Technology driving growth in grocery

Online food and grocery retailing, fairly mature in the West and showing lot of potential in growth markets like China, has not been able to capture the fancy of Indian shoppers yet. Things, however, may be changing as a new generation of well-funded online firms -- Bigbasket.com is a key example -- are using simple end-to-end technology solutions to offer deep discounts on grocery items, predict customer behaviour and keep a tight leash on expenses. With technology playing a key role, they are trying to make a dent in the estimated $343-billon food and grocery market in India.

For example, these firms use a supplychain technology that allow customers to place orders through multiple channels and later predict what a customer is likely to order. Combined with applications that track everything from the time an order is placed to delivery and devices that help during procurement, technology is helping these firms to make a compelling and convenient offer to the tech-savvy shopper.

For these online retailers, the most important tech application is the ability to predict customer behaviour which lets them reduce inventory and thereby, cut costs. For instance, while a traditional retailer might have to stock his monthly offtake of atta at least three weeks in advance, an online retailer ends up stocking it for less than two days. "That is mostly analytics," says Ambuj Jhunjhunwala, the founder of Mygrahak.com which sells food and grocery online in Delhi. Predicting customer needs helps them to plan in advance and procure based on needs. Need-based procurement works ideally well with perishable goods like food not to talk about saving expenses on storage space, which is a large part of expenditure for a traditional retailer.

Analytics also involves knowing the customer better which helps retailers to make tailor-made offers for customers and increase sales. Online retailers can also eliminate a large part of their frontline staff because customers usually help themselves. Typically, large format brick-and-mortar stores spend much of their attention to figure out customer behaviour on the shopping floor and arrange goods so that they catch customer attention. This can now be automated as the platform generates enough data about individual preferences. "You have complete control over knowing what your customer is buying and great level of predictability. The stickiness of forecasting can go up as you use technology to predict," says Anand Ramanathan, Associate Director at KPMG.