Bangalore-based MTR Foods, leader in the ready-to-eat segment in South India, will invest R50 lakh to launch its e-commerce portal by the third quarter of this year.
MTR Foods follows January-December financial year. To start with, the R600-crore packaged food major, which was acquired by Norwegian company Orkla, will launch online service in Bengaluru and move to other markets subsequently.
The online retail chain is the company’s initiative to be present on all distribution channels. At present, the company reaches out to its customers through 80,000 retail chains across the country, and it hopes in the next 15 years, online sales will contribute about 6-8% to its total business.
“Typically, we would like to reach out to as many people as possible. We are already selling our products online through existing channels such as Bigbasket.com,” said Sanjay Sharma, CEO, MTR Foods on Monday.
The company claims to clock R80 lakh in sales per month through different online retail stores across India. “One of the challenges for an FMCG brand to sell through online retail is that people are used to buying things on discount, and the minimum order for delivery is also putting off for online buyers. It’s challenging to create a sustainable and profitable online business model for long-term scalability,” said Sharma. The company will not offer any discount on the website; however, it’s not clear if there will be a minimum order bracket for delivery.
The name of the website has not been decided.
Even though online retailers have been valued in billion dollars, the contribution of online sales in the retail chain was a meagre 0.4% last year, according to a 2015 report by PwC. “While the share of online shopping in retail increased at a fast pace in last few years, it is still minuscule compared with the figure in China, where the share is 8-10%,” the PwC report had said.