Bengaluru: Even when Chinese e-commerce giant Alibaba Group Holding Ltd is approaching an agreement to invest in BigBasket, India’s largest online grocery company will face its toughest test with the expansion of Amazon India and the launch of the business of Flipkart supermarket later this year. According to experts following Indian e-commerce, online grocery sales have taken off slowly and have grown slowly, and are forecast to barely reach $ 1 billion by 2017, according to market research firm RedSeer Consulting Pvt. Ltd However, given the high order volumes and repeat grocery shopping, the industry is expected to be a key battleground for online retailers; the largest internet investors in India are betting that online shopping will become a multibillion-dollar category over the next three to five years.
“Online grocery space will be a great battlefield in the near future – and given the high volume of repeat orders and purchases in this space, it does not make sense for any online retailer to have no presence in grocery stores” said a partner at a top-tier venture capital firm that has a corpus of about $ 100 million. He requested anonymity. In a report last week, RedSeer said that while 2016 was a difficult year for the online grocery segment, sales are likely to rebound by the end of 2017. “After a challenging year 2016, 2017 is on its way to to be a robust year for E-FMCG / grocery market with a probable 60% year-on-year growth. Sales have been driven mainly by volume growth – which points to increasing acceptance and penetration of the online grocery store among consumers.
In addition, the growth of the AOV has also been significant, driven by increased participation of cosmetics and other premium products in the shopping basket, “said RedSeer. FMCG is short for fast moving consumer goods, product jargon such as soaps and shampoos that are sold quickly.AOV represents the average value of the order.Despite the fact that online grocery space has been slow to take off, India’s largest online retailers Amazon India and Flipkart are increasing their plans for While Amazon India is already present in the consumer goods business, Flipkart is preparing to launch the grocery offer later this year, after delaying it due to preparations for its sale of the flagship holiday season, Big Billion Days.
During recent interviews and conversations, senior executives at Flipkart said the firm’s approach to grocery stores will be somewhat similar to BigBasket’s, and unlike the strategy adopted by archrival Amazon. While Amazon offers a two-hour delivery service through its Amazon Now mobile application and encourages customers to buy commodities on their platform when and when they need them, BigBasket encourages customers to stock up on their weekly or monthly purchases in one go. Flipkart is trying to replicate this latest approach and can launch a private label for groceries like BigBasket, according to two executives aware of online retailer plans.
In February, Mint had reported for the first time that Flipkart’s chief executive Kalyan Krishnamurthy was betting heavily on grocery shopping, hoping that everyday household sales would keep buyers coming back to the company’s platform. As part of this plan, Krishnamurthy brought two executives, Manish Kumar and Nitin Rajput, to help launch the new category. On the other hand, BigBasket is currently in talks to raise around $ 200-300 million of Alibaba and Paytm digital payment payments, even as it prepares to fight Amazon and Flipkart, according to two people aware of the discussions. A Flipkart spokesman declined to comment on the online retailer’s plans for the launch of its grocery business.
An Amazon India spokesperson said the company will continue to increase the number of products available on its platform. “Our goal is to be the” all “store, where customers can find each and every one of the products they are looking for,” he said. BigBasket co-founder and CEO Hari Menon did not respond to an e-mail seeking comment on the latest fundraising talks. In an interview in July, Amazon India’s head of consumables business Saurabh Srivastava had indicated that the company would invest heavily in the sector and launch in more cities over the next few months.