Fiscal Year 2015-16 started with a bang for Grocery Startups in India. Over $50 million got invested in April 2015 itself in different startups related to Grocery. Why this sudden rush? Probably there is an expectation that next unicorn will come from this category, reading from the success of Instacart in US which is valued at $2 Billion+.
While Flipkart/ Snapdeal/ PayTM/ Amazon all are trying to crack grocery category, which is expected to significantly grow their revenues, number of transactions per user with them since grocery is bought almost every other day viz a viz once in a while purchase of mobile phone or TV or clothes.
However, at the same time grocery category is a tricky one, since margins are wafer thin and delivery costs very high. Plus people buy groceries very differently from the way they may buy a mobile / apparel.
It is evident from the fact that abroad also Amazon / Google are trying their hand at Groceries – still serving only few cities post years of operation. Our own homegrown Retailers like Future Retail, Reliance Retail etc. are still having negative balance sheets. Hence grocery is not a one size fits all category.
This leaves room for lot of experimentation, and innovative, agile startups have already started taking mind-share. More-so boom of smartphones is proving to be a boon – bringing absolute focus on Consumer Personalized Experience over the mobile. Whoever succeeds in making people shop groceries over their mobile is likely to lead the race. There could be many winners – like current state of our eCommerce in India – considering groceries amounts to $500 billion biz – less than 1% of it is currently online – hence the market opportunity is humongous-ly large.
Grocery Startups/Solutions as of today can be categorized in these 4 quadrants
While in first 3 quadrants there are good number of startups already with decent traction. In Quadrant 1 & 2 companies have got decent traction however no profits as yet. Only way people are making profits by introducing their own brand of products and push those to the consumer.
Quadrant 3 is relatively new with some strong investor interest seen since last month. How it would shape-up needs to be seen, probably the companies will need to bring their margins from outside the grocery category.
Quadrant 4 is a new wave, where there are synergies sought with existing capabilities already in place with retailers – hence cost of introduction will be quite less compared to other models. However the only concern remains is that of Consumer Experience. There are certain startups though that are trying to find a solution holistically to this problem, leveraging technology to control the consumer journey and experience.
Race is hot with every one eyeing to have substantial pie of the grocery/needs market. Consolidation has already started among Big retailers, take for example Future Retail and Bharti Retail merger. There are online stores opening each day. There is other side of coin as well – where stores are shutting shop, online stores are dying un-natural death also. One guy that has managed to stay afloat and profitable is your nearby Kiranawala. With companies like Big Basket & Amazon pushing to woo the Kirana-walas to extend their influence. There are fresh startups like ours that are trying to disrupt the way this category has been catered till date. Everybody is experimenting and hopefully this would bring good results for both consumers and retailers (kirana-walas).
Exciting Times for Sure, and Startups are leading the pack to Change the Game!
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