1. Boost for online grocery stores: Order value rises 33% y-o-y

Boost for online grocery stores: Order value rises 33% y-o-y

The good news in the online grocery business is that people are ordering more at a time. Between January and May, the average order value rose 33% year-on-year to Rs 1,024.4, a study by Kalagato says.

By: | New Delhi | Updated: August 14, 2017 6:03 AM
online grocery, online grocery stores, online shopping, organised grocery sector, economy, financial express The opportunity for organised grocery retailers is pegged at close to Rs 3.5 lakh crore based on demands assessed for urban metropolitan towns and cities with a population of more than one million. (Reuters)

The good news in the online grocery business is that people are ordering more at a time. Between January and May, the average order value rose 33% year-on-year to Rs 1,024.4, a study by Kalagato says. Barely 5% of India’s Rs 20-lakh-crore grocery market today belongs to organised players which gives both offline and online grocers enough room to grow. Not surprisingly, Amazon, Grofers and BigBasket — all armed with approvals for foreign direct investment (FDI) — are together planning to invest close to Rs 4,000 crore in the business.

The opportunity for organised grocery retailers is pegged at close to Rs 3.5 lakh crore based on demands assessed for urban metropolitan towns and cities with a population of more than one million.

Currently, the margins that online grocers make are around 13% on sales but the cost of delivery remains high at Rs 80 per order. Analysts say many customers are merely looking for deals which means the frequency of orders isn’t growing too fast. Analysts believe that at the current scale of 10,000-20,000 orders a day, the inventory-led model seems to have a better margin profile. Amazon, which piloted its grocery app Amazon Now in February 2016, is now rolling out a full-fledged online food retailing business.

Currently, Big Basket dominates the space in India with a presence across 25 cities and an estimated revenue run rate of an annualised $300 million or roughly Rs 2,000 crore.

After a downturn in 2016, when both investments and revenues were hard to come by, the India internet story seems to be looking up in 2017. Private equity and venture capitalists are once again backing e-commerce ventures in India with close to $4 billion flowing in during the six months to June, compared with $1.6 billion in the corresponding period of 2016, data from Jefferies show.

Currently, Big Basket dominates the space in India with a presence across 25 cities and an estimated revenue run rate of an annualised $300 million or roughly Rs 2,000 crore.

After a downturn in 2016, when both investments and revenues were hard to come by, the India internet story seems to be looking up in 2017. Private equity and venture capitalists are once again backing e-commerce ventures in India with close to $4 billion flowing in during the six months to June, compared with $1.6 billion in the corresponding period of 2016, data from Jefferies show.

  1. No Comments.

Go to Top