E-Grocery Start-Ups Continue To Witness A Surge In Demand Amidst Crisis

Team Startup CityMore and more businesses are reported to be gravely hit by Covid-19 outbreak and subsequent lockdown. However, the lockdown has been beneficial to some start-ups that deliver essentials and necessities. It has also paved way for start-ups to pivot or explore new opportunities amid the crisis.While many of the start-up businesses have been struggling to meet the demands of the public, many ventures, which were otherwise in the premium segment or providing various other services, have been repurposing their business offerings or launching new business arms to assist in these difficult times. As per Forrester Research, India's online grocery market could top $3 billion in sales this year, a 76 per cent increase over last year, as the spike in demand for home delivery of fresh produce and staples seen during the nationwide lockdown is expected to sustain through the rest of the year, analysts and industry executives said. The $1.3 billion in additional e-grocery sales could be the biggest driver of overall e-commerce sales, which is expected to grow by just $2 billion in 2020.

As far as e-grocery delivery is concerned, start-ups like BigBasket, iD Fresh Foods, Licious and Nandu’s Chicken have seen a sharp spike in orders, new customer acquisitions and an increase in average order value, as consumers are looking for safe-to-eat, hygienic products. These e-grocery, fresh foods and meat start-ups have adopted to fulfil real-time consumer demand during the Covid-19 lockdown and have embraced innovative business models such as adding ‘store-finder’ feature, rationalising SKUs, introducing new delivery design, hiring delivery staff from companies that are laying off. And honestly, these are working!

Staying Strong
With the initial lockdown announcement, online grocery retailer BigBasket, which has a strong supply chain in place, was hit badly at the workforce level.
This slowed down the e-grocer’s operational capacity to 50 per cent, while at the same time, panic scare among consumers resulted in demand on its platform surging by 5-6x. Now with thing easing gradually, the start-up is scaling its operations and fulfilling 3,00,000 orders a day.

“Pre-Covid-19, we were fulfilling 1.5 lakh orders a day, which dropped to 30,000 orders a day during the first few days of the lockdown because of our limited workforce levels. One of the first things we did was to filter down our 3,800 SKUs to 2,500-3,000 SKUs, which was further rationalised in cities where we faced manpower shortage. With technology and business process re-engineering, we were able to deliver and increase productivity by 23 per cent,” said Hari Menon, co-founder and CEO, BigBasket.

Slow but Steady Increase in Operations
Other than BigBasket, Omni-channel retailer of farm-fresh chicken, Nandu’s Chicken, has seen its orders spike from 40,000 a month pre-lockdown to 65,000 orders; a 15 per cent increase in average order value, a 40 per cent increase in new customers online and a 20 per cent increase in walk-in customers to its stores. “We are fulfilling 2,700 orders a day across all channels, including 32 of our 49 stores which are open, our webstore, Nandu’s app (iOS & Android) and our partnerships with Swiggy, Dunzo and Zomato. Now more than ever, consumers are looking for healthy meat with no steroids, hormones or antibiotics that are 100 per cent traceable. That’s why our sales have doubled during the lockdown,” says Narendra K Pasuparthy, Chief Farmer and CEO, Nandu’s Chicken. Currently, Nandu’s Chicken is fulfilling 2,700 orders a day across all channels, including 32 of its 49 stores which are open, its webstore, Nandu’s app (iOS & Android) and its partnerships with Swiggy, Dunzo and Zomato.

Fresh meat and seafood brand Licious’ pre-Covid order fulfilment of 18,000 deliveries per day has now gone up by 1.5-2x times, with a 30 per cent increase in average order value from customers and a 200 per cent surge in demand across the seven cities it operates in. “During the lockdown, we lost almost 50 per cent of our workforce. While others may be laying off staff, we have hired 300 people over the last 20 days and are back with 1.5 times of our capacity. We have partnered with DriveU, Shadowfax, Yulu among others to hire people very successfully” said Vivek Gupta, co-founder, Licious.

Adopting new Plan of action
Fresh food brand iD Fresh Food launched a ‘Store Finder’ feature on its website to combat panic buying. The new feature is to help consumers with updated information on iD products available at stores near them. Additionally, a ‘notify me’ feature provides daily SMS alerts to consumers when fresh stocks get refilled at the neighbourhood stores.

As per PC Musthafa, Co-founder and CEO, iD Fresh Food,they converted the lockdown challenge into an opportunity to learn and innovate rather than as a crisis. The start-up partnered with Swiggy, Zomato, and Dunzo for deliveries and also consolidated orders from resident welfare associations and recorded its best performance in March with sales of INR 23.8 crore.