FMCG: New E-Commerce Trend?

The current focus for online retail businesses in India seems to be FMCG, concentrated on the Groceries section. This sector has grown rapidly and seems to be the only one that keeps customers coming back regularly for more. The recent entry of Flipkart into the grocery delivery after Amazon and the current market leader BigBasket is visible proof to highlight this ongoing trend.

An IBEF study estimates, that in 2016, the Indian grocery market reached $566 billion in size, while the overall retail market was at $672 billion. It is a massive market that Amazon, Flipkart and others want to crack.

The individual basket value for grocery based shopping may be lower than something like electronics, but, the high volumes make up for the difference and even exceed. In fact, when it comes to sales on Amazon, this is turning out to be the number one category.

Saurabh Srivastava, Director, Consumables & FMCG, Amazon India says, "If you want to transform a person's shopping experience, you need to look at where a customer spends the most time. The answer is FMCG and grocery. Customers interact and engage on a daily basis in this category. You don't buy a mobile phone or a fridge on a daily basis."

Amazon offers 4 different models now:

Amazon Now
This is the only format from Amazon that offers fresh produce. Based on a  hyper-local delivery model, Amazon has partnered with large format stores like Big Bazaar and Hypercity in four major cities i.e. Bengaluru, Delhi-NCR, Mumbai and Hyderabad, to deliver daily essentials within two hours of customers placing an order.

Amazon Pantry
Under this scheme, customers get their products all together the very next day. Only products that are available near a customer's location show up and all products ordered are packed together and reach the customer the next day.

Super Value Day
This is held on the 1st and 2nd of every month. On these days, over 40,000 products in this category are offered on discount, with an additional gift card of ₹1200, if overall purchases exceed a certain amount.

Subscribe and Save
This is Amazon's product subscription service, where customers can subscribe to any product, like shampoos or toothpastes to get additional 10% saving. While it's restricted to certain product, Amazon has seen better than expected response to this strategy.

BigBasket is currently the biggest player in this sector in India. They were the original one to break the myth that FMCG will not work in the e-commerce model. Even without offering many discounts, BigBasket boasts of about 2.5 million transacting customers with sales of ₹ 150 crores per month. They have attribute their success to their service and a solid business model.

BigBasket, currently present in over 25 cities, is concentrating on deeper penetration. They will be touching a revenue of ₹ 1800 crores by end of this fiscal year and are targeting close to $1 billion in revenue by 2020. They claim to be reaching operational break-even in the next 6 months.

The latest entrant into the race, e-commerce market giant Flipkart has launched it grocery delivery service on its home turf, Bengaluru. In 2015, Flipkart had started its own grocery delivery arm called 'Nearby', only to shut it down in less than a year. They also followed the hyper-local delivery model with deliveries limited to Bengaluru. The company claims that it was in fact only a pilot and the learning are being applied to their newer venture.

For now, as a 'soft launch' , Flipkart has made the service available only to it's employees, under the tag 'Supermart'.

Amongst other players, South Korea based Nakkyun Chong launched 'Kirana11' in the grocery segment at Bengaluru. Chong comes with over 28 years of experience in the e-commerce sector and is the Founder and CEO of Planet11 E-Commerce Solutions.

Kirana11 also follows the hyper-local model, getting the ordered products from local stores and delivering it to the customer. Only difference here being, Kirana11 has only on-boarded kirana stores which have their own delivery functions, ranging from small to big supermarkets. The kirana stores directly deliver orders placed from the site/app and only if the store cannot deliver to a particular area, will the Kirana11 delivery unit take over to fulfill the order.

With all the market leaders now heading into this sector, the battle for market share is just heating up. This may be a good thing, since, as is with every competitive market, it will be the customers that will benefit the most.


  1. True! With the internet penetration growing in Tier-2 and Tier-3 cities, towns and villages, thanks to telcos like Reliance Jio, online FMCG retail is the next big wave to hit the ecommerce sector in India.

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