Due to the recent outbreak of the coronavirus, the general public in India is advised to stay confined into their homes. The people are practising social distancing as governments ask them to stay indoors as much as possible. These circumstances provide an opportunity for various e-grocers to improve their business, but can they keep up to the rising demand?
Two of the largest E-grocery brands in India, BigBasket, and Grofers are dealing with a big problem at hand – something that doesn’t seem to go away anytime soon.
The two leading online grocery delivery startups in India have now started delaying their orders and in some cases even cancelled them. The sudden rise in the demand for various groceries as people are avoiding stepping out from their homes for even for essential items has led them to such moves.
A few of the customers took to Twitter to voice their concerns about the delays. BigBasket on their official twitter handle responded to a customer saying that they are trying to fulfil as many orders as they can.
The online companies that are involved in delivering household items at the doorstep are witnessing a fivefold increase in the number of orders as most of the bricks & mortars shops remain closed. To tackle the rising demand companies are slowly closing their delivery services to many pin codes as they try to keep up with the rising number of incoming orders. Swiggy’s micro-delivery company, Super Daily asked its customers to place their orders in advance as the demand is high, while other eGrocery delivery companies, like BigBasket, Flipkart and Amazon, are clocking an average delivery time of four to five days – much more than average of one to two days earlier.
Why the Sudden Surge?
The increase in demand is a direct result of the coronavirus outbreak. Mass panic among the general public is prompting many to place bulk orders to stash necessary supplies for the upcoming days. After the announcement of “Janta Curfew” on March 22 by Prime Minister of India, people are trying to stash as many resources as possible.
In many states, like Karnataka and Maharastra, the complete lockdown has been extended to March 31. This increased the challenges for e-grocers as their stock keeping units go out daily according to Seshu Kumar Trimala, national head of buying and merchandising at Bigbasket.
Retail analysts, on the other hand, don’t see any improvement in the situation in the near future either. Pinakiranjan Mishra, partner and leader of consumer product and retail at EY said they would be seeing a lot of panics and bulk buying as major cities go into lockdown.
The multifold increase in the number of orders is not the only challenge eGrocers are dealing with. Amid the concern and fear, many delivery executives have decided either to go off the road completely or are not working around the clock to ensure their own safety from the spread of the novel Coronavirus.
A top executive at a delivery enterprise while choosing to stay anonymous informed that they are trying to ensure that they follow all safety standards for their staff as well as their delivery workforce. They are trying to tackle the issue of not letting too many people in a warehouse at the same time and this might lead to a delay or even cancellation of some orders.
The Rising Demand: Impact
Gofers and BigBasket faced brief stock outages during panic buying on Thursday. Their senior executives informed that the average order value of e-grocers has ranked up by 20% to 25%. Governments were asked to exempt e-commerce services such as warehouses, vendors, suppliers, and on-ground staff from any imposition of Section-144 by the Ministry of Consumer Affairs, India on March 20, Friday.
As the demand for the products increases, there is a possibility of price inflation as well. It is clearly visible as all the offers on the eGrofers apps have suddenly disappeared.
However, to avoid any price inflation the governments and e-commerce websites around the world are taking the necessary steps to avoid this. Websites like Amazon and e-Bay are suspending accounts of people who are trying to sell home-care items at a marked up price.
But the situation has turned out to be like a blessing in disguise for the online grocery delivery companies. All of it has resulted in a steady increase in sales and the number of daily visits to various e-grocer websites. Trimala from BigBasket added that the number of customers visiting the app increased by 60% to 70%. Hari Menon, CEO also informed that the size of the basket has increased by 15% to 20%. Grofers have also witnessed in comparison to the previous month a 93% increase in sales for floor cleaners followed by a 90% increase for personal hygiene products and a 73% increase for groceries and staples.
While there are several other companies, such as Flipkart, Amazon, Milkbasket, and Swiggy too, that are operating in the grocery delivery business, Grofers and BigBasket are the two largest and most popular players in India. According to Forrester Research, these two companies, together, control 60% of the total market. While other companies are facing the heat and would be taking a ht on their financial books due to market shutdown, the increased demand on these two platforms can prove to be very beneficial for both in the on-going financial quarter.
As people may continue to stay indoors for the next weeks the demand is bound to increase. And, it would be interesting to see if such online grocery delivery companies in India come up with some innovative idea to scale up their supply chain to meet the unprecedented demand.