Online sales of fruits and vegetables gaining traction

Ravindra Ojha | Updated on June 29, 2021

The Covid pandemic has accelerated the e-business transformational change. The two end-players in the supply chain — the consumer and the farmer — are likely to be the biggest gainers

Reports indicate that in India 30-40 per cent of food produced is wasted and 16 per cent of fruits and vegetables are squandered, while 19 crore people sleep hungry every day. What a sad paradox: ‘Waste’ and ‘hunger’ co-existing? For a growing Indian economy which has a large population, the food supply chain, along with healthcare, remains a critical sector, especially in these pandemic times.

During the pandemic, India continues to do a commendable job of managing the food supply chain with no major hiccups. However, the waste figures do trigger opportunities for major improvements in the supply chain. Within food, the perishable fruit and vegetable (F&V) supply chain is all about safe and effective transportation of fresh produce from the farms to distribution centres, sorting them to ensure quality for error-free packaging, and finally delivering the packets to the end-customer in the least time.

Quality of life, living style, health awareness, small families, working parents and eating habits have been gradually transforming the consumption of perishable fruits and vegetables by the middle class. ‘Shelf life’ continues to be a key variable in the F&V supply chain.

The Covid pandemic has further impacted the behaviour of end-consumers. With the closure of restaurants, thinning operations of institutional canteens, fewer customers at hotels, low key running of eateries/food service outlets and nearly closed airline food suppliers have forced SMEs (small and medium enterprises) in the area of F&V supplies to transition from B2B to B2C arena.

This change-over in the recent past is no longer an option, but has become a necessity for SMEs. This has forced enterprise owners in the supply chain to swiftly move in connecting the fresh farm produce deliveries to a large number of homes — from a few large business houses to many small customers. Online order placement and payment making, restricted movements of family members due to the pandemic, attractive incentives to buyers and process simplicity have all made home-makers get their daily requirements at their doorsteps.

The effective last-mile delivery has provided responsiveness of deliveries and quality of the produce to customers at an affordable price. Players like Bigbasket, Grofers, Easyday, Foodfund and many more in India and abroad are growing their business well. Discussions with various stakeholders in this fast growing farm-to-kitchen supply chain business reveal the emergence of the following 12 key drivers:

Digitisation: order placement, product flow visibility, payment, etc.

Providing safety during pandemic, by preventing crowd mingling.

Convenience through home/doorstep delivery.

Freshness reducing agri produce lead time from farm to kitchen.

Small and frequent orders — waste reduction through small batches by small families.

Easily relatable unit of measure — moving from kilograms to numbers or pieces.

Customer orientation — volume-variety flexibility and responsiveness by service provider.

Quality of produce — improved understanding and alignment to customer expectations.

Investment — cost effective and reduced complexity in warehousing.

Healthy inventory turns — a business driven by low turn-around-time.

Farmer engagement and robust logistics — improving entrepreneurship and infrastructure.

Better ecosystem awareness — low wastage, recyclable packaging and less carbon footprint.

The fast perishable F&V business supply chain is primarily an informal one and, hence, carries with it the inherent challenges and risks. The major drivers to the waste generation in the supply change are: excess inventory of the perishable produce, volatile and sometimes long distance deliveries from farmers, and variation in customer order cycles.

Therefore, some of the related challenges/risks associated are:

Large customer order data handling and error-free order execution by the SMEs.

Varying farm produce procurement lead time management due to uncertainties.

Availability of variety of fresh farm produce and connect with farmers.

Informal labour training for skill development and their retention in distribution centres.

Manual packaging and associated productivity of deployed migrant labours.

Farm produce matching of demand with supply quantity.

Waste management at the distribution centre at the end of each day.

Dynamic pricing strategy and barriers to prevent competitor entry.

Customer-end digitisation readiness and retention of customers.

Post pandemic strategy.

With the ever-increasing population, the scale of operation is bound to increase. The risks have to be mitigated. The pain points in the F&V supply chain have to be analysed in a structured manner using big data, cost effective technology and design thinking approaches to provide sustainable solutions. Intelligent minds have to engage in following nine futuristic research areas:

Nudging farmers to move from conventional post-harvest activities of sorting, grading and packing to growing more value adding crop (variety, organic) and post-harvest processes.

Visible real data (customer behaviour history, orders, farm material availability, material on wheels, packaging flow, delivery packet visibility) for robust decision making.

Material handling crates and equipment to handle and move F&V safely to destinations.

Improving and standardising low cost packaging and aerated humidifying setup for longer shelf life, while transporting and brief storage periods,

Effective logistics: vehicle utilisation, shortest-routes and zero in-transit/ handling damage.

Digital tracking of the produce is bound to add value to the supply chain.

Low cost automation of the order cycle management and packaging assembly lines.

Real time customer feedback, followed with improvement actions and implementation.

Powerful incentive schemes for the employees for stretched deliveries and consumers.

In sum, the Covid pandemic has created a common business pain across the F&V supply chain stakeholders — the farmers, logistics owners, business owners and the final consumers — thereby accelerating the e-business transformational change in a well-synchronised manner. The change is here to stay for times to come due to the inherent business drivers and advantages.

The challenges of inventory management, real-time tracking, optimisation of the transportation routes, responsiveness through effective last-mile delivery, strategic collaboration avenues for sustainability, demands in material handling and many more would attract qualified engineers and management graduates for problem solving and then enhancing value creation in the value chain.

For some big players, the business ratio between B2B and B2C could alter but it would provide robustness to the business in the pandemic journey. The two end-players in the supply chain — the end-consumer and the farmer — are likely to be the biggest gainers in this drive.

The writer is Professor, Great Lakes Institute of Management, Gurgaon

Published on June 28, 2021

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