Ebene Magazine – Low- and middle-income households are the next big opportunity for e-grocers

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In fact, these low and middle income households form part of the tier 2 market (almost 58 percent) compared to metropolitan areas (42 percent).

Published: March 03, 2021 3:22 AM |

Last updated: March 03, 2021 9:43 am

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BENGALURU: India’s low- and middle-income households are now at the center of the e-grocery battleground among heavyweights like Tata Group, Reliance Industries, and e-commerce majors Amazon and Flipkart. In fact, these low- and middle-income households form part of the tier 2 market (almost 58 percent) compared to metropolitan areas (42 percent).

According to a Redseer analysis, value-minded households in India are driving discounts, exchange policies and cashbacks, driving the shift in buying behavior from offline to online, and contributing 61 percent to the $ 293 billion market opportunity.

The biggest challenge, however, is the traditional kirana stores (or the disorganized market) that rank 95 Percent of the entire food market and are strongly represented in the hinterland.
The Redseer report indicated that of the total of 1.1 million kiranas in India, about 80 lakh live in tier 2 cities.

Although kiranas are the mainstay for the delivery of food and other essentials during the lockdown these traditional brick and mortar stores are now being tied in with digital platforms for faster hyper-local service. During the embargo (April to June 2020) when customer buying behavior changed drastically, Reliance announced its entry into the e-grocery segment through Jiomart, while Amazon expanded its vertical grocery industry to 300 cities in June 2020.

On Tuesday, Flipkart announced that the company has expanded its grocery stores in more than 50 cities across India and will target 70 more regions over the next six months. The possible takeover of BigBasket by the Tata Group will lead to a further consolidation of the segment. Overall, the unprecedented coronavirus pandemic has been a disguised blessing for the digital platforms that sell food. Total sales almost doubled to $ 0.37 billion by the end of 2020.

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