Home Retail Consumers turn to e-groceries for essentials; companies see massive growth

Consumers turn to e-groceries for essentials; companies see massive growth


While shopping malls and markets across the country wore a deserted look on the sixth-day post demonetization of Rs 500 and Rs 1,000 notes, a few online sectors are rejoicing with massive gains – both in terms of orders and customer acquisitions.

Consumers turn to e-groceries for essential purchases; companies see massive growth
Grocers like Bigbasket and Grofers are coming out as go-to-destinations for grocery shopping

As customers look to save precious cash and turn to online channels to serve their grocery needs, grocers like Bigbasket and Grofers are coming out as a go-to-destination.

“Orders have gone up by 35 per cent (month-to-date orders are higher by 20 per cent). While we already sense that the demand could be higher, we are accepting orders based on our capacity so that the customer experience is maintained at the same level as before,” National Head – Buying and Merchandising, Seshu Kumar told Indiaretailing.

Read: Demonetization a Masterstroke, Give it time to play out: CII

Another e-grocer, Grofers also saw a spike in orders. “As buying through local kirana store and sabjiwalas has become a challenge for consumers with not enough cash in hand, online grocery options are emerging as a viable option. For us, the order value and GMV for fruits and vegetables have specifically increased in the last six days. Where order value has seen a 35 per cent jump, GMV(Gross Merchandise Value) has increased by 50-52 per cent,” Director Marketing, Grofers, Prashant Verma said.

“This means that consumers are not only buying fruits and vegetables online they are also buying it in much larger quantities,” he added.

For Grofers, the daily customer acquisition rate has also increased by 48 per cent post demonetization.

CoD takes a hit

Along with the increase in orders, the Centre’s move has also marginally hit the Cash on Delivery (CoD) option for both e-grocers and e-tailers who have either disabled this option or are encouraging consumers to opt for other mediums.

“Cash on Delivery had been contributing at least 50 per cent of our overall sales before 8 November, 2016. Post the currency ban, it has slipped to 15 per cent of sales. Of the remaining 85 per cent; 63 per cent is cards – credit and debit cards, and 22 per cent is through wallets,” Kumar noted.

Read: Currency Ban: E-tailers disable CoD, huge surge in business for mobile wallet cos

A similar dip has been witnessed by e-commerce major Snapdeal though the company feels it’s a short-term slump and things will pick up soon.

“There is a short-term dip in the CoD business mode and discretionary purchases have taken a dip. Customers are migrating to pre-payment mode,” said company’s Co-founder Kunal Bahl.

According to him, the lower discretionary spends by consumers resulted in a minor dip in its overall sales, though it was only “temporary”.

However, Behl felt that the note ban is actually a boon for companies like Snapdeal since it will push consumers towards online payments and a cashless economy in the long run, boosting their margins – especially since CoD makes up for almost 80 per cent of sales currently.

Mobile Wallets Go Mainstream

The biggest beneficiaries of the Government’s move are arguably mobile wallet companies which have become mainstream payment options for consumers to make purchases across segments and categories.

With (some) wallets being accepted even at a panipuri stall, the move has spurred the digital payments sector in a massive way.

Read: Mobile wallet companies laud PM’s decision, expect spike in digital payments

Where India’s largest mobile payments and commerce platform, Paytm has a record 5 million transactions a day and is on the way to process over Rs. 24,000 Crores, FreeCharge has seen a 10X surge in the number of retail merchant sign-up queries, with most of the queries coming from grocery stores, pharmacies and food joints.

Another mobile wallet company, MobiKwik, has also registered 18x growth in transactions since the announcement of demonetization. It also registered over 2,000 per cent increase in add money (money in the mobile wallet).

In the wake of challenges being faced by masses in India, the companies on their part are equally helping consumers by simplifying the process.

Read: MobiKwik slashes bank transfer fee to zero

For instance, MobiKwik announced on Tuesday that users will be able to transfer money instantly to any bank account at 0 per cent fee. Usually, to transfer money from a mobile wallet to the bank, a non Know Your Customer (KYC) user was charged 4 per cent fee and the fee for a KYC user was 1 per cent.

Similarly, Paytm went multilingual onn Tuesday to enable millions of Indians to overcome language barriers and pay and shop in their preferred regional language. With this, the company has expanded its reach to over 80 per cent smartphone users in India, who prefer internet-based services in regional languages, thus making mobile payments and commerce accessible to all.

Snapdeal acquired Freecharge also launched a new feature — Wallet on Delivery (WoD) allowing users to pay on delivery using their Freecharge wallet.