Friday, June 14, 2024
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The Evolution of Online F&G Market in India

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The evolution of F&G e-commerce channels in India has been characterized by a multitude of significant developments that have shaped the landscape. These developments have paved the way for a transformative experience for consumers, revolutionizing the way they procure their everyday household necessities. The last twelve years of evolution of online F&G retail in India can actually be classified under four main phases as follows:

Phase 1: 2011 to 2013 – Concept Testing & Initiation

During this phase, F&G retail witnessed the birth of first few online grocery platforms such as BigBasket, Grofers and LocalBanya. Most of the players first tested their Minimum Viable Plan or concept in a single city and then post corrections in the model, spread to other cities. These groundbreaking platforms revolutionized the shopping experience by presenting the novel concept of ordering groceries online and having them conveniently delivered right to the doorstep of consumers. This marked a paradigm shift in the way people approached grocery shopping, providing them with unparalleled convenience and saving them valuable time. The icing on the cake was the deals and discounts offered to lure consumers to shop on these platforms.

As consumer confidence in online grocery shopping continued to grow, these platforms gradually expanded their product range. Initially, they primarily focused on offering staples and non-perishable items. However, recognizing the increasing demand and evolving preferences of consumers, they ventured into perishable items. Fruits, vegetables, dairy products and even fresh meats were soon added to their repertoire, further enhancing the convenience and variety offered to customers.

Phase 2: 2014-2016 – Channel Expansion

This phase marked the expansion of the online F&G retail channel on two fronts. Firstly, it witnessed the launch of mobile apps which today contribute predominantly to online F&G retail. With the surge in smartphone usage, online F&G platforms swiftly recognized the immense potential of mobile technology. They meticulously crafted user-friendly mobile applications, enabling consumers to seamlessly browse and order groceries on the go. This shift towards mobile platforms further elevated the convenience factor, allowing users to effortlessly access a vast array of products and services at their fingertips.

Secondly, this period marked a defining moment with the entry of e-commerce giants, Amazon and Flipkart, into the F&G retail market. These industry behemoths astutely recognized the untapped potential within this segment and embarked on a mission to revolutionize the online shopping experience. Amazon & Flipkart launched and tested multiple models in online F&G retail. Their entry intensified the competition among the existing players, sparking a wave of innovation and driving the industry forward.

Phase 3: 2017- 2019 (Pre-Covid) – Streamlining & Growth

In a bid to gain market share and improve margins in a low-margin and high competition business, key players started streamlining and optimizing their supply chains and delivery models. Many online F&G platforms began forging partnerships with local kirana (traditional mom-and-pop) stores between 2017 and 2018. These collaborations aimed to leverage the existing infrastructure and supply chains of these traditional stores, thereby increasing delivery efficiency (time and cost), particularly in smaller towns and cities. This strategic move not only benefited the online F&G platforms but also empowered local businesses, fostering a symbiotic relationship between the digital and brick-and-mortar retail sectors.

In 2018 and 2019, some platforms adopted a hyperlocal delivery model, which revolutionized the concept of swift delivery within a specific radius. This innovative approach allowed platforms to cater to the immediate needs of consumers, effectively competing with traditional kirana stores. This hyperlocal delivery model further enhanced the convenience and timeliness of online shopping, providing customers with a swift and seamless experience.

Phase 4: 2020-Now (Covid and Post Covid): Hyper growth

The year 2020 brought about an unprecedented disruption with the outbreak of the COVID-19 pandemic. Consumers, prioritizing safety and convenience, swiftly turned to online platforms to fulfill their grocery needs. The demand for online F&G delivery services skyrocketed, and the industry witnessed an unprecedented surge in demand. This global crisis significantly accelerated the adoption of online F&G shopping in India and affected the online and offline sectors in different ways.

The COVID-19 outbreak delivered a significant financial blow to the traditional brick-and-mortar F&G retail segment, especially in the early stages of the pandemic. Even retail chains like Spencer’s, which operated both online and offline, encountered substantial challenges because of their limited online expertise and delivery infrastructure. Their primary focus had traditionally been on physical stores.

The effects of COVID-19 compelled retail chains to shift their focus towards the online platform, acknowledging the need for a strong digital presence. There were essentially two viable paths to choose from; either collaborate with an existing F&G retail platform or embark on the venture of creating your own e-commerce website. This decision depended on factors such as available resources, technological expertise and the necessity to adapt to the rapidly evolving market dynamics.

Stores like Le Marche and Modern Bazaar serve as prime examples of this adaptation. They smoothly transitioned into the online realm and managed to generate around 7-10% of their total revenue from their digital platforms. By diversifying their sales channels and embracing e-commerce, these F&G retail chains not only mitigated the impact of the pandemic but also positioned themselves for sustained growth in the digital era.

For the online F&G retail platforms, this unforeseen turn of events further solidified their position as a reliable and convenient means of obtaining everyday household necessities and they entered a phase of hyper growth.

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