Leading auto-rickshaw aggregator Jugnoo on Thursday announced its entry into the grocery segment. The diversification follows the recent launch of its initiative Fresh, delivering fresh fruits and vegetables. Maintaining its stance of optimum utilisation of resources, the grocery orders too will be delivered by auto-rickshaw drivers during their free time, the company said.
Before launching the service into other geographical locations, Jungoo plans to grow organically in Chandigarh and fortify its operations and processes. After acquiring a strong hold in its home town it intends to replicate the model in 40 cities across the country, with a plan of launching in about 6 cities by mid of next year. Jugnoo is also working on tying up with brands directly for its grocery service.
Jugnoo has tied up with the local branches of wholesale dealers. At present the deliveries are done the next day of placing an order between 4 pm – 8 pm. To further enhance the services, Jugnoo also intends to launch an Express store this December, where deliveries will be done within 2 hours of placing an order, said a press release.
Elaborating on the launch, Samar Singla, founder and CEO, Jugnoo, said, “Post the successful launch of Fresh, the idea was to enhance our user experience and offer customers an all-inclusive end–to-end solution for all their daily needs. This additional category was a profitable move, as this adds to our overall order size.”
The food and grocery industry in India is now worth $383 billion and is expected to touch $1 trillion by 2020, according to a study by advisory firm Technopak. Though the online grocery retail market accounts for a very small percentage of the total sales, it is growing at 25 to 30 % in the metros and other large cities in India.
“As a matter of fact, grocery in spite of being a low margin business, has been unit economics profitable for us from day one due to its strategic launch after Fresh. Furthermore, unlike other players in the industry, we have introduced a wholesale category that allows our customers to order their daily use items in bulk and increases ticket size for us,” he said.
The key players in the grocery segment in India at present include Big Basket and Amazon but it has also seen the exit of others like Flipkart and Ola. Institutional Equities in its recent report said that Indian grocery segment is estimated at R20 lakh crore and the opportunity size for the organised (including online) retailers stood at R3.4 lakh crore.
However, the food and grocery delivery business has its own challenges in terms of scale. Big Basket, for now has limited its operations to 25 cities in the country while Amazon is expanding its service in a judicious manner.