The coronavirus outbreak has thrown up a massive opportunity for India’s online grocers. Yet, only time will tell if they succeed in making the most of it.
With people avoiding crowded places as a precautionary measure, online grocery retailers in India have seen a massive spike in business. For instance, BigBasket’s traffic and revenue doubled in less than two weeks. The average “basket values” on the platform are around 20% higher than regular days, and many new users are also flocking to the brand.
Rival Grofers has seen a nearly 80% growth in orders across Mumbai, Bengaluru, Pune, and Ahmedabad in recent weeks, and a 60% spike in Delhi National Capital Region (NCR) and Hyderabad. The number of orders on Grofers is 45% higher than regular days, while the average order value has increased by 18%, the company said.
Even though the boom is more a knee-jerk reaction to the coronavirus outbreak, experts believe it could translate into long-term gains.
“Data from China show that the (online shopping) numbers will stay elevated even after the crisis, as more people are exposed to the ease and fun of online shopping,” Anindya Ghose, professor of technology, operations, and statistics at New York University’s Stern school of business, told Quartz.
But keeping up with rising demand is going to be a challenge, experts warn. As supply chains come under strain, their technology capabilities, with regards to booking and processing orders seamlessly, will be tested, according to Yugal Joshi, vice-president at Texas-based consultancy Everest Group.
Surviving the panic buyers
India has so far reported over 150 cases of coronavirus, and the government has taken some drastic steps to contain the pandemic. With international borders being sealed and advisories issued on social distancing, there is a sense of panic that is making people hoard for an uncertain future.
At brick-and-mortar stores, inventories are getting wiped clean. “If I had not got fresh supply today, I would have had to shut shop,” said a shopkeeper at grocery chain Honey Money Top in Gurugram on March 16, adding that customers are buying most items in bulk.
Restocking is becoming difficult and is costing more. “We’ve run out of wheat because our suppliers have increased prices given the high demand,” the owner of Basics, a farm-to-table grocer in Gurugram, said on March 16. “I’m personally going to my supplier in Madhya Pradesh to sort the situation. If nothing works, I will have to buy at the rate he is quoting and then increase prices for my customers. Demand is so high right now that I think my customers will buy at whatever rate I sell at.”
Online grocers, though, have so far largely managed to keep prices in check. For instance, Grofers said it sold all the N95 face masks that it had in stock at Rs90 ($1.20) even when some shopkeepers in the country were charging up to Rs500 for the respiratory mask that can be used as a precaution against coronavirus.
Dwindling stocks, though, is a reality even for online sellers.
They have already run out of sanitisers and masks. Grofers has seen a surge in demand for floor cleaners and immunity-boosting products such as Chyawanprash and honey. Even essentials are running out.
Quartz’s attempt to place a order on BigBasket to a Gurugram address on March 16 showed items such as atta, rice, oil, pulses, carton milk, and spices out of stock.
“Although we faced some disruption in the last three days, we have taken corrective action and have geared up for supplies to meet the increased demand,” BigBasket said in a statement on March 17. “We are not facing shortages…In effect, supply will not be an issue.”
These companies are also voluntarily rationing some products to prevent hoarding. For instance, discounts and promos on buying more than one quantity of a product have been withdrawn to disincentivise buying more.
The real test for these companies will be to maintain these standards over the coming weeks.
Keeping up the reputation
“Online shopping gives them (customers) options of social distancing and a way to make sure that they have all the essential goods they require in case of any upcoming lockdowns,” Satish Meena, senior forecast analyst at Forrester, told Quartz. But if items frequently show “out of stock,” they could “face an issue of bad customer experience and unreliability,” he added.
BigBasket is already feeling the pressure on delivery timelines. While it typically offers same or next-day delivery, the outburst of orders has caused delays of three to five days in some areas. “We will face some constraints for a few more days because it takes time to build capacity in terms of storage, delivery fleet, and people,” BigBasket said, adding, “we will be back on track very soon.”
Grofers, for whom delivery timelines are currently three days in Delhi and two days in most other cities, also said, “all essential supply chains are functioning normally.”
And while they ramp up supply capabilities and hire more personnel, they also need to focus on ensuring safety and hygiene.
Considering the virus can last on surfaces up to nine days, packaging and delivery standards needed to be rigid. Grofers has implemented stringent screening at its facilities to make sure all employees are healthy and are taking necessary precautions. “Our warehouses are disinfected and sanitised on a daily basis to keep the inventory virus-free,” co-founder and CEO Albinder Dhindsa, told Quartz.
In a bid to curb physical interaction, Grofers is encouraging people to avoid cash-on-delivery since it can “become a source of transfer of virus.” Despite limited evidence of this being true, better safe than sorry.