Low, middle-income households present next big opportunity for e-grocers

BENGALURU:  India’s low and middle-income households are now at the centre-stage of the e-grocery battlefield amongst heavyweights including the likes of Tata Group, Reliance Industries as well as e-commerce majors Amazon and Flipkart. In fact, these low and mid-income households form a chunk of the tier-2 market (nearly 58 per cent) as compared to metro cities (42 per cent).

According to a Redseer analysis, value-driven households in India who prioritise discounts, exchange policies and cash backs are driving the shift in buying behavior from offline to online contributing 61 per cent of the $293 billion market opportunity.

 However, the key challenge comes from the traditional kirana shops (or, the unorganised market), that account for 95 per cent of the overall grocery market and have a strong presence in the hinterlands.
The Redseer report pointed out that out of the 1.1 crore total kiranas in India, about 80 lakh are in tier-2 towns.

Although kiranas were the mainstay for delivery of groceries and other essentials during lockdown, these traditional brick and mortar stores are now being onboarded by digital platforms for a faster hyperlocal service. During the peak lockdown period (April-June 2020), when purchasing behavior of the customers underwent drastic changes, Reliance announced its foray into the e-grocery segment through Jiomart, while Amazon expanded their grocery vertical to 300 cities in June 2020.

On Tuesday, Flipkart said that it has expanded its grocery operations in more than 50 cities across India and will target 70 more geographies in next six months. Tata Group’s possible takeover of BigBasket will create further consolidation in the segment.  In all, the unprecedented coronavirus pandemic has been a blessing in disguise for the digital platforms selling groceries with total sales seeing a near two-fold growth by end of 2020 at $.0.37 billion.