Who will win the grocery race: specialists, general e-commerce or retailers?

At the recently concluded CMO Week (2^nd edition), we spoke to marketers from the online grocery space to understand the segment better.

Before March 2020, ordering groceries online was a matter of convenience; few brands (Grofers, BigBasket, etc.) were busy building the category, and were pretty much synonymous with it.

After last March, things changed dramatically; the e-grocery segment was re-classified as an essential service and ‘new’ entrants like Swiggy, Zomato, Domino’s, Paytm, Dunzo, Flipkart, and several others joined the grocery game in a big way. Amazon also ramped up its e-grocery vertical.

Hypermarket and supermarket chains (Future Retail, Reliance Jiomart, DMart, etc.) also re-looked their online grocery delivery pipelines, adding yet another layer of competition to the suddenly crowded segment.

Which of these sub-segments – the grocery specialists, the e-comm generalists and the offline traditionalists – has an edge over the others? At what point does ‘category creation’ end and cut-throat rivalry begin?

Panelists:

Prashant Verma, senior vice president, marketing, Grofers

Reetesh Gade, head of marketing, Nature's Basket (RPSG GROUP)

Pawan Sarda, CMO - digital, marketing and e-commerce, Future Group

Nikita Bhargav, ex-Amazon executive and present day co-founder of NittyGritti (a startup that helps brands optimise their e-commerce product catalogues)

Watch the full session (below) or read on for highlights.

Edited excerpts.

Verma of Grofers said the team saw a 60 per cent increase in demand when the curfew was announced in Maharashtra, few weeks ago. “The categories that people buy have also changed... people stocked up for staples, ready-to-cook and ready-to-eat-products, sanitisers, disinfectants. We’re also seeing a 20 per cent increase in ticket size,” he said.

He describes Grofers as a technology company that happens to be in the business of selling groceries. He said this in the context of the team’s focus on tech innovation – the kind that let’s a buyer edit her shopping cart if the delivery date is four days away, for example.

Interestingly, Grofers is looking to move beyond groceries, into categories like home décor, apparel, durables, appliances, books, etc.; Verma expects growth for these new categories to come from buyers who have already “adopted us for grocery shopping”. Data, consumer lifecycle marketing, personalisation, UI and UX – all will play a role in bringing this endeavor to fruition.

Gade of Nature’s Basket spoke about the way the demand curve, for online groceries, kept rising between March and September 2020, after which it stabilised for a while. Of late, though, in sync with the second wave of the pandemic, the demand curve has grown sharply once again. Presently, business is 4X as compared to pre-pandemic levels. Interestingly, panic buying has reduced significantly in 2021; while the number of transactions remains the same, the average ticket size has reduced.

“Online retail is no longer about convenience. Now, it is about the experience,” Gade said, adding that things like ‘on time delivery’ and ‘discounts’, are commonplace and that consumers have come to expect them from all brands. One of his customers asked for “sample” mangoes to be sent over to his house, pre-purchase. Others want to place orders on WhatsApp. The scope to delight is huge, Gade insists. An example of this is “virtual stores”, an interface that lets buyers walk around a store and shop, digitally.

Future Group’s Sarda spoke about the way fear and anxiety have guided purchase patterns for this category over the last year. The absence of restaurants/dining out experiences, he pointed out, have created a market for “upgrade products” or slightly fancier groceries, as it were.

In the context of the competitive scenario, Bhargav of NittyGritty opined that the ‘original’ e-grocers like Grofers and BigBasket are and will continue to be ahead of the curve. General e-commerce sites that have recently diversified into the grocery space have the advantage of huge shopper traffic and pre-existing ‘user comfort’ on their platforms. The offline retailers have maximum scope to innovate, as they try and convert their ‘footfall buyers’ into ‘online buyers’.

“Grocery is not one category. It is a bunch of categories. And that’s where 'the generalists' have not got it right,” said Verma of Grofers.

What will drive differentiation for online grocers now on? Is it a pin code battle or does it boil down to things like price and delivery speed? Turns out, different things matter to different buyers; say, for some, a delay of even a day or more is acceptable, but they are not flexible on price, and it could be the other way around for others. That’s where personalisation will help e-grocers tailor their platforms across different kinds of shoppers.

“We’re preparing to cater to the next 100 million people who are going to enter the e-commerce category through grocery,” Verma of Grofers.

About his ‘first time’ user, Gade of Nature’s Basket, whose loyal customer is an “evolved” 35-45 year old, said, “We’re getting 30 per cent new users month-on-month.” This new ‘pandemic customer’ is an “upmarket” 20-something, who has seen videos of international recipes and wants to experiment. “Their frequency is high, ticket size is low, and they are not loyal,” he said.

This session was part of CMO Week, an afaqs! event. Partners for CMO Week 2.0 (April 19-22, 2021) include ABP news (presenting partner) and Shutterstock (session sponsor).

Image Credit: Mark Stebnicki from Pexels.