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Will Online Grocers Survive?
Fri, 13 Nov Pre-Open

Start-ups have acquired a fair share of Indian business in quick time. They have entered most of the commercial sectors. Be it clothing, electronics, food or any services one search on the internet can give you wide options online.

However, as these firms are gaining most of the attention with their ad spends questions about their sustainability are raised all the time.

Let us examine one of such models where the online business trend is expanding rapidly: grocery shopping. Many players have entered into this business. Few majors are Localbanya, PepperTap, Big Basket, etc. They offer various discounts in order to expand their presence. Moreover, they are offer convenience by means of free home delivery and COD (cash on delivery) options. They are leaving no stone un-turned to get ahead of their competitors.

While this can be a threat for the brick and mortar grocers, not all of them are of the same view. Some of the big guns of the industry are of the opinion that the business model of the online grocers is not viable.

Kishore Biyani, CEO of Future Retail Ltd has stated that the online model of existing online grocers does not make any sense. By quoting that, he was referring to the hyper-local delivery companies. These companies source their requirements from local supermarkets and neighborhood stores. This in turn results in high operating costs and huge losses.

As an article in Livemint states, there are signs of a slowdown and start-ups in overcrowded sectors could fail to survive in before their next funding round. Ultimately, they would have to go for major cost cuts just to ensure their survival. Moreover, if that does not suffice, they will have to consolidate.

However, only time will tell how things will work out for these small firms. Indians have a tendency of 'touch and feel' before buying the product, especially more when it comes to grocery. Thus, it will be interesting to see if the online grocery model can change this mindset of the people.

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