E-Grocery Market in India 2012

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Dessence Consulting has focussed interest in the Indian Organised Retail Market. We have also advised extensively on e-commerce. Download from http://www.dessenceconsulting.com/download28.html
This presentation is an outcome of our Tracking the E-Groceries space in India with a view to understanding the
1. Various business models in place
2. Logistic challenges
3. Payment Methods
4. "Discount" mentality on the Internet
5. Barriers and constraints
6. “Vow “offerings
7. Store brand opportunities
8. Niche-organic, Gourmet, Ethnic, Global and Wellness propositions
The Indian E-commerce Market has reached a 9 Bio USD size, yet no big player has emerged in the e-grocery space. Private Equity Investors and Venture Funds have viewed the domain with scepticism and very few ventures have got funded.
Groceries dominate the Indian Retail Scenario. Has the time come to go Online?

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E-Grocery Market in India 2012

  1. 1. E- Grocery Market In India
  2. 2. India is 6th Largest Grocery Market in the WorldTotal Retail Market $470bn 2011 Indian Retail Sector – Quick Facts Organized Retail penetration 5-8 % 70% Food & Grocery No. UnorganizedKiranas Un-Organized Retail 12 mn Market 94% Shops Market ($443bn) Growth rate of Retail Market 15-20% 30% Rest Growth rate of Online Retail 35% Organized Retail Market 6% Market ( $27bn) Size of Food & Grocery Market in USD Billion 482 302 236 16% Food $4.32bn & Grocery 2006 2010 2020 Source: IGD Research & Estimates 2 Marketing White Book 2011-12
  3. 3. Indian Organized Retail and Grocery Sales are growing at 18.4% Share of Categories in organised Retail Grocery Sales Growth Across Countries (2010) in % F&G 18.4 Footwear 12.4 Furnishing 11.1 10 Furniture Pharmacy 3 2 9.2% 0 16.3% Home Improvement 9.2%2.0% Books And Music 6.1% 3.1% Jewellery and Source :India Retail Forum,2010 19.4% 3.1% Watches 6.1% Nonstore Restaurant 7.1% 1.0% 8.2% 7.1% 2.0% Apparel Entertainment Misc Products Marketing White Book 2011-12 CDIT 3
  4. 4. Different Modern Store Formats in IndiaHyper Markets Shopping Malls Departmental Stores Super Markets Modern Formats Online Web Stores Share of Spends Traditional Modern Purchase of.. Format Store Format Store 10% Traditional Staples, Packed Food Items and Format other non-food 96% 15% Modern Format Household products 90% Perishables-Milk Eggs, Bread, 99% 6% Vegetables, Fruits Source: D’Essence Research 4
  5. 5. Growth Drivers for e- Grocery Market in India • Growing Younger Population • Growing Internet Usage / Online ShoppersDemand • Rising Disposable Income • Increasing Affluence Levels • Quality /Organic Products • Customer Driven And not Investment Driven • Growing e-Commerce Market in India • Multiple Channel Distribution • Flexible Delivery Options Supply • Presence of Major Players • Convenience • Increasing supply of Packaged Grains and food products • Multiple Mode of Payments like Credit Cards, Debit Cards, Net Banking, Mobile Payments like Airtel Money, Mosambee (Swipe Credit & Debit Card on Mobile) 5
  6. 6. The Hybrid ModelDairy Meat Bakeries Breweries Others B2B Wholesale/ Imports Locality Level Cross Docking Terminals City-City Level LDC Stores B2C Pan-India Individual Households 6
  7. 7. Business Models of e-Grocery currently in practice Importer (Wholesaler) CDTCentralDistribution CDT LDC 1 LDC 2 LDC 3 LC D LCD LCDTerminal Local LDC Distribution Terminal The Operation Model Can Be Divided In Two Approaches: 1. Stock It Yourself –Limited Warehouses To Fulfill The Orders. 2. Outsourcing Warehouse Model-using Logistics Specialists Which Do The Work Of Stockpiling And Shipping Web Stores. Manufacturer Importer Customer Wholesaler Wholesaler 7 7
  8. 8. Key Indian e-Grocery Players focused on Metro Markets Minimum BusinessKey Players Location Delivery Slots Order for Free Funded Model DeliveryAaramshop.com All India Aggregator 24*7 Rs.500 Yes Processed within 1-3Farm2Kitchen.com Delhi Own Supply chain Rs. 500 No days 48 Hr Delivery & 24*7 No MinimumMyGrahak.com Delhi –NCR Own Supply Chain No Support OrderCallandorder.com Mumbai Own Supply chain Next Day Rs 500 No Specific Localities & 10am to 7pm & NoFreshnDaily.com Mumbai Rs. 150 No Self Delivery Delivery on Sunday Specific Localities &Shopveg.in Mumbai Same & Next Day Rs. 200 No Self DeliveryAtmydoorsteps.com Bangalore Own Supply Chain Same & Next Day Rs 500 NoBigBasket.com Bangalore Own Supply Chain Same & Next Day Rs.1000 YesZopnow.com Bangalore Own Supply Chain Everyday Delivery Rs.500 No 3pm-9pm, NextVeggiBazaar.com Chennai Own Supply Chain Rs. 150 No 8 Business day
  9. 9. Product Portfolio Of Key e-Grocery Players In India Fruit& Conf Dairy Organi Beverag Grocer Non- Pet Home Personal ToiletrKey Players Vegetab ectio products, c es & y Veg food care Care ies les nary Eggs food snacksAaramshop √ √ √ √ NA NA √ NA √ √ √Farm2kitchen √MyGrahak √ √ √ √ √ NA √ √ √ √ √Callandorder √ √ √ √ NA NA √ √ √ √Freshndaily √ √ √ √ √ NA √ NA NA NA NAShopveg √ √ √ √ NA NA √ NA NA NA NAAtmydoorsteps √ √ √ √ √ √ √ √ √ NA NABigBaskets √ √ √ √ NA √ √ NA √ NA NAZopnow √ √ √ √ √ NA √ NA √ √ NAVeggibazaar √ √ √ √ √ NA √ NA NA NA 9 NA
  10. 10. International e-Grocery PlayersUnited States Of America• Amazon.com• Americagrocer.com• AULSuperstore.com• Netgrocer.com• ShopfoodEX.comUnited Kingdom• Tesco.com• Ucado.com• Waitrose.com• Foodfullstop.comCanada• E-Z Grocer.com• Canadagrocer.ca• Grocerygateway.com• Onlinegrocer.ca• Telegrocer.comSingapore• Singaporegrocerystore.com• Egrocy.com• Yumtrade.com 10
  11. 11. Whose buying Grocery Online? 85% of Online Shoppers are between age of 22 to 45 Female Male 63% 37% 53 61 24 32 11 11 3 5Reasons For Purchasing Groceries Barriers to Purchasing Groceries Online Online 65 38 37 35 32 30 30 28 40 38 25 32 31 22 20 20 22 20 18 15 15 11 Source: SOGS,india
  12. 12. What Motivates Shoppers to Buy Grocery Online? Stated Critical Needs The Commitment Drivers • Polite, Courteous Store Staff • Aware what a regular customer • Availability of store Staff wantsThe Traditional Format • Credit Available • Personalized Services Shopper • Fresh, Quality Services • Return /Exchange Policy • Reasonability Prices • Less Impulsive buying • Trust Level • Stick to budget policy • Polite, Courteous Store Staff • Modern Shopping Experience • Fresh High Quality Stocks The Modern • Availability of Latest Products, • DiscountFormat Shopper brands Coupons/Promotions/Freebies • Larger shelf display • Increasing Affluent levels • Bulk buying • Use of Credit facilities • Convenience Shopping The Online • Better way of spending Shopper • Already a Online shopper • Easy and convenient • Grabbing Bargain deals • Delivery at stated timings 12
  13. 13. Key Challenges in the Operating e-Grocery Model Key Challenges Solid supply Chain ManagementSource: Booz and Company Analysis 13
  14. 14. Do Investors Think investing in E-grocery is a Good Deal?• E-Grocery companies in India have early-start up advantage.• Largely predictable business cycle helps ,even the conservative investors find the business appealing.• New players coming up with specialty models (like farm2kitchen.com – organised food and organised Products ) which is appealing to customers.• Low Costs and logistics costs is still concern for many. 14
  15. 15. D’Essence Consulting Services D’Essence Consulting is a Management Consulting, Business Strategy and M&A Advisory firm Remain M&A Build Grow Competitive AdvisoryServices• Market Entry & Growth Strategy• Business Plans & Financial Projections• Start-up Acceleration Services• Market Assessment +91 22 28347425• B2B Market/Consumer Insights• Solutions to transform Food and Retail Sector• Access to Capital through our Investor Network chandni@dessenceconsulting.com www.dessenceconsulting.com 15 303, Aar Pee Center, 11th Road, MIDC, Andheri (E), Mumbai- 400093

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