Future Group heats up online grocery space, to launch grocery app soon

To get early advantage in the nascent grocery industry in India, Future Group is all set to launch e-commerce app for grocery delivery offering the daily and weekly requirements to consumers.

It plans to deliver fresh fruits, vegetables and dairy items through the app for Easy members in the coming weeks.

"They are daily products. We want the first mover advantage,” Vinay Bhatia, CEO, group loyalty and analytics, Future Group was quoted as saying in an ET report.

The app will be in line with Amazon Prime model. The membership programme will charge Rs 999 as annual membership fee, for which members get 10 per cent discount on all purchases. This will allow app users to order grocery from their homes.

The retailer aims to use its neighbour format stores Easyday for delivery. The company plans to open Easyday small-store within 2 km of every Indian consumer by 2022.

Presently, Future Group has more than 950 such stores and the target is to take it to 10,000 by 2022. Each EasyDay Club store will be for registered members only, with each store accepting only 2,000 members.

According Industry experts, grocery is the largest consumer segment. Indians spend more than 50 per cent of their monthly income on groceries. Online and offline players can't afford to ignore it.

This week, US giant e-tailer Amazon said groceries and households products will account for half of the business in coming years.

Earlier, Future Group CEO and Founder Kishore Biyani had said that physical retail is a threat to the online retail, which has a low business share and a high business cost.

In November last year, the Future Group unveiled a 30-year vision called Retail 3.0, and planned to become Asia’s largest integrated consumer retailer by 2047 with revenue exceeding $1 trillion. This is Kishore Biyani’s third attempt at online retail. The first two, Big Bazaar Direct and FabFurnish, did not take off as expected.

At present, Future Group is the parent of four listed retail entities such as Future Retail, Future Lifestyle Fashion, Future Consumer and Future Enterprises, which together have a combined revenue of $4.4 billion.

Grocery opportunity in India

India, which is reported to have around 500 million Internet users by this year June, offers a huge e-commerce opportunity for players competing in the segment.

Over the next three years, the e-retail industry is expected to continue its strong run, growing over 2.5 times to $28 billion (Rs 1.8 trillion) by fiscal 2020, according to the global analytics firm Crisil report.

Among the online segments, online grocery will be the fastest-growing segment (around 65-70 per cent CAGR between fiscals 2017 and 2020) in e-retail and almost quadruple over the next 3 years to Rs 100 billion in terms of revenues, the report further outlined.

The growth in e-grocery would be driven by investments, new strategies adopted by grocery players like introducing private labels, same day delivery as well as B2B food service.

Of late, the segment saw significant investments and developments. Online grocery platform, BigBasket recently got $300 million backing from Chinese investment and e-commerce giant Alibaba. Grofers also raised 100 Mn from Softbank.

With Amazon joining in with full force, the e-grocery space will become a battleground for players such as Grofers, BigBasket and new entrant – Flipkart and upcoming entities in grocery such as Quikr and Paytm. Amazon currently offers food products through Amazon Pantry and standalone app Amazon Now. Both platforms procure from third-party sellers.

Whereas Flipkart, after launching grocery service in Bengaluru, is also planning to kick-off grocery delivery service ‘Supermart’ in Hyderabad, Chennai, and Delhi (NCR).

Entrackr had reported that Flipkart also staged a closed pilot in Delhi for its employees last week. It’s slated to launch grocery vertical by May end or early June in Hyderabad and Chennai.

Currently, Grofers claims to have 30 per cent market share of online grocery retail while Bigbasket commands over 50 per cent market share in online grocery space.