Why online Grocery store startups are failing in India?

Half a decade ago, online grocery stores started creating a mark of the Indian e-commerce industry going the sophisticated way and definitely boasted of enough potential to give the age old local markets a run for their money and sustenance.  Unfortunately, the results didn’t show a great side of this attempt. The tech startups have slowly started retracting from their online businesses citing reasons that have forced them to call the quits.

grocery startup falling
Credit: http://www.delish.com/

The mannerism of the Indian consumer markets have contributed towards this and startups haven’t been able to break even forcing them to give up on the great Indian e-grocery dream.

Here’s our take on 5 main reasons for the crisis:

  1. The Indian Market Behavior:
    Online retail stores have tried their best to promote their brands by offering discounts on their first set of purchases. Sadly, most consumers use up these promotional offers and land up at their regular local markets the very next day for the next purchase. Though a larger section of our consumer base is tech savvy, they prefer purchasing from local grocers than using their smartphones.

    What’s the way out?
    Market research, consumer behavior study, analysis of the culture, habits, paying capacity, demographics and more to come up with a strategic approach of building and designing the app and its features.

  2. Cost of marketing:
    Promoting business of any sort is an expensive affair and startups have gone ahead and splurged on it. Discounts on first purchase, loyalty discounts and free products to garner attention. Actors have been roped in to endorse various brands further increasing the cost of marketing. These investments have failed terribly at giving enough returns and this has nailed the coffin for many start-ups.

    What’s the way out?
    Divide the investment in pre-launch, post-launch and subsequently, quarterly budgets instead of spending the whole bunch in one go. Meet the expected ROMI first and then take the next step ahead.

  3. Options Matter:
    Most startups have focused on the urban section of the consumer base and have options that have not suited the larger base. The preferences of Indian customers still remain raw at a larger scale and have not been able to suit themselves and their budgets to these online brands.

    What’s the way out?
    Go multilingual, advertise smartly with location-based media – so your app goes viral not just in the urban locations, but in the rural ones too. Once you have a thorough market research, you will easily be able to zero down on a friendly app interface and an easy hang on your grocery app for the whole world out there.

  4. Spread Effect:
    Many cities haven’t accustomed themselves with the e-commerce culture and grocery shopping isn’t really on their cards because of the legacy buying habits. People tend to believe it’s a tedious job to book groceries online and the word of mouth is such; resulting in failing concepts.

    What’s the way out?
    The app has to be really outstanding in terms of usability – easy flow, checkout and seamless display, categories and choosing of items. Grocery is a huge area and covering everything smartly, easily is a smart job to do – nevertheless, very much possible!

  5. The Bazaar:
    Indians have always loved the outdoor purchasing system. The sight of fresh vegetables and fruits has always tempted the Indian spirit in us. We love the bargaining and appreciate the banters with local sellers. The e-grocery website hasn’t been able to replace these facets of local bazaars.

    What’s the way out?
    Show the smart way! The fresher, brighter and pixel-perfect you show your stuff, the better it is. If you are able to maintain the freshness, the timely deliveries, and the product range, you can conquer the market as the scope is huge.

  6. Stocks & Discounts:
    The bigger stocks are maintained by old players in the market and most of the promotional offers have been availed by them, leaving the startups in a lurch, not having been able to serve the larger consumer base. Grocery store owners enjoy better margins and benefit the maximum out of these offers.

    What’s the way out?
    Collaborate with the existing monopolies – the ones already in the business since long, the big players, the wholesalers. This way, the stocks can be maintained by the respective owners and you just have to work on the app specifics, technology, marketing, support and deliveries.

  7. Training and Customer Service:
    Training the online grocery staff has also posed a big challenge to startups. Customer friendly services, handling the delivery, managing time and cash is indeed a paramount task and most of the online startups haven’t been able to provide enough training to their staff members and this again has found place in the list of losses.

    What’s the way out?
    Prepare your workforce beforehand. The better the delivery, the better the customer satisfaction and popularity is. Happier customers are the best advocates. So pick people who are smart – especially for the delivery and support functions.

  8. Heavy Apps with poor navigation:
    Most apps haven’t been able to satisfy their users and this again has contributed in proportionate measures towards the big fall. The right kind of user interface, the ease of shopping and safe payment techniques are factors that are of great importance. With data connection very fickle in the Indian origin, it is important to create an all encompassing app that is both striking and light (loading time) at the same time – this limits the use leading to failure.

    What’s the way out?
    Build a rich app which is quick to load and sell on that. Smart development and design can help your app sail through this otherwise big problem in the Indian sub-continent. If you have a well-developed app on the right platform and technology, it will be faster to load and easier to tweak per the standards and requirements of time and business.

To a successful Grocery App, though there are hindrances, a well-researched strategy, market-study, target identification, predictive analytic, technology, development and more with amalgamation of latest features can help startups sail through the common hurdles in a country like India and around. Have a grocery start-up idea or want to transform your existing app to a high-performance, successful app? We are masters at this task! See for yourself by getting in touch at info@valueappz.com.

Jeta Sharma

I am a passionate sales and marketing expert with experience in leading business initiatives. My expertise in sales forecasting, Channel development and Business building with excellent people management skills. Specialties: Marketing, Sales, Business Analysis, Branding, Channel Development, Promotions and Sales Negotiations. http://www.valueappz.com/