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Vishal \n Krishna, Businessword<\/i><\/p>\n Vishal \n Krishna, Businessword<\/i><\/p>\n
Bangalore, \n September 29, 2012<\/i><\/p>\n
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It \n is an early Monday morning and Sandhya Ram is busy preparing a \n presentation. But at the back of her mind are thoughts about her \n kitchen supplies, and what to cook for dinner. Sandhya needs provisions \n in a hurry so she turns to a grocery retailing website — \n it is convenient and the order comes right to her door. “I \n am a PhD student, and a mother. My husband is a consultant. We \n have no time to shop, and shopping for groceries outside takes \n time and energy,” says Sandhya, who is also a teacher and \n research assistant at a business school in Bangalore. Sandhya \n and many others like her are just the kind of customers that online \n grocery retailers plan to tap. At least 20 such businesses have \n opened up in the past year, and most of them are based in Bangalore. \n
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\n But there is many a slip between the cup and the lip. Online grocery \n retailing has not had a good run in other countries, barring the \n likes of Tesco and Walmart that have spent years getting their \n supply chains and technology right. “When it comes to \n start-ups, the easiest piece to create is the technology involved \n for a great user interface to attract the customer,” says \n Devangshu Dutta, CEO of retail industry consultancy Third Eyesight. \n <\/b>
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\n There are, however, other challenges in grocery retailing — \n sourcing, maintaining consistency in service and products, and \n keeping operational expenses in control. But there are bigger \n problems.
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\n One, the business needs money to survive in the long run. The \n scale that many of these businesses have is limited to the top \n 10 major cities and their affluent populations. Two, a majority \n of Indian consumers is yet to experience shopping online. Of the \n 8-10 million Indian women working in the formal sector (according \n to the National Institute of Public Cooperation), it would be \n difficult to assume how many of them actually shop online. But \n the online grocery business’s survival will ultimately depend \n upon women as decision-makers.
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\n This business may be easy to enter, but longevity is another ball \n game, and the entrants are still learning the rules.
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\n The Right Direction?<\/b>
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After taking orders online the previous day, the five-member \n call centre of Towness.com dispatches the packing order to the \n delivery team. The next day, 20 trucks leave a 20,000-sq. ft warehouse \n in Peenya, Bangalore, with cartons of jams, lentils, rice, wheat \n and pickles from FMCG brands, including ‘Town Essentials’. \n “I have been running a B2B business for 10 years and that \n gave me enough experience to dabble in the B2C business with private \n labels,” says Amar Krishnamurthy, MD of Town Essentials. \n Thanks to private labels in lentils, jams and pickles, the B2C \n business gives him higher margins and he also has more control \n over the working capital cycle. Usually, say analysts, margins \n in the online retailing business are only as high as 8 per cent, \n and that too if one manages the supply chain efficiently. But \n if private labels are the main business, margins can be significantly \n higher.
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\n “There is enough business within Bangalore and I am improving \n my website experience to get more orders,” says a confident \n Krishnamurthy, adding that his B2B business, which supplies to \n over 200 hotels and restaurants, funds the online arm and manages \n its delivery too. Towness.com gets about 45 orders a day. “I \n do my own sourcing of all the commodities, fruits and vegetables \n because I believe in maintaining consistent quality if the customer \n has to come back to shop at the website,” he says.
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\n In another part of Bangalore, 20 Omni vans leave a mandi in Whitefield \n for a 6,000 sq. ft warehouse, from where Bigbasket.com takes its \n products to three hubs across the city and delivers groceries. \n “The ability to gauge demand is the key to success in this \n business as you do not want to end up with too much inventory,” \n says Hari Menon, who co-founded Bigbasket.com with Vipul Shah. \n Menon adds that every online grocery retailer has to operate multiple \n spokes supported by a large hub if this business has to succeed. \n Bigbasket.com has 20 trucks and claims to handle over 400 orders \n a day. To support large orders, it is moving to a 30,000 sq. ft \n warehouse that will also be its central hub. “In this business \n you have to meet a 100 per cent fill rate for the customer. If \n you do not have the product he or she likes, you have lost one \n customer,” says Menon. The company has raised $10 million \n from Ascent Capital, and is currently the only business in this \n segment to have external funding.
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Vishal Krishna, Businessword Bangalore, September 29, 2012 It is an early Monday morning and Sandhya Ram is busy preparing a presentation. But at the back of her mind are thoughts about her kitchen supplies, and what to cook for dinner. Sandhya needs provisions in a hurry so she turns to a grocery retailing website — […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-3036","post","type-post","status-publish","format-standard","hentry","category-press-quotes"],"yoast_head":"\n