Grocery delivery: Bengaluru vs Gurgaon
Can the underdog Gurgaon catch up with Bengaluru with big names?
Can the underdog Gurgaon catch up with Bengaluru with big names?
Brief:
Bigbasket from Bengaluru is the market leader. It has raised more than INR 6300 crore. It services more than 50,000 orders per day. It’s turnover is INR 1000 crore.
Grofers from Delhi is second to Bigbasket. It has raised more than INR 1700 crore. It services between 35,000 to 40,000 orders per day. It’s turnover is INR 200 crore, 1/5th of Bigbasket.
Milk Basket from Gurgaon raised INR 50 cores recently. It caters to 40,000 households in Delhi.
Amazon India, headquartered in Bengaluru is distant third. It serves 5,000 orders per day. Amazon has been burning $3–3.5 million.
Walmart will also join the bandwagon soon. Expect them to start a mix of online and offline grocery delivery, as they do in USA.
Fortune from Kolkota is planning to upgrade its stores to match offline to online major Hema of Alibaba. It is the future of retail. It currently has 1,000 stores, which it plans to increase to 10,000 stores.
Grocery business is one of the most difficult businesses:
Economic Times reports that none of the brands have made profits.
It is deemed a low-margin business. Third-party brands share 12–15% with the retailer. Add last mile delivery from central warehouses and logistics cost would constitute 25%. Additional costs include customer acquisition, discounts, shrinkage, transaction and platform of over 30%, which would mean a negative retail margin of 40% — a loss of Rs 40 on a sale ofRs 100. Profitability remains a distant dream despite numbers.
Why is everyone after India’s grocery market?
India’s food and grocery market is worth $428 billion. As per FT by 2020 food and groceries will form more than 60% of the total market.
Startups want to be part of India’s rapid shift to online and mobile shopping, which is expected to rise from $10bn in 2015 to $47bn in 2020 according to eMarketer, a US research group.
India’s online grocery market makes up less than 1 per cent of total grocery sales, roughly $150m, according to Technopak, the consultancy. This compares with about 5 per cent in the UK — the world’s most advanced online market for consumer staples.
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