AskMe Grocery might be a Johnny-come-lately in online grocery but the company has thrust ahead of its competitors like a turbocharged rocket. In barely a year of blasting off the blocks, it has ignited an impressive blaze on the grocery e-tailing firmament, establishing a presence in 38 cities so far with plans to streak across some 40 newer cities in the next six months.
“Our core strength is to give consumers a regional flavour, a bouquet of local brands and popular products for a particular locality. The local offering is bundled with the trust of quality and lowest pricing. These, along with efficiency, will give us the value proposition that will ensure we stay ahead of the competition,” says Co-Founder AskMe Grocery, Ankit Jain.
In this exclusive interview with Progressive Grocer, Jain discusses how his company is powering ahead in the marketplace by playing to its strengths: asset-light model, zero inventory, no warehousing and riding on the crest of technology to make use of smart analytics, demand forecast and consumer behaviour to juice more business
What led to AskMe Grocery and what is its business model?
Grocery is one of the fastest growing segments in Indian Retail. Th e Indian food and grocery market is the world’s sixth-largest today and is projected to grow at the rate of 104% to touch $482 billion by 2020, as per India Brand Equity Foundation. The huge opportunity offered by the grocery segment led to the AskMe Group acqui-hiring ‘Best at Lowest’ and rebranding it as AskMe Grocery. Based on a hyperlocal model, the brand provides an online platform for local kirana stores to sell groceries to the untapped households, in their vicinity. Over the past six-eight months, the brand has scaled to 38 cities across the country and is aiming to be operational in 40 more cities in the next three-six months.
How is the management structured?
The management is structured in a way that both the founders complement each other. While Amit Nigam is responsible for the end to end management of the seller relationship, I lead Brand Onboarding and operations for AskMe Grocery. What are the reasons for choosing the marketplace over the inventory model? I believe that venturing into the inventory-based model will imply compromising on scalability and speed. Further, in decentralised operations, it is very difficult to manage inventory efficiently, which leads to losses, pilferage and dump.
An inventory based model in online grocery space is not doing well due to the high costs involved in stock keeping and warehousing whereas a marketplace model does not require us to maintain stock. We let the stocks rest with the brick and mortar retailers with whom we have tied up with for a particular locality. Once the customer places the order online, our runners visit the retailer with orders in bulk. The runner then takes these goods to the hub where they are screened using the three step quality check. Then they are processed for delivery once they pass the test. The runner then delivers the orders to their specific location.
The hyperlocal model will work better in the online grocery business as it is asset light. It plugs the offline sellers to the online business model and helps them with an alternative avenue for business.
Tell us about AskMe Grocery’s current range of operations and its progress.
AskMe Grocery is currently active in 38 cities across 18 states and we plan to scale it up to 40 new cities within the next three to six months. Currently, we are looking to add to the kitty of tier-II cities.
What is your marketing positioning and the differentiators?
We are the largest online grocery player in the country today, with a presence in 38 cities. Some of our differentiators include:
- Most competitive pricing
- Extensive reach
- Delivery in 4-6 hours
One of the key value additions by our brand is the three-point quality check before delivery of any order. We are committed to delivering a high quality customer experience to all our shoppers.
What is your core strategy for creating and building market advantage?
I believe that the market and opportunities are so huge that a single business model or player cannot be the winner. AskMe Grocery’s core strength is to give consumers a regional flavour, a bouquet of local brands and popular products for a particular locality. The local offering is bundled with the trust of quality and lowest pricing. These, along with efficiency, will give us the value proposition to stay ahead of the competition.
Tell us about your product basket and how much of the sales contribution comes from each of these categories.
We have over 2.5 lakh unique SKUs pan India. Around 1.25 lakh SKUs are listed in the city of Delhi. We have close to 7-10K SKUs for East Delhi alone. The monthly product basket comprises edible goods such as rice/ atta/ oil/ ghee and products from Patanjali as well, with an average cost of Rs 1,500.
What are you doing about optimising assortments, building customer loyalty, creating business efficiencies, and differentiating the brand?
At AskMe Grocery, when we venture out to launch our services in a new city, a typical SKU assortment being offered would be much lesser (on an average of around 3,000-5,000). However, as we increase our footprints and integrate/ partner with more offline grocers, this assortment increases to 8,000 SKUs for a locality. To give an example, for Delhi we have more than 1.25 lakh unique SKUs, which is biggest in its segment by variety. We understand that customer loyalty doesn’t get built overnight. We are constantly working towards providing the best consumer experience and have a high repeat buying rate. We also have one of the highest per order value in our segment, which in turn is testimony to the increased customer loyalty towards our brand and the competitive pricing we offer.
What is the typical customer profile?
What kind of people frequent your site, and what is the dominant age group? Typically, we have more than 60 per cent males in the age group of 25-45 years, as our customers. We accept orders on web, mobile and even on call. We are targeting customers across all age groups, irrespective of their gender, profession, location, income, etc.
What is the customer buying pattern at AskMe Grocery?
In grocery, the customer buying pattern is region specific. The consumption patterns vary from locality to locality within a specific city. For example, a customer from south Delhi will prefer olive oil, while a customer from north Delhi would prefer the conventional refined oil. We focus on monthly grocery list rather than impulsive buying as it gives us a higher AOV in the range of Rs 1,800-2,000.
With our regional/ local product offerings, coupled with competitive pricing and deals/ combos, we provide the consumers the range and options to cater to their requirements.
Our repeat purchases are quite high, in excess of 60 per cent, due to our strategy of focusing on the monthly grocery list. On an average, a customer buys three times in two months from our platform. About 95 per cent of our transactions are through COD, which is also preferred by us, given the charges applied in online payments.
How many orders a day are you getting currently? What is your fill rate currently?
The number of orders that we are clocking on the same day is over 20,000. As of March 2016, the highest number of orders came from Delhi, followed by Hyderabad and Bengaluru. We are also seeing good traction in both tier-1 and tier-II cities. In tier II cities, good traction is seen from Jaipur, Coimbatore and Indore.
Our fulfillment rate is close to 99 per cent. We see less than 1 per cent cancellations on our orders. Also fill rates are more than 98 per cent due to our unique business model.
We are expecting multi-fold growth rate in next few months. We are growing at a rate of 70 per cent month on month as of now (due to a smaller base) and shall continue to grow at more than 50 per cent in next few months.
What is your sourcing strategy, especially for fresh produce, organics, etc.?
For sourcing we rely on our kirana store partners. We believe that kirana store owners have ample SKUs to cater to the requests of customers in the locality, since they are well versed with the demands/ consumption pattern of the local buyers. We have back-end tie-ups with kirana store owners that help us in ensuring lowest prices across competition. We have piloted the fresh/perishable category in Delhi and are seeing good response. We are minimising the returns and dump in this category and shall start this pan India soon.
Organic, health food, etc. are already there in our kitty. We ensure quality/value/price for consumers via a three step check process.
What is the number of retailers and kirana stores for your marketplace and what are your targets for increasing the numbers?
Over 1,000+ grocery retailers and kirana stores have partnered for our online grocery marketplace. As we foray into new cities, we would also look at partnering with kirana store owners in each of these cities. Further as we add on more categories, these numbers will increase further.
How important it is for retailers and suppliers to share a common view, and a common set of performance measures?
Our objective is to build an ecosystem to help offline sellers with an alternative avenue of business, through the online mode. We partner with sellers and will always keep their business interest supreme and never think of bypassing them. So, we are providing impetus to some of the biggest retailers of the country, which are the traditional “kiranawalas”.
We understand that logistics and supply chain is a critical component of this business, and hence, we handle it on our own and do not rely on any other third party logistics firm.
What are you doing for the local brands?
We want to be the ‘messiahs’ or ‘angel in disguise’ for the local brands. We work with them to get their products on the shelf and at par with the biggies. We strive to provide a level playing field to the local brands in every region. Currently we have over 300 local brands on board on a pan India level. We are targeting to increase this by 10x and get over 3,000 brands by the end of 2016.
How are you using technology to enable cutting-edge operations?
Maintaining real time inventory, assortment and pricing are challenging tasks, especially with kirana stores who typically are unorganised and not that tech savvy. We are constantly working towards solutions customised to each kirana store. We strive to partner and work towards the common goal of providing best assortment at lowest pricing to the consumer.
What is your strategy for engaging with shoppers on social media platforms?
At AskMe Grocery, we are very active on all major social media platforms to acquire and engage customers. We also run contests from time to time to keep the engagement going and reward our customers. We are quite strong in offline BTL activities involving engagements at the local RWA/ Market level where our marketing team interacts with consumers, on ground, and explains them the value proposition of shopping with us.
How do you use analytics to better understand the customers and deliver more personalised shopping experiences?
We use analytics to understand what is working and what is not when it comes to the customer’s shopping habits. We are able to get a clear understanding of the shopping/ product preferences for customers in a specific area in any part of the country (where we are operational). Not only are we able to ascertain what products our customers are buying in a particular locality, but also learn about the exact areas from where the customers are exiting from the shopping funnel. We also use analytics to understand the impact of promotions on the overall health of the business.
Is the use of analytics helping you to garner more business and loyal customers?
Our team of analysts and data miners has always focused on adding more retailers and their stocks to the database. By ensuring that we have a large number of retailers and products present with us, we are able to offer more and more choices to the customer at an optimum cost. By optimum cost we mean the cost that is lower but the quality has not been sub standardised. Analytics also helps us to better understand the consumption patterns of customers in a particular locality. This helps us to structure the SKUs better.
Any innovations in offer structures, cross-merchandising, discount levels and so on?
We try and add intelligence and innovation to ensure that the customers have a smooth shopping experience. However, we do not believe in deep discounting since that does not help in creating a sustainable business. We follow a simple strategy- “Provide maximum assortment of best and tested quality at the lowest price”.
What are the challenges prevailing in the online grocery market?
One of the biggest challenges in the industry lies in creating an unmatched value proposition for the online grocery shopper who is continuously looking for better deals than the neighborhood kirana store or large retail outlets. Delivering a sustained customer experience to ensure brand allegiance will be a constant challenge. Logistics is another area that constantly needs to be improved on to generate higher customer expectations. Today’s customers want products delivered to their doorstep as quickly as possible and creating a robust logistics infrastructure is one challenge every company in the online grocery segment will have to consistently work upon.
Margins, range of products, consistency of product availability and freshness remain a challenge for online players. How are you dealing with them?
We plan to overcome each of these issues by fostering an ecosystem of as many local stores as possible to cater to the dynamic needs of our customers. We have an aggressive campaign of onboarding such local stores pan India to ensure anyone shopping on our platform gets nothing but a quality experience, each and every time.
What are you doing to improve your unit economics and increase profitability?
We believe that business efficiency can be the key differentiator. At AskMe Grocery, we aim at hub wise profitability. We are looking forward to tying up with more and more retailers and strive to get a wider range of SKUs and best prices for the customers. While we believe in profitability, it is not possible for a business to turn profitable in six months. There is investment that needs to be done for an initial time period to build the business. We work on low investments (we have a capital-light model) and module business that can provide profitability once it is scaled up.
Is it possible to compress costs even while maintaining quality and increasing sales?
We have multiple deals running on our website, which are funded by the company or by the grocer. It is the customer acquisition cost which I am investing in my business. This investment cannot be accounted as expenditure. My customer acquisition cost is actually investment into the business. It can be in the form of an ad or in the form of direct discounts to the consumer. We hope to be innovative and create a brand recall amongst our customers. Discounts will not stay forever. Instead, it is the product offering and the funded deals/ combos which will be the mainstay and help the brand carve a differentiated positioning for itself.
We believe that more the number of sellers empanelled with us, more will be the business generated for them. This will, in turn, enable us to get the best pricing and deals, which will benefit the consumers and us.
Do you think that government initiatives like Make in India, Skill India, Start-up India, Digital India, etc., will in some ways help to mitigate the challenges faced by online players?
We are building an ecosystem of kirana stores that is in line with Government campaigns like Make in India, Skill India, etc. We are a relatively young company wanting to improve the quality of life of our customers through our service offerings. We are all for nation building and a business like ours can tremendously help the economy through job creation. Campaigns like Start-up India will definitely help us focus on our core competency without having to worry too much about issues like regulatory compliance, finance challenges and taxation issues.
Going forward, as you attempt to scale and compete for greater customer attention, which will be the tools you will depend on?
As we attempt to scale up, we will focus on providing the best regional product portfolio and options to our customers across cities. We will also work towards offering best deals and combos to the consumers, ensure multi-level quality check points to ensure that the best quality and lowest prices are passed on to the consumers. We strive to offer the best-in-class consumer experience to all our shoppers.