Grofers' 15-minute delivery pledge fraught with risks, say experts

Experts say delivery time frame on groceries purports to blow right past the logistics promises

The race for faster delivery was heating up even before the Covid-19 pandemic. With the widespread adoption of e-grocery, the ability to get customers the groceries they order, fast, is even more of a priority. Online grocery player Grofers last week announced it was yet again foraying into the 15-minute express delivery segment. The company claimed it had managed to deliver 7,000 orders on Day One. But experts feel the company might be getting too ambitious. They say it's the delivery time frame on groceries that purports to blow right past the logistics promises and is fraught with risks of cash-burn and customer wrath.

The speedy grocery delivery space has not, however, been a smooth ride for all. It has remained a segment that is still finding its sea legs. The larger players are instead operating in the service band of one-two hours.

In 2019, BigBasket discontinued its 90-minute express delivery service. Grofers, too, had discontinued its express delivery service due to poor unit economics. Industry experts have time and again said that express delivery of 15-30 minute does not work in India. One, the unit economics is abysmal. Two, customer experience is often dire.

“Grocery shopping in India is a planned exercise. The promise of 15-minute delivery is finitely not feasible. Do customers need a 15-minute delivery service or would they rather have quality products delivered?” asks Arvind Singhal, chairman and managing director, Technopak.

He further adds: “These players must instead focus on the quality of assortment of products, especially perishables.”

An industry expert points out that customer experience and service are often the casualty of speedy grocery delivery pledge. Besides, for the 15-minute express delivery to be successful, one will need stores within the radius of 1 kilometre of the customer.

“You have no visibility on inventory. Moreover, the customer will order on your website, but most products will be picked from a mom-and-pop store. At any given time, kiranas have around 500-600 stock-keeping units (SKUs). If a customer has ordered 10 items, you will be able to deliver only five or seven,” says a senior executive of a leading online grocery player.

The service requires sourcing from the local kirana store, which can run into frequent out-of-stock issues and operational concerns.

With Indians having embraced e-commerce, online shopping has seen explosive growth. This explains the less-frequent in-store shopping trend.

“It’s the pandemic effect at work. A lot of people prefer to pay delivery charges for online delivery. Both Zomato and Swiggy have started charging for delivery. That is what is making players like Grofers feel they can take another stab at the segment. But then Zomato and Swiggy have a different delivery footprint,” says another executive of an e-grocery platform.

Players like Flipkart, Amazon, and BigBasket have preferred to focus their express delivery services on the 45-minute to two-hour window. This not only allows the company to deliver these orders from its dark stores, but also gives them a peek at the inventory as customers place orders.

For instance, Flipkart launched Flipkart Quick in 2020 in Bengaluru. It offers an assortment of more than 2,500-3,000 products in categories such as fresh fruit and vegetables, dairy, and baked goods. In addition, Flipkart Quick is also available in the mobiles and electronics categories. Today, the service is present in seven cities, with plans to expand further.

“Apart from Flipkart’s dark stores, Flipkart Quick leverages the company’s investment in strong technology and fulfilment capabilities of Ninjacart and Shadowfax, and strategic partnerships with other local vendors, to build an end-to-end ecosystem that enables swift delivery,” says a company spokesperson.

Similarly, e-commerce giant Amazon has focused on the two-hour delivery window for Amazon Fresh. “India has more than 25 specialised centres that exclusively fulfil customer orders on Amazon Fresh across a wide range of selection, including fruit and vegetables, frozen and chilled products like dairy and meat, dry grocery items, beauty, baby, personal care, and pet products,” says a spokesperson for Amazon. On Amazon Fresh, customers can opt for two-hour delivery or choose a two-hour slot from 6 am to midnight.

For Tata Group firm Bigbasket, it has been investing more into its dark stores, especially when it experienced the challenges of working with kiranas. The company in Bengaluru has 16 dark stores in the city - each store is spread over an area of 15,000–20,000 square feet - with 5,000 SKUs that make up almost 90 per cent of its sales. At present, BigBasket has dark stores in the top 10 metros of the country.