KIT: Online Grocery Retail in India

Strategic tools for the practising manager

Of the total e-commerce market, almost 80 per cent is online travel. Even in the Rs 2700 crore e-tailing market, Food & Grocery is negligible as of now, with electronics, lifestyle, books etc dominating the products retail.

This category has potential to contribute significantly to the total e-tailing market in next 10 years. However, at an overall level this will still remain a very small (less than one per cent) part of total F&G market in India.

Non-availability of retail space will drive established retailers to approach online channel more seriously and have online presence to compliment physical presence. While initially food is a difficult category to service through this channel (given the lack of standardisation and brands), FMCG categories which are relatively more branded like personal care, baby care, home care etc will more easily move online. In the long-run, consumers will mix the channels they use for their weekly or monthly shopping.

The challenges:
> Achieving standardisation, when a large part of grocery is still sold as loose in India, and convincing consumers of the quality and consistency will take time

> Developing a comprehensive and efficient delivery network across geographies

> The online channel does not satisfy sensory needs of consumers, hence this category will be slower to get adopted on the online channel as compared to others like electronics, books, lifestyle etc.