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How does an online grocery store work? Simply put, they collect orders via common portals and then assign orders for delivery to designated customers. That’s what it looks on the outside, on the inside each player in the Online Grocery Market In India, has to develop an approach that makes sense to them based on market conditions. How do they do that?
There are a few models that are practiced and seem to work. The warehouse-model. Here, the company in question has its own warehouses/warehouses managed by a group of staff, that also handles other functions like wastage, procurement, etc. The last time we checked, BigBasket worked on this model and they also market many of their in-house white-label brands. Pros: It is possible to have better control over the margins they have. Cons: It is costly to build and maintain as there are physical warehouses, this can get more capital intensive with more warehouses that you build. The local store aggregation. Here the company might only manage the incoming orders. Then they pass them over to local stores to fulfill and deliver to the respective customers. This involves maintaining a network of small local retailers. Pros: The model hardly has any assets like what’s seen in the warehouse and is also cost-effective because of this. Cons: The customer experience can differ, even be inconsistent as the delivery quality can vary from one retailer to the next. Some might even be impacted due to shortcomings of their own. The delivery-only model. Here, the company does not own any inventory to hold products, just a fleet of delivery guys and vehicles. They work by getting orders, procuring products from the stores and then purchasing those items from them or delivering the orders for them. Pros: It’s the exact opposite of local store aggregation, where the company has better control over the kind of delivery experience they build. Cons: Customer orders are subject to a fill rate, where fulfillment is determined by stock availability, without lost sales or backorders. The Deep-Integration Omni-channel model. This is a more complex take on the delivery-only model, where the company is interconnected with reputed offline stores. They process orders from their own warehouses and that of these offline stores as well, to try to capitalize on the offline and online preferences that buyers have in the Indian market for online grocery. Pros: The delivery and customer experience is in their hands. It is cost-effective because of its asset-light. Cons: The orders delivered or fulfilled are dependent on the inventory partner if the product or the actual partner is available.
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We buy everything from clothing to appliances online, so why not our groceries too? In fact, people are doing just that and have helped build a formidable Online Grocery Market In India valued at INR 1,034.13 Bn by 2023 – and those buyers can get everything from fresh fruits, vegetables, dry fruits, meats, baby and personal care products even household items too. Owing to the kind of variety, conveniences that it has to offer, there are many online grocery stores available. So once can imagine that this place will get crowded in a very short time and in order to compete, retailers and the online grocery supply and distribution partner has to make this easier for their buyers if only to hang onto them. This includes making it easier to browse, do a quick comparison shop, and eventually make purchases as well. But there is some method to this chaos, let’s check out some key facts as to why a consumer would prefer to buy their groceries online. First, they get the products delivered to their doorstep directly. This aspect of the business was created keeping in mind conveniences that the consumers look for at the end of the day. Everything that they ordered for reaches their location as determined by them and mitigates the hassles of getting the products on their own. Consumers want choice, and in this field, it’s no different. Big online grocers make use of an app that lists out all of the items they have for sale and users can simply browse through everything, and pick out their choice of items – so they are offered variety and can choose from brands that they trust. An obviously, when they can view things from an app in the comfort of their homes, office desks and have their items delivered to them, consumers gain value in the form of time saved, convenience and the assurance of quality as well. Our related post: What lies ahead for the online grocery market in India? Why the Online Grocery Market in India is set to go big in the future? Decoding the growing popularity of Online Grocery Market in India |
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