‘To Be or Not to Be’ – The Dilemma of India’s E-Grocery!

Online grocery shopping has taken off since 2011 after the introduction of cashless payments and e-grocery portals.

Tech News
4 min read
Hindi Female

This article should ideally be titled… "Now you see it, now you don’t." Until recently, until the consolidation in the segment took place, India’s e-grocers have been vanishing from the shelves as fast as products sold on deep discount.

In the early years of this farm-to-home phenomenon, 2011 to be precise, as many as 40 e-grocers set up shop in the virtual world.

You can recount and count the numbers left behind in 2019. Calculator not required, fingers will do, because less than a dozen continue to deliver with vigour.

In a way, the entry was well-timed 8 years ago. Increase in internet penetration, mobile handset sales, nuclear families, working couples, bachelor pads and off-campus student accommodation augured well for a virgin vertical.

The younger generation was not so particular about touch and feel, not so keen on running rice through fingers, eyeing the eggs, debating to pick up sauce or ketchup or mulling over six brands of soap on display.

It was more important to have a set of cooking and cleaning essentials ready for the trusted cook and maid who would let themselves in with a key, or at arms-length for hubby and spouse reaching home after a hard day at work.

While foregoing the legacy associated with buying grocery, what did online shoppers get in return? Plenty. For starters, a lower bill total. Using economies of scale, the grocery portal actually manages to sell FMCG, fruits and vegetables at sub market prices. Next comes the method of payment. The local kirana or maligai store prefers to take cash.


As the online start-ups entered the grocery retail business, and while some of them got left behind, unknown to all a huge advantage was in the offing. Digital India made an entry, and a net savvy nation took to it naturally.

All of a sudden there was a boom in non-cash payments - facilitated by the launch of numerous payment gateways, and propelled by fintech companies that made payments as easy as two clicks or a single swipe.

On the other side, governmental regulations that started with the introduction of GST, tightening of payment channels and encouragement of digital payments turned out to be a boon for online portals operating across verticals. Consumers too benefited, and in fact, had nothing to lose by ordering household requirements online.

Which brings us to the "now you see it, now you don’t" part. Market forces were playing out from 2013 onwards, and only the fittest could survive in the e-commerce jungle.

E-grocers were experimenting with various models – inventory-led model which called for accumulation of stock in a large warehouse, partnership model which tried to rein in local outlets for last mile delivery, mega discounts and more, all of which had the unified goal of acquiring and retaining customers.


They did not factor in the fickle-mindedness of the modern consumer, did not factor the fixed costs for keeping an online portal humming on ground, or the fact that self-infused capital can only last for a limited time, while VCs had all the time in the world to evaluate a start-up. For many who sought seed funding before the big boys ventured in, it was an agonising wait, and those who could not grin and bear it had to exit the race.

As we end our review of this vibrant and niche sector, here are the questions that come up: Which company is the unicorn of e-grocery, which are the ones that survived, and has anyone made a late, great entry? Answers, in that order.

The Unicorn in this space, undoubtedly is Big Basket, with a reported valuation of $1 billion. Next comes Grofers, with a presence in nearly 15 cities. E-commerce giants such as Amazon and Flipkart, which see potential in this space, have entered with their own sub brands – Amazon Pantry and Supermart respectively.

Here is why: The Indian grocery market is valued at $400 billion, and analysts say the e-commerce part is currently only 0.5% of the pie. Here’s one more statistic to chew on, while you slice celery and cucumber home-delivered by your favourite portal: In 2018, online grocery firms in India raised funding of $385.7 million, compared with a mere $50 million in all of 2017.

Last point reserved for a recent entrant. An unassuming man, unknown to VCs, HNIs and angel investors, made a late entry with a challenger brand, almost declaring in Rajni style, “Naan late-aah vanthalum, latest-aah varuven” (even if I arrive late, I will arrive in the latest way).

Techie-turned-entrepreneur S.R. Ramasubramania Rajah, arrived 6 months ago in Chennai with grocery portal Ansio armed with his own money, state-of-the-art supply chain techniques and lessons learnt from the mistakes of his predecessors.

Those who have survived the churn, and those like Rajah who entered last, will do well to practice this philosophy: In e-grocery, it is not about "to be or not to be," it is about being different.

The writer is an author, columnist and advertising professional. The views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.

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Topics:  Online Shopping 

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