Tuesday, September 15, 2015

Some Thoughts On Why Groceries Is The 2nd Most Transacted Segment In ECommerce In India

India is a fascinating country, thanks to its large population, its english speaking people and its formidable room for growth. It is a fast growing country, speeding up the pace, and sometimes jumping some technologies gap.

I remember I attended a conference where they said India was going to jump from no Internet to mobile Internet, skipping home Internet equipment. Because of it, it could be a chance to innovate for the country. I read this interesting article about India's grocery Ecommerce market.

"We are seeing many companies aggressively investing in online grocery shopping. Web portals like Big Basket, Grofers, Grocermax have cumulatively raised over USD 65 million to expand their business. We expect this segment to witness 5 lakh transaction a day in 12 months from 30,000 at present," PayU India CEO and Founder Nitin Gupta told PTI.
"About 5 per cent of the total transactions made in e-commerce in India on our platform are from the grocery segment. We see it rising to 35 per cent in a year," Gupta said.

If you read this article, you may think that India could be the promise land for groceries Ecommerce. But I would like to make it clear this is not my case.

Indeed, for the longest times, leading retailers such as Carrefour, Walmart & Auchan, have been looming on the potential of the Indian market. But they so far have failed where they have thriven in Brazil or China.
For 2 main reasons:
  • The market is over regulated, and the government has no intention to let foreign retailers to settle down in the country. 
  • India is poorly equipped in cars, and transportation systems, especially roads, to allow hypermarts to settle down. Major investments are needed to really allow retailers work on an efficient supply chain and to have enough people coming to their stores.
Actually, I checked online two of the grocery Emerchants they are talking about in the article, Grofers, & GrocerMax. Both have based their modells on home delivery, which requires a lot of operational costs, even though obviously manpower is pretty cheap in India. Nevertheless, once discounters like the one named above would come around, they will have hard pricing which will open the market, and will lower the importance of those actors.

Now don't get me wrong, you should pay close attention to this article. Still, to be the 2nd most transacted segment is still a good performance. And when I check those websites they are of a pretty good quality. Also, let's remember India could be the first country to adopt for real the Amazon's drone delivery system. 

 But still, I really wonder what it would be like when the Indian retail market will really open up.