Grocery Delivery Is the Must Have Feature for All Apps in the Coronavirus Pandemic – But Will It Last?


With the coronavirus lockdown, people are trying to stay home as much as possible, and the demand for grocery deliveries has gone through the roof. Companies like BigBasket and Grofers which were well established in this space initially struggled to keep up with demand, but today, grocery deliveries have become the new must-have feature, just like lending was the last big buzzword in India.

Amazon, Flipkart, Swiggy, and Zomato are all delivering groceries, helping people cope with the lockdown, as well as several others such as B2B groceries platform Ninjacart, real estate platform NoBroker, or social commerce firm Meesho. These neophytes say they’re here to say, but experts believe this isn’t the case.

Shortly after the government announced the nationwide lockdown on March 24, entities ranging from e-commerce companies and mobile wallet apps to social commerce platforms and real-estate rental portals, all started shifting their focus towards groceries. The arrival of new players also pushed restaurant aggregators Swiggy and Zomato in the country to start considering grocery as a dedicated section on their apps.

But while newcomers including Meesho, Paytm, Perpule, and NoBroker were quite active in making their announcements to start delivering grocery items through their platforms, BigBasket and Grofers that both have years of experience in the field were struggling to fulfil consumer demands. The lockdown also made it difficult for their delivery fleet to carry out the existing orders. Similarly, a shortage of delivery staff emerged due to the coronavirus contagion that made things even worse.

Now, BigBasket and Grofers have been able to resolve their initial issues by hiring new executives, enhancing their supply chains, and even partnering with cab aggregators. But this doesn’t mean that the new players that entered the market are set to say goodbye either. NoBroker, the rental portal that started grocery services through its society management app NoBrokerHood last week, is set to extend its offering for people in Delhi and Mumbai.

“Online grocery is still a vastly untapped segment and it is set to grow further,” said Srinivas Mothey, Senior Vice President, Paytm Mall. “We have been selling groceries for quite some time now and would continue to expand the business through our business relationship with BigBasket and other merchants.”

However, experts don’t see any long-term implication of grocery deliveries by many new entrants. They believe that the market will get contracted again once the outbreak goes over. “The point is when a pure-play grocery player, whose job is to deliver groceries, is struggling, whether it’s Amazon, BigBasket, Flipkart, or Grofers, it is quite difficult to say that a company who wasn’t delivering groceries earlier is enabling them without any issues,” Satish Meena, Senior Analyst, Forrester, told Gadgets 360 over a phone call.

Visibility and marketing move
One of the benefits that companies such as Meesho, Paytm, and NoBroker have got from their move to start enabling grocery deliveries is the visibility among the masses. While a large number of people weren’t able to step out to buy their daily essentials due to the lockdown and contagion, these companies projected themselves as the saviour.

“The supply-chain being built by a lot of companies whose core business is not grocery delivery is only temporary,” said Pranshu Kacholia, Vice President of Business at logistics intelligence platform ClickPost. “They are servicing the immediate need of the hour, and in the process getting new customers.” Meena of Forrester added to what Kacholia mentioned by stating that many of the new players didn’t understand the market dynamics of online grocery deliveries. He also said that what they’re doing today wouldn’t help them get any volumes.

“It’s just another marketing campaign by many companies — nothing beyond that,” he said.

Having said that, the debut of the additional players might have helped some people get essentials delivered at their doorsteps. Meena, however, underlined that since the companies didn’t provide any details about the orders they’d fulfilled so far, it is difficult to predict how successful they were in terms of resolving the demand and supply problem.

No room to garner profits or generate big revenues
Grocery is about 60 percent of the total retail business in India. This is the reason why behemoths such as Alibaba, Walmart, and SoftBank want to invest in the Indian grocery business. However, despite being a large segment in a market that has a population of over 137 crores, online grocery orders are still insignificant — just only about 0.2 percent of the total retail in the country.

The pandemic has certainly pushed a large number of Indian population to start ordering their essential home requirements online. But nonetheless, at the end of this crisis, the online grocery segment in the country will probably reach 0.5 percent of the total retail market, as mentioned by Grofers co-founder Albinder Dhindsa in a recent blog post.

In addition to the small segment size, there are multiple challenges that delivery companies need to resolve at their end to proceed orders. The list of challenges go beyond the requirement of large warehouses and large on-ground fleets and include several supply chain hurdles and scalability to allow daily transactions on a single platform.

Similarly, a large number of kirana stores in the country still don’t prefer to go online and start selling products through any of the available platforms. They instead want their customers to come to their shops in person. Rishabh Maggo, the owner of New Delhi-based departmental store Maggo Mega Mart, which recently left online platforms to sell goods only offline, told Gadgets 360 that the prime reason they had eventually preferred offline over online as their customers weren’t comfortable in ordering their daily essentials through apps.

All this limits the scope of getting large revenues and makes profit generation an unfulfilled dream. “For commodities delivery, margins are razor thin already that adding a delivery charge makes it prohibitive for movement,” said Ratnesh Verma, Founder and Leader of on-demand delivery and courier service Pidge.

Food delivery companies could play spoiler to incumbents
One exception to this is the food delivery companies, like Swiggy and Zomato, which are developing themselves as the competitors against incumbents. “While food delivery is also a part of the essential services, grocery delivery, as an added service, will definitely help us connect with new users and improve their stickiness,” said Mohit Sardana, COO, Food Delivery, Zomato. These companies already have a large delivery fleet in place, and adding groceries to their offering allows them to increase utilisation of their vehicles. This is why — even before the COVID lockdown — Swiggy was investing in a Dunzo competitor called Swiggy Go, and a grocery delivery platform. This has recently expanded to 125 cities.

Swiggy and Zomato were already the two anticipated players in the online grocery segment in India. Although both tried to foray into the segment for some time, they ultimately entered at the time when food orders dropped significantly due to the coronavirus fear amongst customers. “Given the current need of our customers, we quickly sprung into action to serve,” said Sardana.

Forrester’s Meena also sees the move by the food aggregators optimistically for the online grocery segment in the country. Likewise, Sagar Daryani, CEO and Co-Founder of food chain Wow! Momo and Head of National Restaurant Association of India (NRAI) Kolkata Chapter, said that the move by Swiggy and Zomato would help bring new business models for some restaurants who’re currently facing a tough time due to the pandemic.

“In post COVID-era and post the lockdown, things are going to be very different. It’s not going to be the way it is right now,” Daryani said.



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