Amazon India in March 2015 launched Kirana Now. The new platform, which is currently only available only in Bangalore, allows consumers to buy groceries from kiranas (traditional grocery retailers) online. The application allows independent small grocers to list themselves on Amazon Kirana Now as a seller, and consumers can purchase groceries, which will be sourced from the closest kirana store by Amazon and delivered between two to four hours. This is Amazon’s second attempt to break into the largest grocery retail channel in India. However, with the upcoming online grocery retailers in India, Amazon may not succeed this time around either.
Amazon’s insistence on breaking into the channel
In March 2014, the company, launched Amazon Pickup, the Indian equivalent of its US and UK Amazon Locker. This was the first attempt made by the company to break into the kirana stores. The service is available in 10 states including Delhi, Karnataka, Maharashtra and Tamil Nadu amongst others. The service provided consumers the option to get a product purchased from Amazon.in delivered at any kirana store closest to them so that they could pick up their products at an address other than home or office. This way consumer could buy groceries from independent small grocers anytime during the day, and not necessarily had to be home to receive the delivery. The service however, was not very popular amongst consumers, as the company did not promote or publicise the channel the same, which led to low awareness amongst consumers.
Amazon is trying to tap into the largest retail channel
The Indian retail landscape is unique with 49% of the total retailing sales being generated by independent small grocers in 2014. With 65% of the population still living in rural parts of the country, store based retailing and especially traditional grocery retailers continue to be the preferred channel amongst consumers. Kiranas are extremely convenient for consumers as they populate local neighbourhoods, have a credit system and offer free home delivery.
On the other hand, the fastest growing in India in 2014 was internet retailing, which grew at 85% in 2014. The growth was driven by the tech savvy urban consumers who preferred shopping online due to the convenience and low price the channel offered.
Independent small grocers (Kiranas) in Bangalore
Source: Euromonitor International
The combination of Kirana stores and internet retailing was inevitable, considering the former is the largest and the latter is fastest growing retail channels in India. What came as a surprise was that none of the Indian internet retailing companies thought of taking this route, and Amazon is making efforts to tap into the independent small grocers in India.
Why the new platform may not work
Food and drink internet retailing in India continued to be a negligible channel in India, with a niche presence only in the metropolitan cities. However, this channel is expected to be the fastest growing thanks to the urban consumer base. Companies such as Grofers.com, Bigbasket.com, and Localbanya.com amongst others already performed well in 2014. The growth is expected to be driven by the urban consumer base, whose busy work schedules allows them lesser time for household chores, and ordering groceries online will allow them to save time.
Online grocery shopping is expected to become the next big thing in e-commerce in India.
Though it is early to predict the success of the new platform launched by Amazon.in, the tie up might not work. This is because, Amazon‘s Kirana Now, provides only one added benefit to the perks offered by kirana stores already, that is consumers don’t have to call the store to place the order. This singular benefit is not strong enough for consumers to shift to Kirana Now, especially since the deliveries take hours rather than the minutes needed to stop by the store while on the way home or running errands. Furthermore, Amazon’s Kirana Now also faces serious competition from pure players of online grocery retailing, as the product portfolio covered by the latter is much more elaborate and not limited to the kirana stores.