Online grocers threaten kirana stores

24 September 2014

NEW DELHI: India has seen a sharp rise in the number of online grocery sites as internet usage grows and time-poor urban consumers explore new shopping options.

A report from the US Department of Agriculture, reported by the Indian Express, said that the number of such outlets had tripled in the past year, from 14 to 44, and would continue to grow alongside the increase in internet users and the changing shopping preferences of a younger, professional demographic.

Most currently operate in individual cities and are effectively in competition with kirana stores – local independent outlets, many of which already provide a near-equivalent service, with quick home delivery and credit extended to trusted consumers.

Compared to these stores, online retailers will need to overcome delivery challenges, the report said, but a mixture of keen pricing and convenience – both in terms of payment options and time saved – means that more consumers are prepared to overcome a reluctance to buy products unseen and to trust the safety of online transactions.

While the range of products offered by these sites is largely domestic, there is a clear trend towards introducing more international brands. One such site, LocalBanya, now offers a variety of cheeses for example. It reports that around 10% of its revenue comes from its international portfolio and this is growing at 25% a month.

According to Pragya Singh of Technopak consultants, the fact that grocery is largely a standardised category is helping attract people online. "This also presents an opportunity to tap niche or imported products," she told the Business Standard, "since consumers do not have easy access to such products and, hence, there is a higher propensity to buy online."

Hari Menon, founder of the BigBasket site noted another factor. "We see high demand for packaged imported foods and cheeses among the expatriate community in cities like Bangalore, where a lot of foreign information technology executives live," he said.

His business is expanding rapidly, and expects to be present in ten cities within the next year , with as much as 20% of the products it carries being imported.

Data sourced from Indian Express, Business Standard; additional content by Warc staff