Amazon partners with farmers to scale up grocery network across India

The e-commerce giant seeks to expand its supply chain network across the country to provide groceries like fruits and vegetables to customers

Uma Mahesh Ambre is a happy mango farmer in Ratnagiri, a district located in the southwestern part of Maharashtra and known for the Hapus or Alphonso mangoes. She is now able to get the right value and timely payment for her harvest. Earlier this was a huge challenge as she had to sell mangoes through middlemen and traders. She has also been able to reduce post-harvest losses and improve the quality of mangoes. This turnaround in fortunes came after Ambre started selling mangoes through e-commere platform Amazon, which has improved the life of a lot of farmers like her, by providing technology and supply-chain to reach out to the customers.

“Earlier, we sold through middlemen and traders and it did not always offer the right valuation for my harvest,” said  Uma Mahesh Ambre. “With Amazon procuring it directly from us, we are now  getting the right value of our produce and timely payments within 4 hours of delivery.”

The collection centre manager at Amazon regularly visits her farm, provides weekly demand projections and guides her on best harvest and practices. “This has helped us to reduce post-harvest losses this season while improving the quality of mangoes,” said Ambre.

Ambre is just one of the thousands of farmers that Amazon is working with as the e-commerce giant is scaling up its infrastructure and supply chain network across the country to provide groceries like fruits and vegetables to the customers. The endeavour is to source as much locally as possible.

“We are working with farmers to improve their yield because we do want to offer very high-quality fruits and vegetables to our customers,” said Sameer Khetarpal, director, grocery, food and health, Amazon India, in an interview. “We realize that the supply chain in India is not geared for the farm practices to have higher yields.”

Amazon continues to make progress with its single grocery store called Fresh. It has now expanded to more than 20 cities where the firm said it offers customers very high-quality fruits and vegetables, a large supermarket grocery selection available in two hours from morning 6 am to midnight. It has plans to scale it up further. In the remaining 250 odd cities, the firm said it offers ambient grocery such as ‘atta, dal and chaval’ at very competitive prices.

The firm has formed local, regional, national, and seasonal collection centres where it directly invite farmers to come to the collection centre at a slotted time. They can plan what they are harvesting accordingly. The prices are displayed on the digital screen very fairly, and they get paid in 4 hours. This saves a lot of time for farmers to go to Mandis and figure out their harvest plans.

“Our farm sizes are larger than China but our yields are smaller,” said Khetarpal. “So, I do want to break the myth that India has small farm sizes and therefore we cannot have higher yields and higher quality of produce.”

The firm is working with farmers to help them understand what to grow and when to grow, empower them with the right practices and how best to address issues such as disease or pests in their crop.  “We have been beginning to scale and we are working very closely with close to 10,000 farmers on this dimension,” said Khetarpal.

He said out of the several farms that Amazon has worked with, the yields improved by 30 per cent and quality improved by almost 40 to 50 per cent.

Opening a fulfilment centre is easy. But the challenge is to align it with the local supply chain of fresh fruits and vegetables and the temperature-controlled vehicles and infrastructure at the back end.  Amazon has invested heavily in the temperature-controlled supply chain relevant for products like tomatoes, apples, lychee and meats and ice creams.

Amazon competes with e-commerce firms such as Walmart-owned Flipkart, Reliance’s JioMart and the Tata group for a share in the grocery and food market, which is expected to become a $790 billion market size by 2024 from $603 billion in 2019, according to analysts. The demand is not just in the metros, but the market is shifting towards organised channels, as e-grocery finds acceptance in smaller cities and towns.

“You will be surprised to know that Agra, Meerut, Mysore, Coimbatore, and Indore have equal penetration and adoption for grocery,” said Khetarpal.

Leveraging technology is playing a huge role for Amazon to provide value to the farmers and also compete with other e-commerce players. Using computer vision analytics, soil testing and weather forecasting, the firm helps the farmers improve their yields. For example, a farmer can send a picture of the pest that has infested his crop. He can then get a very quick solution, just by analyzing the image using computer vision. The same technology is used for monitoring the defects when the food items are on the shelves.

“We can look at a picture of a mango and actually decide whether it is ripe or not, ” said Khetarpal. “You don’t need humans to grade it. It is done through computer vision analytics.”

There is also the use of the Internet of Things (IoT) a technology where devices communicate with each other intelligently. The company also uses biodegradable packaging to protect fruits and vegetables.