Start-Ups in India See Opportunity in Online Delivery Market Through Local Grocery Stores

Simon Mundy reported yesterday at The Financial Times Online that, “Manish Supermarket appears typical of the kirana neighbourhood stores that have been at the heart of Indian communities for decades, its every available space crammed with goods from soap to biscuits.

“Yet amid the household essentials are two distinctly modern, smartphone-wielding young interlopers sent by Grofers, a technology start-up seeking a slice of an Indian ecommerce market that Morgan Stanley analysts predict will be worth $119bn by 2020.”

The FT article explained that, “A dizzying number of tech companies have emerged to offer Indian online shopping ventures in recent years. The number of web users increased by roughly 50 per cent to pass 300m between 2014 and 2015, according to the Internet and Mobile Association of India, and is expected to reach 462m this year. In a country where western-style hypermarket chains never took off, this has fuelled predictions that consumers will leapfrog directly from local family-run stores to ecommerce.

“But Grofers has taken a more nuanced approach, developing an ecommerce service that piggybacks on the age-old kirana network, enabling customers to order from their local store with a few taps on a smartphone.”

Mundy noted that, “To entice consumers to the platform, Grofers decided to ‘give them a look into the inventory’ of their local stores through a smartphone app, which customers would use to order products instead of calling the shop.”

Yesterday’s article added that, “There is an intimidating new competitor on the scene in the form of Amazon’s Indian subsidiary, which this year began testing its own grocery delivery service, which also relies on kirana stores and other local retailers.

“Still, some investors are sceptical about the notion of trying to integrate kirana stores, with long-established ways of operating, into ecommerce.

‘If you take too much [commission] from the kirana shop, they’re going to say: why the hell am I bothering with you? You’re just giving him the customer that’s already coming to him,’ says Sandeep Murthy, a partner at the Mumbai venture capital firm Lightbox Ventures.”

This entry was posted in Start-up Company Law. Bookmark the permalink. Both comments and trackbacks are currently closed.