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The Ecommerce is no more limited to items and commodities which had larger shelf life, such as electronics or apparels. Now, It has now entered into Recommerce and grocery sales. The superiority over GMV stands priority for some of the India’s top ecommerce houses.
In the recent development (in July 2017), the ecommerce behemoth’s proposal to invest $500 Mn in offline and online food retail stands approved by the DIPP (Department of Industrial Policy and Promotion). Amazon can now sell packaged food and groceries on its online marketplace (through website and app) and also through third-party offline retail outlets.
Why Groceries and Packages Food Items is a tough nut to crack?
Groceries and Packaged Food items has been one of the major attractions for some of the leading Industry conglomerates in India. Recently Tata Group has acquired GrocerMax for its new venture Trent Hypermarket. However, very few and handful of the companies have been able to crack this tough nut. The on-ground reality lies in mastering Distribution and Offline Retailing. Right from sourcing to warehousing, the entire Supply Chain Management has to resonate with the local demands and preferences since the commodities (vegetables, fruits etc) have lower shelf life. Also some of the leading chains like Big Bazaar and More (by Aditya Birla) have mastered the art of dong offline retailing for over a decade and understand the pulse much better than any online companies.
Flipkart has tried to manage the dynamics of the Groceries sales through its initiative Flipkart Nearby but has failed miserably.
Amazon has prepared well to make sure Online Groceries is a Hit and not just a Learning Experience like Flipkart.
Recently Amazon acquired Middle East Ecommerce Giant Souq for $650 million. This acquisition was held under a strong deliberation around sourcing grocery and packaged food items from places which are geographically near to India, as well as logistically approachable. Sourcing from US could bring in logistic issues as the items are to be transferred through refrigerated containers. Also it’s a cheaper logistics arrangement (such as sea or water rather than cargo airplanes).
Souq which is termed as Amazon of the Arab has a huge variety of food and grocery products which are consumable and demanded in India. Amazon will try and cross leverage their Indian Seller Marketplace to get these items in experience to Indian consumers.
Amazon has also been successfully running Amazon Fresh in US ( in Texas ) and is also looking to expand in European countries like Great Britain and areas near and around London. They have tried to take hands on experience of running groceries sales before they have entered India.
Amazon also has invested in strengthening its market place model and has gone a level deeper to ensure that the merchants on its platform are taken up with utmost care. The giant has invested $260 million in seller services in India and is eyeing to expand this PAN India to resonate the wave of 4G mobile penetration in India.
Groceries amounts to nearly 15-20% of every household budget in India. The next wave of Indian Ecommerce is set to be driven through online groceries sale. Amazon is looking to give every bit possible and working quite hard in making this a success. And if, Amazon is able to crack this tough nut, it could register a huge leap in terms of GMV from any of its competition, thus paving the way to lead ecommerce in India.
GMV – “Gross merchandise volume or GMV is a term used in online retailing to indicate a total sales dollar value for merchandise sold through a particular marketplace over a certain time frame.”