Bengaluru: Amazon India is enabling pickups from More retail outlets for its online grocery orders. This comes at a time when the e-grocery space is witnessing intense competition among Tata-owned BigBasket, Walmart-owned Flipkart, Grofers, and Reliance Industries’ JioMart battling for bigger chunks of the market.
The US-based ecommerce firm is doing in India what it has done with Whole Foods in the United States, where a consumer can order on Amazon Fresh online and pick it up from the nearest Whole Foods store in select cities.
In 2017, Amazon acquired Whole Foods for over $13 billion.
Amazon Fresh online grocery orders in Bengaluru can now be picked up from the nearest More store within two-three hours. The service has gone live across many pin codes in the city. Unlike most ecommerce deliveries, cash-on-delivery is not permitted for these orders yet.
Amazon, in partnership with private equity firm Samara Capital, had acquired the More retail chain from the Aditya Birla Group in 2019.
Amazon’s free store pick-up for online grocery orders is adding another model to the hyperlocal play for e-grocery orders and delivery, industry executives and analysts said.
“Some companies are exploring various models, and this seems to be another hyperlocal model being tried out. This is also tailor-made for someone like Reliance Industries,” said Arpit Mathur, partner at management consultancy Kearney. “We will have to wait and see how this plays out in India compared to the US which is a different market.”
How Indian consumers value the convenience of delivery at doorsteps compared to placing orders and then picking the same remains to be seen, he said. “India also has one of the highest grocery store penetrations in the world,” Mathur added.
“We are committed to ensuring a smooth and seamless experience for customers across the country and have continued to significantly invest in our operational capabilities to enable faster deliveries,” a spokesperson for Amazon India said, without commenting on ET’s specific queries.
On Amazon Fresh, customers can opt for two-hour delivery or choose a convenient two-hour slot from 6:00 am to midnight. All customers get free scheduled two-hour delivery on orders over Rs 600. Orders below this threshold can be placed with a delivery fee of Rs 29, and there is no minimum order value to shop from sellers offering products on Amazon Fresh, the spokesperson said.
For now, Amazon Fresh store pick-ups are free in Bengaluru.
Last week, Bloomberg reported that Amazon was informing Prime users they would have to pay a fee for Whole Foods deliveries.
Across ecommerce platforms offering online grocery, consumers may have to wait longer as more people are seeking essentials online, resulting in longer delivery timelines.
In February, Amazon merged its two grocery products—Pantry (large size grocery purchase) and Fresh—into one in cities where it was offering both separately. In the rest of India, it continues to offer Pantry wherever Fresh is not available yet.
Previously, Amazon was also servicing some of its Pantry orders through Future Group’s BigBazaar outlets after both had formed a partnership. This was done through the delivery fleet and consumers were not involved.
It is not clear whether Amazon still has this facility with Future Group since both the companies have been fighting a legal battle over Future’s deal with Reliance Industries. Last week, the Supreme Court of India said a Singapore international arbitration order was valid in India which put the RIL-Future deal on hold.
Like Amazon’s latest attempt at grocery delivery, Kotak Institutional Equities had said in a note last year that Future Group’s retail stores, across formats, could be utilised for JioMart’s hyperlocal deliveries and could put more pressure on rivals like Amazon and Flipkart.
Amazon Fresh was initially launched as Prime Now as a two-hour delivery service of essentials but was migrated to Amazon’s India marketplace under Fresh in 2019. Prime Now was eventually shut down a year later.
Globally, Amazon has shut its Prime Now app.
All prominent players in the space, like BigBasket, Grofers and Flipkart are aggressively chasing express deliveries—typically in an hour—while Swiggy is also scaling up its 30-45-minute grocery delivery service Instamart and is on a marketing overdrive.
Hyperlocal delivery startup Dunzo has also scaled up its instant grocery delivery service rapidly over the last one year with increased demand for groceries online. In May, Dunzo said consumables, its fastest growing category, witnessed users transacting more than 2 times per week.
“Everyone has realised if you get a grocery customer to transact, there is high stickiness (frequent purchases). This time with express deliveries, the big difference is everyone knows it has to be inventory-led or the experience will suffer. Dark stores have become critical for such services,” Kearney’s Mathur said.
Dunzo told ET that it was harnessing the power of its micro-fulfilment centres to act on the urgency of this demand and deliver the top 1,500 SKUs (stock keeping units) at under 20 minutes per delivery. “With micro-fulfilment centres, we aim to have a stronger hold on supply chains and continue to improve on the promise of faster deliveries,” a Dunzo spokesperson added.
Swiggy founder and chief executive officer Sriharsha majety told ET last month that the company would invest further to scale up Instamart as part of a plan to have a large non-food business.
Swiggy raised $1.25 billion from investors like SoftBank and others last month.
ET has reported previously about BigBasket’s plans to try out express deliveries again, while Zomato has launched its grocery marketplace starting from the Delhi-NCR region. Over the last two weeks, Grofers has taken its 15-minute delivery service to cities like Bengaluru after launching it in Gurugram. Zomato has invested $100 million in Grofers but the food delivery app’s founder and CEO Deepinder Goyal told ET last week that it was a separate investment and there were no synergies between the investment and grocery marketplace yet.
A report from PGA Labs for the online grocery market in FY21 puts BigBasket in the leadership position with 37% market share. Amazon India was the second largest with 15% share, while Grofers was at 13% followed by Flipkart at 11% and JioMart at 4%.