Promise of speed, ease of ordering or stock availability: how will the cluttered e-grocery segment differentiate?

That ordering groceries online is now a part of the daily routine of crores of Indian households, should not come as a surprise.

E-grocery will be three per cent of the total grocery opportunity by 2025, with a market size of approximately $24 billion, says RedSeer Consultancy. It’s a ripe market up for grabs, and there are plenty of players.

You’ve got online grocery specialists, like BigBasket and Grofers. General e-commerce and food delivery players (Amazon, Flipkart, Swiggy, Zomato, etc.) have launched grocery horizontals.

Then there are e-commerce brands focused on a single category, like meat (Licious, Meatigo and Fresh2Home). Hyperlocal players (Dunzo and Instacart), and the brick-and-mortar supermarkets (Big Bazaar, JioMart, Spencer’s, StarQuik, Nature’s Basket, DMart, etc.) now offer online delivery.

The customer is definitely spoilt for choice, and the onus lies with these e-grocers to differentiate themselves from each other to attract the customers.

At our recently held CMO Week 2.0, Ashwini Gangal, executive editor, afaqs!, asked this to the panellists in the grocery space: what will drive differentiation going forward? “Will it be a pin code battle, price, the promise of a speedy delivery, because Swiggy says 45 minutes, Flipkart says 90 minutes, Future Retail (Big Bazaar) says two hours…”

Turns out that the answers varied from the speed of delivery to the offering, such as virtual stores, to the personalisation of the platform for each customer.

I asked Gurpreet Amrit, chief marketing officer, Cremica, if speed is the biggest differentiator for online grocery brands. Amrit says, “Wide assortment and stock availability are the biggest differentiators for online grocery platforms. Fast delivery, or speed of delivery, will become table stakes in the segment. Online platforms have the opportunity to service the long tail of consumer demand and build a loyal consumer base.”

“While there is an assortment, experience and all that, the time slot is the biggest differentiator for online grocery brands,” quips Jayen Mehta, senior general manager, planning and marketing, GCMMF (Amul).

It’s all a “demand and supply game.” As more people order groceries online, the e-grocers will feel the pressure and “will need to ramp up, in terms of vehicles, or delivery personnel… the moment it eases, things will go back to normal,” adds Mehta.

For Dunzo’s chief marketer Sai Ganesh, speed is not the key differentiator for online grocers. It is just one of the many differentiators that come into play.

People buy groceries online based on the “freshness of the product (for fruits and vegetables), packs that are not close to expiry, and the fact that all the items are available in one single place, say the nearest store…,” says Ganesh.

Speaking about the speed of delivery, he remarks that it is a differentiator when it comes to food delivery because you’re hungry, but not in the case of groceries.

Ganesh also talks about a customer segment that isn’t too big a fan of grocery planning and usually “buys kitchen goods weekly”, i.e., young couples, with no kids and families, and families where one person is also the caretaker.

Mahesh Murthy, a venture capitalist and head of digital marketing firm Pinstorm, says that the speed of delivery makes a small difference only “when you want dinner tonight, in which case the competitors are Zomato and Swiggy, and not Grofers and BigBasket.”

Dunzo’s Ganesh and Murthy seem to agree that the relevance of speed of delivery is heightened in the food delivery space, as compared to online grocery.

For Murthy, the difference comes in the “ease of buying.” He takes the example of e-commerce giant Amazon that “has three different parts of buying groceries: Amazon Pantry, Amazon Fresh, and Amazon, and it’s confusing.”

He remarks that nobody has figured out the ability to use AI, or some simple learning to say “Look, I understand what you buy every month. Let me suggest what you need to buy this month and this is your regular monthly purchase…”

Murthy says that Amazon is quite close to a subscription model: “You can start subscribing to individual items, and say just send me five-kilo rice every month.”

Rajesh K Prasad, category leader - Amazon Retail, said this at a global seafood forum that caught our eye. “Speed of delivery by itself won’t let you win in grocery... uber cities like Bengaluru and Delhi value speed, along with the right orders, while cities like Hyderabad or Kolkata don't mind when there's a drop in delivery speed... cultural nuances come into play."

He went on to say that commitment holds more value than speed. If you say “we will deliver to you between 6 and 8 p.m. today, then that becomes sacrosanct.”

Prasad also reveals that when it comes to things like non-veg food and seasonal fruit, the expectations of consumers become very “speed-sensitive.”

Three days (Wednesday, Saturday and Sunday), he says, account for 80 per cent of the meat demand on Amazon. He’s asked his team to “build a solution, where we will deliver on these (particular) slots on Wednesday, Saturday or Sunday, because people plan before ordering meat…”

“Instead of continuous availability of selections and slots, which are expensive and difficult to manage, you could have a standardised approach,” Prasad signs off.