E-grocery start-ups unwrap new business models amidst lockdown

Sangeetha Chengappa Bengaluru | Updated on April 29, 2020 Published on April 29, 2020

File photo   -  Paul Noronha

A ‘store-finder’ feature, rationalising SKUs, new delivery design, hiring delivery staff from companies that are laying off, etc are some of the business innovations that e-grocery, fresh foods and meat start-ups have adopted to fulfil real-time consumer demand during the Covid-19 lockdown.

The $70-billion Indian online consumer economy is going through perhaps its worst phase so far, as it grapples with the prospect of a 90 per cent drop in GMV this April.

But, armed with innovative business models, start-ups such as BigBasket, iD Fresh Foods, Licious and Nandu’s Chicken have seen a sharp spike in orders, new customer acquisitions and an increase in average order value, as consumers look for safe-to-eat, hygienic products.

Covid effects

Online grocery retailer BigBasket, which has a strong supply chain in place, was hit badly at the workforce level with several employees leaving for their home towns immediately after the lockdown was announced. This reduced the e-grocer’s operational capacity to 50 per cent, while at the same time, panic scare among consumers resulted in demand on its platform surging by 5-6x.

“Pre-Covid-19, we were fulfilling 1.5 lakh orders a day, which dropped to 30,000 orders a day during the first few days of the lockdown because of our limited workforce levels. One of the first things we did was to filter down our 3,800 SKUs to 2,500-3,000 SKUs, which was further rationalised in cities where we faced manpower shortage. With technology and business process re-engineering, we were able to deliver and increase productivity by 23 per cent,” said Hari Menon, co-founder and CEO, BigBasket at a recent webinar organised by Fireside Ventures and TiE Delhi-NCR.

“Now, with operations in place, we are able to fulfil 3,00,000 orders a day. Government support really helped in scaling and clearing things at the ground level across cities,” he added.

Increase in orders

Omni-channel retailer of farm-fresh chicken, Nandu’s Chicken, has seen its orders spike from 40,000 a month pre-lockdown to 65,000 orders; a 15 per cent increase in average order value (₹500); a 40 per cent increase in new customers online and a 20 per cent increase in walk-in customers to its stores.

“We are fulfilling 2,700 orders a day across all channels, including 32 of our 49 stores which are open, our webstore, Nandu’s app (iOS & Android) and our partnerships with Swiggy, Dunzo and Zomato. Now more than ever, consumers are looking for healthy meat with no steroids, hormones or antibiotics that are 100 per cent traceable. That’s why our sales have doubled during the lockdown,” said Narendra K Pasuparthy, Chief Farmer and CEO, Nandu’s Chicken.

Fresh meat and seafood brand Licious stopped its express delivery service within 90 minutes and implemented slotted deliveries throughout the day to better manage them. The start-up’s pre-Covid order fulfilment of 18,000 deliveries per day has now gone up by 1.5-2x times, with a 30 per cent increase in average order value from customers and a 200 per cent surge in demand across the seven cities it operates in.

“During the lockdown, we lost almost 50 per cent of our workforce. While others may be laying off staff, we have hired 300 people over the last 20 days and are back with 1.5 times of our capacity. We have partnered with DriveU, Shadowfax, Yulu among others to hire people very successfully” said Vivek Gupta, co-founder, Licious.

The start-up has three plants in Delhi, Bengaluru and Mumbai, where 600 people work. “Instead of them travelling to work and back from their homes using public transport, we provided them with hotel accommodation, where they are made to follow stringent safety and social distancing measures and provided transport to the plant and back,” added Gupta.

New strategies

To stop consumers from panic buying when the lockdown was announced, fresh food brand iD Fresh Food launched a ‘Store Finder’ feature on its website, that provided consumers with updated information on iD products available at stores near them. Additionally, a ‘notify me’ feature provides daily SMS alerts to consumers when fresh stocks get refilled at the neighbourhood stores.

“We are an offline retail company, but when the lockdown was announced, we looked at it as an opportunity to learn and innovate rather than as a crisis. We have partnered with Swiggy, Zomato, and Dunzo for deliveries and also consolidated orders from resident welfare associations and recorded our best performance in March with sales of ₹23.8 crore” said PC Musthafa, co-founder and CEO, iD Fresh Food.

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Published on April 29, 2020
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