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Fast and fresh: Micro-delivery gaining traction

Micro-delivery dovetails into the Indian consumers’ preference of purchasing fresh supplies every day

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Delivery of commodities and perishables to the doorstep is getting quicker, efficient and need-based. From making bulk orders for monthly or weekly supplies, consumers are now adopting a more need-based approach of ordering limited quantities of products that get home-delivered the next morning in consumable batches.

Micro-delivery, synonymous with dailies like milk, bread, eggs, fruits, vegetables, etc, and deemed high on the convenience factor, is gaining traction in the start-up world. In the recent past, a number of ventures such as DailyNinja, Doodhwala, Milkbasket have cropped up in micro-delivery space. And big, established players like BigBasket, not to be left behind, have been making inroads into this super-specialised sector through acquisitions.

Not long ago, BigBasket acquired 100% stake in milk delivery start-ups RainCan and Morning Cart. 

Speed, convenience and price efficiency are some of the value additions micro-delivery platforms offer, said Dhruv Kapoor, partner, Sistema Asia Fund. “With a simple subscription, customers can order through the app one night before and goods get delivered early morning to the doorstep. Micro-delivery dovetails into the Indian customer preference of purchasing fresh supplies every day. What we also notice is that once the purchase behaviour becomes routine, other products like groceries, medicines start getting bundled through this network.” 

Micro-delivery holds more distinct advantages over “delivery’’. Anirudh Damani, managing partner, Artha Venture Fund, said as compared to bigger delivery players that require customers to order items with a set minimum value, or incur heavy delivery charges if the order is small and often take longer to deliver, “micro-delivery scores over these factors.”

According to Tarun Bhasin, CEO, Keventers, which recently launched a mobile app-based premium milk delivery service across the National Capital Region, accessibility and convenience has become the most important currency as the consumer habit of stocking up groceries has shifted to more frequent need-based trips. 

Moreover, the rise and ease of digital payments has fuelled the growth of such start-ups as well, believes Damani. “Since the limit to the minimum transaction has been lifted, consumers are easily making purchases of even Rs 50 from their credit cards, wallets. This has largely enabled the hyper convenience sector. The distance between pick-up and drop off points has reduced, which has resulted in a decrease of delivery costs, and thus, an increase in the number of consumers.”  

Groceries, including fruits and vegetables, constitute roughly 50% of the monthly consumer purchase basket, as per industry estimates. Goldman Sachs estimates the Indian online grocery market to reach $40 million by FY19. Experts believe micro-delivery has tremendous growth potential in India. They predict greater action in terms of mergers and acquisitions (M&As) in the sector. 

Kapoor said BigBasket, for example, has a supply chain network that is designed differently from that of micro-delivery start-ups where the latter have no warehouses and inventory. “Real-time sorting is done daily and goods are delivered to customers. The frequency of orders is very high in this business, say 15-20 times a month or more. A brand like BigBasket can ride on top of this supply chain network with other products,’’ said  Kapoor. 

Nandu R Kumar, CEO, Spice Route Business, said acquiring micro-delivery start-ups provides larger retail/grocery brands with a channel to build their familiarity and trust among a new segment of users. “It helps them to build a captive audience and improve their average ticket size over a period of time, without diluting much on their overall strategy. Micro-delivery appears like a logical add-on or an extension to online grocery players. On the other hand, since scaling up appears a challenge to micro-delivery start-ups, more action in the form of M&As will follow.”

Meanwhile, brands like Keventers that have just entered this space are keen to expand. Bhasin said they plan to capture 20% of the premium milk delivery market in NCR by this financial year and enter other states in the time to come.

A BIG BASKET

  • 50% – Of monthly consumer purchase is groceries, as per industry estimates
     
  • $40 million – Indian online grocery market by FY19, says Goldman Sachs 

AT YOUR DOORSTEP

  • A number of ventures such as DailyNinja, Doodhwala have cropped up in the micro-delivery space. Big players like BigBasket, not to be left behind, are making inroads through acquisitions
     
  • Micro-delivery firms have certain advantages over bigger players that require customers to order items with a set minimum value or incur heavy delivery charges if the order is small and often take longer to deliver
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