New players emerge in grocery delivery space as online purchases skyrocket

As big-budget grocery e-commerce players struggle to meet the burgeoning consumer demand due to last-mile delivery bottlenecks, the Covid-19 pandemic has opened doors for several new players to enter the retail delivery industry. Companies like StoreSe.In, JustMyRoots, HouseJoy Mart and Wow Momo Essentials, among others, have launched their grocery delivery operations within the last two months and are already seeing 3x-5x growth.

“We were piloting a new grocery delivery platform since January and had no plans to launch it now. With this unprecedented demand coming, and delivery players not being able to meet it, in March we made a quick move to launch StoreSe.in,” said Abhinav Pathak, CEO & Cofounder, Perpule.

StoreSe is part of Perpule which is a series funded company retail-tech startup. The company has invested ₹1 crore in it. It currently operates in two cities and is adding 20 per cent sales on a weekly basis since its launch.

Another player with a similar story is Near.store. The Mumbai-based retail-tech startup was founded in 2018. The company’s founder Ashish Kumar saw an opportunity in the grocery delivery segment right before the lockdown and launched the portal in March this year. On a month-on-month basis, the Near.store has seen a 6x growth in sales.

On a daily basis, StoreSe caters to “a single-digit thousand orders” and Wow Momo Essentials claims to deliver 2,500 orders, whereas, JustMyRoots and Near.store daily order volumes are approximately 250-300 and 300-500 respectively.

The big fish in the industry too saw a surge in demand. According to a report last month, BigBasket had 2.83 lakh daily orders, compared to 1.5 lakh before the shutdown, while Grofers serviced 1.9 lakh daily orders against one lakh before the crisis. Amazon Pantry too saw a growth of 2x-2.5x in comparison to the pre-lockdown demand.

Demand-supply mismatch

However, unlike the small players, this surge became a bottleneck for these players creating a demand and supply mismatch due to backend disruption and inadequate manpower.

Ruchi Shah, a South Mumbai resident living with her grandmother since the lockdown had begun, was struggling to get a slot on online-grocery delivery platforms for several weeks. “I used to sit with my phone for hours checking Grofers and Big Basket to get a slot. Luckily, if there was a slot available, the products I needed were out of stock. My friends suggested DMart and Big Bazaar’s portals but neither of them delivers on my pincode.” Eventually, a neighbour helped her procure groceries from a local kirana store.

Just like Shah, several others struggled to get their essentials delivered to their doorstep. Several customers also took to Twitter to express their angst. By the end of last month, these three players went on a hiring spree of delivery partners whereas Grofers decided to deliver 24x7 to complete the backlog.

Though things are getting back to normal for them, this slowdown became a boon for small players. They made a rapid move to go hyperlocal and cater to the demand.

The differentiator for these new-age players is their supply chain, whether it is partnering with kirana stores, distributors, FMCG brands, giving tech-support, or providing delivery fleet.

These companies work on an asset-light model, unlike the big players which own the stock at their warehouses.

JustMyRoots gets its stocks from select distributors of FMCG companies and delivers products via a third-party delivery app along with its own fleet.

Whereas Store.Se has partnered with kirana stores and large format retail stores and has partnered ridesharing service companies like Meru and Ola to deliver their products. Whereas Near.store procures its stock from both kirana stores and FMCG companies directly and uses a third party fleet to deliver these products.

F&B company, Wow Momo’s retail arm, Wow Momo Essentials has partnered with FMCG companies to procure essentials on a consignment basis and has registered on Swiggy and Zomato Market to deliver them. Being an F&B company, its sales were tapering because of the lockdown. Hence, it is currently using its manpower and restaurant space for Wow Momo Essentials.

Where players like Wow Momo were struggling to make sales, food-tech aggregators too were bearing the brunt of the lockdown. Recently, Zomato too launched Zomato Market to deliver essentials.

Speaking to BusinessLine , Mohit Sardana, COO-Food Delivery, Zomato, said while the company has always been focused on food, the grocery segment is another touchpoint within the same ecosystem. “It was always on the radar, and therefore we explored it and were able to expand so quickly,” he said.

Zomato Market already has 3,700 partners, including FMCG players, retail chains, and local kirana stores. Zomato Market already constitutes more than 35 per cent of its current order volume. “Our differentiator is that essentials are delivered within 60 minutes,” said Sardana.

Zomato’s differentiator is delivery in 60 minutes, while payment gateway app Insta Mojo’s differentiator is the registration of merchants on its app within 10 minutes.

Will this stickiness be there post the lockdown?

According to Praveen Khandelwal, Secretary-General, Confederation of All India Traders, if these new models have come up in such unprecedented circumstances and withstand the pressure of the lockdown, then “in normal conditions they can be a game-changer. Along with this, the very low cost of the delivery system and the time period of delivering the goods shortly after placing an order are liked by all.”

Over the next six months, the asset-light StoreSe plans to scale up to 100 plus cities whereas JustMyRoots plans to cater to over 200 cities by the end of FY21. Wow Momo Essentials plans to expand deliveries for niche essential items in the near future, whereas Zomato plans to stick on to delivering essentials and food at the moment.

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