Online grocery’s mad delivery rush is no longer innovation

Representative image. REUTERS/Shailesh Andrade/File Photo - D1BETTMEIYAA

Old-timers might recall how ecommerce companies such as Pets.com, Webvan and India’s FabMart, went bust simply trying to deliver bulky pet food and groceries at the turn of the last century. Without today’s technologies, it was a lot of grunt work, without corresponding or sustainable rewards.

In the two decades since, the industry has been rebuilt on cutting-edge technologies. Advanced mapping and machine learning, to name two key technologies, have transformed efficiencies. Consequently, it is easy for today’s online companies to determine the fastest and cost-efficient ways of delivering customer orders at scale.

It is why ecommerce firms have, over the years, been able to sharply cut delivery times — from several days to an hour or under. Even the 60-minute delivery promise is nearly a decade old in the United States. Amazon, a fount of ecommerce innovation, was the first of the major players to offer such expedited times, in late 2014 in New York. Today, more and more products, including groceries, are delivered in an hour or less across many cities and countries.

But is 10-minute delivery even a real thing for online groceries?

Last month, Grofers started offering such a service in 10 cities. It is not clear how many areas or pincodes it can serve at this time, or the real cost of the service. Still, Grofers is additionally promising to extend the offering to a ‘majority’ of its customers in the next 45 days.

On the face of it, Grofers’ offer seems more gimmicky than real. It could, for example, take all of those 10 minutes to simply navigate through many apartment complexes whose residents tend to be among the biggest users of delivery services. From a customer’s point of view, there is every likelihood the order is not going to be at the door in 10 minutes. Such a crunched time limit is a big ask even if the delivery is timed only up to the gate, rather than the customer’s doorstep, because of the quality of our roads, and the density of traffic.

Grofers CEO Albinder Dhindsa has stoutly defended the startup’s “innovation”, despite the “hate” he received on Twitter, and claimed that the company’s expedited service is based on solid fundamentals. He claims a network of partner stores that are within 2-km of its customers. Consequently, Grofers can deliver 90% of the orders within 15 minutes “even if our riders drove under 10kmph!”

While that is admirable, it also begs the question: Does further innovation lie in speeding up delivery times? How much faster could anybody get? Clearly, innovation will be needed, but in several other areas, such as the broad customer experience, in providing pervasive and ubiquitous access to services, in creating payment and credit options, including the growingly popular buy-now-pay-later, green packaging and delivery via electric vehicles, etc.

Currently India’s online grocery market is miniscule. Even in the pandemic year of 2020, when people bought more online, it accounted for less than $3 billion, or 1 percent of the total grocery market worth more than $600 billion annually. The colossal opportunity ahead is why the sector has attracted the likes of Amazon, Reliance, Walmart-owned FlipKart, and most recently, the Tatas — via the acquisition of a majority stake in BigBasket.

Led by early-mover BigBasket, the leading players have attained great maturity in inventory management, supply chains, and delivery. They have made inroads into larger cities, and even towns, but clearly only capture the low-hanging fruit. Innovation, as much as fundamentals, will drive further progress for each of the companies.

Reports suggest exciting innovation in the works. Tatas, for example, is betting on a super app to leverage its diversified offerings, in addition to groceries. Reliance is believed to be leveraging WhatsApp, a messaging platform with over half a billion users, to simplify online orders and to integrate with local kirana stores. Both conglomerates also have advanced plans to integrate online with offline, in inventory as well as ordering — Reliance with its own brick-and-mortar stores, and Tatas with its StarBazaar stores built in partnership with the United Kingdom’s Tesco. Amazon is similarly engaged with a contentious deal with Kishore Biyani’s Future Retail and Aditya Birla group’s More supermarkets to improve offline integration and to build omni-channels for distribution.

The next year will likely see several of these initiatives coming to market but it is doubtful if customers are looking only for speedier deliveries, or other gimmicks.

Bala Murali Krishna works for a New York-based startup. 

Views are personal and do not represent the stand of this publication.

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