With the accelerated growth in grocery e-commerce over the past few months, there is a strong need for a robust eco-system consisting of all FMCG ecosystem.By Prem Kumar
When we think of e-commerce, the first thing that comes to our minds are the biggies such as Amazon, Flipkart, SnapDeal, Urban Ladder etc. Over the past few years, the e-commerce industry in India has grown by leaps and bounds and is currently at $27 Billion (as of calendar year 2019). The Covid-19 situation has merely accelerated its growth and this industry is expected to grow to $200 billion by 2026 recording double digits growth YoY.
While these are impressive growth figures, it is important to note that the growth has primarily been driven in very few categories such as fashion, consumer electronics, mobile phones, books amongst the others. It does not cover one major category – FMCG Grocery which is overall a $540 billion industry! It also does not cover one major aspect of this industry – the ‘silent’ e-commerce which is already prevalent in the unorganised grocery trade for a very long time. And it’s happening at your humble kirana store.
Grocery micro-ecommerce – The ‘silent’ E-commerce revolution already underway!
E-commerce, in simple terms, is buying and selling of goods and services over a digital medium. While talking about grocery e-commerce, we have never looked at the micro-ecommerce ecosystem where this exchange of goods and money takes place ‘online’ at our kirana stores.
In the past few years, kirana stores have fulfilled customer orders not just at his store but also through the following ‘online’ channels:
(a) Phone calls
(b) SMSs
(c) WhatsApp
(d) Hyper-local apps such as Swiggys, Dunzo etc (a new phenomenon)
(d) Kirana mobile apps (a new phenomenon)
Even before Covid-19, we’ve seen customers sharing their extensive shopping lists with the kirana stores over digital media – phone calls (for many decades), SMSs and more recently – WhatsApp. WhatsApp has become one of the most popular tools for customers to place ‘online’ orders with the kirana stores. One receiving the order via WhatsApp, the kirana store owner (known for maintaining excellent personal relationships with his customers) confirms the order quickly, makes recommendations if there are any new offers, suggests alternatives if a particular item is out of stock etc. This goes back and forth between the customer and the store owner – almost like a real face-to-face interaction and then finally, the store owner dispatches the supplies to the customer’s house. Both of them win – kirana store owners gets a sale without store being overcrowded during Covid-19 and the customer successfully gets the items online without the need to visit a website, create an online account etc. and gets all the items he has asked for (unlike grocery e-commerce sites which is known to have a below-satisfactory fill rate). As a result, there has been significant growth in the use of WhatsApp by the kirana stores and customers alike – for grocery shopping and fulfilment. This explains why facilitating e-commerce transactions over WhatsApp is being touted as the next big thing.
Impact of silent e-commerce growth – Not silent anymore with the entrance of the big players
From the point of view of the FMCG players, the current Covid-19 situation has made them step out of their comfort zones. They have had to adjust/adapt their product portfolio/mix in sync with the sudden change in consumer purchase behaviour (to shop online or go to a kirana store?) – Not to mention the fact the consumers are willing to try out new products and go for regional/in-store packaged brands. This has forced the FMCG companies to look for new ways to reach out to the consumers and get their products into the consumers’ baskets – via e-commerce.
Therefore, with over 560 million Indians connected online and over 400 million WhatsApp users in India, there is a huge micro-ecommerce evolution that is already underway. The current Covid-19 situation has merely fuelled the growth of e-commerce with many large players entering into this space. We’ve seen Swiggy (a player in food delivery), Facebook/Google/Qualcomm + Reliance JIO (conglomerate), Domino’s Pizza (a pizza chain!!), various banks and many more all entering into this grocery ecommerce space. Their entry will change the retail landscape as they pump millions of investment dollars to build the necessary infrastructure and bring in a structure that will drive high level of efficiency in the retail operations. This will only drive stickiness towards this sector and bring in droves of consumers who have started embracing digital mode of shopping.- be it through a shopping app, e-commerce website or a messaging app.
The way-forward: Creating a robust eco-system for micro-ecommerce
With the accelerated growth in grocery e-commerce over the past few months, there is a strong need for a robust eco-system consisting of all FMCG ecosystem (FMCG Brands, Distributors, Wholesalers, Fintech Players, E-commerce players, eB2B players, Research agencies etc). We will see various new robust hyper-local platforms emerging out in micro-ecommerce space which will connect and deliver value to all these FMCG players (including the kirana stores and consumers) – some form or the other. These platforms will facilitate smooth/efficient flow of supplies and financial resources to these kirana stores and end-consumers. How the massive opportunity gets tapped by various players to create and unlock this immense value needs to be seen.
The author is CEO and founder of Snapbizz
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