek to achieve insight into how uptake of Internet-based eGrocer relates to management orientation and find relationships between the uptake of Internet-based eGrocer and entrepreneurial orientation, competitive intensity, and IT maturity.BIGBASKETsee muchold age homes articleOverview BigBasket.com is Indias largest online f ar and marketplace store. It has oer 10,000 products ranging from fresh Fruits and Vegetables, Staples, Spices and Seasonings to FMCG mark products, Beverages, Personal c are products, Meats and much more. The complete in is go to sleeped right to the clients doorstep, anywhere in Bangalore, Mumbai & Hyderabad. Within a year, the company is designingning to start services in Delhi and Chennai as well. Subsequently, it also plans to cater to Pune, Ahmedabad and Kolkata. The customer can schedule their bringing date and season (4 pitching slots per day). Payment options include cash on slant, credit and debit cards or food coupons. The connection is co-founded by V.S.Sudhakar (Director), HariMenon (CEO and head marketing), Vipul Parekh (head finance and marketing), Abhinay Choudhari (head customer service and line of reasoning development) and V S Ramesh (Head logistics and Supply Chain). BigBaskets Board of Direct ors include Meena and Ganesh K of Tutorvista. The average calendar monthly aver size stands at Rs 1,500. Since its inception, the company has seen request grow 25-30 per cent on a month-on-month basis.Business Model Once a customer registers on BigBasket.com he can browse the wide range of products, recognise the products he wants and place an order online. intern eachy the products are then picked, hygienically packed and delivered to thecustomer in the succession slot selected by the customer. BigBasket has tie-ups with manufacturers, wholesalers and importers and the merchandising teamwork on a combination of post order procurement and in house inventoryinging. The service is crotchety as it lets customers shop for daily essentials from the simplicity of their homes, saving them time, effort and money. The company returns high property products at competitive prices along with an on time rake guarantee. There are two operating models. It is called just-in-time model. Th is way of life that not just perishables but everything they bring against an order. So they consolidate orders for the day, go and buy the products and deliver. When they reach a particular volume, they move from the just-in-time model to what is called the warehouse stocking model.That is where they are as far as Bangalore is concerned. They buy products promptly from the supplies, like Unilever and Procter & Gamble, they buy from farmers and mills and stock the products in the warehouse. They stock a certain number of years of sales, depending on the product and sales. They are able to set initial roll levels and then decide what the re-ordering levels are. So it is all completely automated.Analysis BigBaskets business model relies on on-time delivery of goods, and in order to manage the operations smoothly and efficiently, it uses the hub-and-spoke mode of distribution. Here wholesalers deliver goods to BigBaskets warehouses. Branded delivery vans then deliver these goods t o the consumers. Perishables are only warehoused for a matter of hours, and in whatsoever cases its 24 hours from farm to fridge. It handles 1,500 plus orders a day in Bangalore and 700 plus orders a day in Mumbai and Hyderabad. The grocery store banks on engineering science-driven solutions to track everything from the time an order is placed to delivery. BigBasket uses AssetTrackr RestAPI interface to tightly integrate with the ERP strategy and handle all movement of trucks and delivery vehicles, notification to customers on estimated delivery times, etc. AssetTrackrs palpable time location info helps achieve optimal vehicle utilization.AARAMSHOPOverview AaramShop is a hybrid retail syllabus that enables sales and marketing of FMCG / CPG brands to short on time high on stress consumers. It enables grocery obtain by leveraging the strengths of theneighborhood retailers and integrates them with opportunities provided by the internet. AaramShop was founded by Vijay Singh, who , as an entrepreneur, has a deep focus and furor for brand marketing. Head-quartered in New Delhi, AaramShop is a small team of techies and marketers that ingest been operational since a microscopical less than a year. Over 1900 retailers across 26 cities in India use AaramShop as their preferred vocation platform. Their tie-ups with retailers are based on mutual strengths. The retailer has a time-tested local presence, which includes an ability to deliver goods to the doorstep of the consumers in his catchment area. They intend to add to this strength with the increased accessibility of the shop on web and mobile devices. This is done at no additional cost to the retailer. AaramShop currently lists over 12k SKUs. Only branded products are listed in AaramShop commodities and private labels are excluded from their platform. The core idea of AaramShop is to enable independent retailers, who have a physical presence, to have a web-store, which brooks them to connect better with mo dern consumers.Business Model The business model of AaramShop is different from most e-commerce sites, as they do not believe that transaction based revenues is the way to go in the grocery category at the moment. AaramShop does not make revenues on taking part of the margins make by the grocers rather, they have created a number of premium services that are offered to brands. These services are in various genres like, advertising options, on and off the platform, analytical led marketing and marketing at the retail point. The idea behind this unconventional and unique business model is that AaramShop does not disrupt the existing business practices and thereby ensures no escalation of cost. New Delhi-based AaramShop has partnered with retailers so that customers can shop at these local retailers online. Once logged in to the site, users can choose a local retailer and shop for groceries. AaramShop then sends the order to the retailer in real time. The groceries are delivered to the customers doorstep and the customers pay for the goods upon delivery. They dont keep any inventory and their partner retailers maintain their own inventories. There is no cost for the retailer to join AaramShop, they are basing their ability to get revenues by offering premium opt-in services offered to the brands.Analysis The model does look climbable and rather beting as compared to symmetric ecommerce shopping. There is no logistics cost that the startup incurs and it brings in the comfort of your local store as well. The only issue is predictability of order delivery as live inventory is not available online. The current format is more like providing one more interface to your regular grocery store, with the same issues and comforts. A more of ajax functionality would make the shopping process faster and avoid viewing shopping bag page after every item is added. Unlike other online grocery delivery stores that become a threat to the small local businesses, AaramShop puts th e ball back into the court of local businesses that had begun to purport underprivileged in this age of Internet. AaramShop has overcome three major hurdles of business.It has convinced kiranawalas roughly the business model by putting them in touch with customers and being paid directly. Secondly, it has convinced customers by eliminating the ask for online payments. Furthermore, since customers can choose their own kiranawala, they can be assured of quality. Thirdly, it has cut its own operational costs by eliminating the need to set up an inventory to stock goods or hire delivery boys.AaramShop is a great example of how you can optimize on the available resources to maximize your gains. AaramShop makes most of its money with with(predicate) ads of the numerous grocery brands it stocks on its portal. With a model like AaramShop, everybody is a winner the suppliers, the consumers and the business itself salt N SOAPOverview coarseness n Soap, a BlueBeaks initiative, intends t o provide its consumers a convenient, social, enjoyable and rewarding bang of shopping their daily grocery needs online from the comfort of their homes and offices. Started in November 2012, flavor n Soap (www.saltnsoap.com) is own and operated by BlueBeaks Solutions LLP (www.bluebeaks.com). Though the services of booking daily grocery needs online and receiving timely delivery at the convenience of home or office are the basic foundations of Salt n Soap, Salt n Soap is more than just another online version of a hypermart, supermarket or a local kirana store. Salt n Soap intends to provide todays busy urban consumers online tools for making their shopping work through social, enjoyable and rewarding. Salt n Soap enables this through the various social features of the website, engaging and interesting games and contests. Salt n Soap comes up with, and, last but not the least, the goldmine of information and analytics that facilitate a smarter buying decision.Apart from offering wh at conventional online grocery sites have to offer (i.e. online purchase, home delivery, throw outed products, etc.), they have come up with quite a few innovative and engaging products and services that will catch tutelage of discerning customers. First, they are positioning online grocery services to cash reach, time poor segment of population, typically SEC A1 and A2 split up of people, working couple with busy work schedule and very little time to do daily shopping chore. Hence, Salt n Soap position is more on honour a customer derives by saving time rather than being just a discount shop.Business Model Salt n Soap is a Kolkata-based outfit that has apparently pioneered the supposition of clear-cut analytics in this home where customers can instantly summon a variety of data on a product like its market share, purchasing ways, and a comparison with what people in the same socio-economic class are buying. The site also lets you know when it thinks a particular product has run out, thanks to some nifty code, and pings you so youre reminded to buy more of it. Consumers have access to a variety of data like market share of a product, purchase trend of a product, comparison of purchase trend with average pattern of people in the same SEC (Socio Economic Class). Consumers can maintain their calculate for purchase and track their consumption compared to the budget.Salt n Soap also seem to have develop an algorithm that predicts (presumably reasonably accurately) the number of days of provision that a user has and thus prompting him/her when he should buy the same product again. Salt n Soap has integrated their product with social media to provide a social experience to their consumers. Consumers are also rewarded with redeemable points for sharing their shopping experience with their friends in social media. The website has been designed to enable users to shop through a list where he/she can select multiple products from one screen instead of having to navigate to multiplescreens.Analysis They seem to operate efficiently with very low capital investment. Plus they provide a lot of innovative rate added features to consumers which are typically not available in a brick and mortar store. Some such features are a unique web front that allows customers to shop multiple products without having to navigate to many pages (remember, unlike some other products like books, apparels or jewelry, for groceries, customers buy many products at one time), providing personal shopping assistance, helping customers to plan and monitor their grocery budget and inventory, analytics on market share and sale trend of products, etc. Salt n Soap seemed to have understood that online shopping and especially grocery shopping is not about just providing a web front to the consumer allowing them to book an order and then delivering the goods to the consumers doorstep. They have introduced the concept of Personal Shopping Assistance where they promise to pro vide personalized assistance to consumers in buying through qualified professionals. Salt n Soap is constantly innovating on the features to ensure a more enriching and meaty experience for its users.CHALLENGES OF ONLINE GROCERY BUSINESSGrocery is a pretty multiplex business from the back-end and supply set up perspective. The complexity is one of the biggest challenges. We deal with close to 8,000-10,000 SKUs. Order sizes are large. Typically at the beginning of the month you have 30-60 items in one order. That makes it very different from typical ecommerce businesses where you normally shift one or two products, it could be a camera or a mobile phone and so on. The back-end is complex because the supply chain is not yet efficient. You deal with a large number of vendors and suppliers and not all of them are organized. WHY ONLINE GROCERY RETAIL BURNS CASHLack of consistency in quality and fill ratesDelivery and inventory costsLow repeat customer rates fix and feel nature of Indi an shoppersThe supply chain in India is built to help kirana storesOrder value isvery lowBrands and distributors will not give long-term creditWarehousing needs skill, technology is just a toolOrganized retail far from saturatedOnline grocery business in India The grocery segment has one of the most predictable consumption patterns and buying these products online has a huge advantage. It follows that online groceries would be big business in India.The truth is no player has broken even and the market is littered with shutdowns across the country. It is estimated online groceries contribute less than one per cent of the total food and groceries market in India and an equally small percentage of the e-commerce market in India is dominated by travel, electronics and apparel.One of the biggest rivals of e-grocers is the local kirana store, which offers home delivery in many cities, often within an hour. But kirana shops lack the cost advantages to offer customers the best price, and cannot stock a wide range of products.CONCLUSIONOnline grocery has been a late entrant in e-commerce space in general ( probably albeit due to early failure stories like Webvan), and in India, in particular. However, since 2011, quite a number of start-ups have launched online grocery stores all across India. They are generating reasonable amount of traffic and interest as well as good amount of venture capital funding. While no one doubts the eventual ascent of this segment, when that will happen and at what cost remain unanswered, primarily because of its single-digit margins, low order values and complex logistics, as well as the high cost of customer acquisition. So, few online groceries have been funded and fewer still will be able to get subsequent rounds of finance. The big difference is that there is a very large population on the Internet today. Today smart phones and smart devices allow customers to use the Internet on the go. More than half a dozen start-ups have launched online grocery stores in recent past.Working people, happy to have rice, sugar and even organicpepper delivered to their doorstep, may query why no one thought of it sooner. There is, of course, room for growth. Within this category, the organised food and grocery market, is expected to grow at a compound annual rate of 30 per cent in the next five years. Truly online grocery seems to have come to a different age from the time when the colossal failure of Webvan started by George Sheen hit the headlines in 2000 and someway led to the dotcom burst. Better IT infrastructure, more net savvy customers and leaner warehousing and logistics compared to the early stage start-ups in online grocery will probably make online grocery stores succeed now. Online grocery stores in India seem to have an inherent advantage over those started in the West because of comparatively lower labour costs. However, the flip side is poor logistics infrastructure in India.