Out with its first ad campaign – 4 years after its launch – Tata Group’s StarQuik is the latest e-grocer on the block. An interview with its co-founders, Gaurav Juneja and K Radhakrishnan.
The e-grocery segment is hot right now, thanks to the heightened demand for the ease and convenience of ordering one’s groceries without having to step out of the safety of one’s home.
Brands in the segment can be classified as grocery specialists (BigBasket, Grofers), general e-commerce platforms that diversified into the grocery space after the pandemic began (Flipkart, Amazon, Dunzo, Swiggy, etc.) and supermarket chains (BigBazaar, Nature’s Basket, DMart, JioMart and Spencer’s among others).
According to consulting firm RedSeer Consulting, the burgeoning e-grocery segment is expected to swell to $24 billion (market value) by 2025 and account for three per cent of India’s total grocery market by then.
The latest advertising campaign in the space is from the stable of Tata Group’s online grocery shopping platform StarQuik. Titled ‘#AasaanGrocery in a Click’, the ads are all about the ease of ordering a wide range of groceries on the app. The agency behind the campaign is Schbang.
StarQuik operates out of 20 stores in Mumbai, Pune, Bangalore, Hyderabad and Ahmedabad. It picks, packs and delivers its orders from Star Bazaar, an offline retail chain (under Tata Group's retail firm Trent), their sourcing partner.
Launched in Gurgaon, in 2014, as GrocerMax by Gaurav Juneja and K Radhakrishnan, it came under Tata’s fold in 2017, when the latter was looking to enter the e-grocery space.
GrocerMax soon shut shop in Gurgaon and moved to Mumbai. Currently, it operates as an independent business and has more than 100 employees and 550 delivery boys.
Tata has another grocer in its fold; as per The Economic Times in April 2021, the Competition Commission of India (CCI) approved Tata Digital’s (a subsidiary of Tata Sons) bid to acquire a 64.3 per cent stake in Supermarket Grocery Supplies, the (B2B) arm of BigBasket.
StarQuik’s co-founders Juneja and Radhakrishnan have both worked for Reliance Retail in the past and were in the company during 2006-07.
Juneja, before co-founding StarQuik, worked at firms like Bryan, Garnier & Co (a European Growth Investment Bank), Lehman Brothers and Standard Chartered Bank.
Radhakrishnan has worked as CEO of Future Fresh Foods and Reliance Retail, in the past.
You’re advertising your brand four years after its launch. In the meanwhile, rivals have made their presence felt. Aren’t you late to the e-grocery party?
Juneja: It’s about the scale of the organisation.
Our presence is now across Mumbai, Pune, Hyderabad, Bangalore and Ahmedabad with 20 odd stores. From that point of view, we are at an optimal size where a campaign like this would make sense.
What does Tata’s acquisition of BigBasket mean for StarQuik?
Juneja: It reinforces the fact that grocery is an extremely important category and gives it more size and scale. At the moment, we are in a different group of the company. We have to see what the future brings. What gives us confidence is that within the group, we are in a strong place as far as grocery is concerned, online or offline. We can give anyone a run for their money.
Give us a break-up of your media mix…
Juneja: We are running the campaign across all major digital channels: Google, Facebook, OTT and Google Display Network and supplementing it with an influencer campaign.
Today, our cost of marketing is at 9.5 per cent (of total revenue). It is driven by YouTube (50 per cent), Facebook and Instagram (30 per cent) and influencer activity (20 per cent). We are also running engagement content and contests across all social media channels.
The campaign targets more than just our core TG comprising 25-44 year olds. In fact, after launching this campaign, our new customer acquisition rate has almost quadrupled.
With regard to the duration of the campaign, the creatives should be fresh till July-August. The idea is to refresh it with another set of ads, keeping the theme and the idea intact, after that.
The online grocery space has so many players. Who do you see as your core competition?
Juneja: We compete with offline retailers like supermarkets and hypermarkets and their online avatars, including JioMart, Nature's Basket and Spencer's. We also count online grocery apps like BigBasket and Grofers (among our rivals).
Radhakrishnan: Meats, eggs, dairy, fruits, vegetables and bakery products are difficult to get. People gravitate towards formats that service (each) well.
We deal directly with the farmers and source 75 per cent of our vegetables and 50 per cent of our fruits directly from them. We manage the pricing without any middlemen.
Also, very few people have a mechanism where within 18-19 hours fruits and vegetables are delivered to customers' homes (eg., Mumbai) from the harvest in Nashik or rural villages (about 150 km away). It's challenging to get anything equivalent to that. Our differentiation lies there.
The 'fresh' proposition is going to remain. We will add more categories. For instance, international food range is getting important for us.
What are the current challenges the e-grocery segment is faced with?
Juneja: One challenge is ensuring availability of the entire catalogue and keeping production on. Our inventory must be full. Forecasting of sales is hard as sales are more volatile than normal.
Managing operations on the ground is another challenge, because as we scale, our requirement for merchandise also increases. Over the last 45 days, we have scaled up our delivery capacities four-fold, to serve an increasing number of customers. That comes with its own set of challenges. We need to hire those many pickers/delivery boys, ensure we have the merchandise in store, and up our sourcing of fruits and vegetables.
All this while keeping covid norms in mind. Hiring is not easy when there’s so much fear. So, the need to balance scale with safety is important.
Bill values are becoming larger. People are buying a wider basket of articles and the frequency (of orders) has gone up by 10-12 per cent. These are signs of higher engagement and habit building.
The orders are up 3.5 times (compared to last year). We expect this trajectory to sustain as there is no wide-scale migration (this year).
Consumers are spoilt for choice and often download more than one grocery app. How do you deal with the problem of ‘uninstalls’?
Juneja: We’ve got close to half a million customers on the app, a figure we’re looking to quadruple this year.
App uninstalls are part of a natural process. We have observed that our ‘retentions’ are quite high and the uninstalls happen mainly at the top of the funnel. People come to the app, browse a bit and uninstall. It's more like window-shopping. But once they have placed an order with us, our ‘retentions’ are pretty good.
Minimising even those early-stage uninstalls is part of our marketing plan – we have to get the initial experience right for them.
When they come to the app, can they see the best of prices and offers? Are they able to find what they are here to buy? We want to take them on a journey where we can engage for the ‘repeat order’ and build it into a habit. Along that journey, there will be points where customers will drop off. We will want to figure out those points.
Radhakrishnan: For a customer to go away, the threshold of dissatisfaction is very low. It's not just for us; it's for every single online player, irrespective of how good they are, whether it's a supermarket, holiday home or an airline. It's about giving the customer that essential service day in and day out.
On being a Tata enterprise…
Juneja: Tata is the gold standard of a customer-oriented B2C brand in India. It's a huge responsibility we carry. It makes us strive harder. Our customer reminds us that we’re part of Tata all the time – “You are a Tata enterprise. How dare you mess up?”