Tech Drives Growth in Grocery E-tailing

Supply-chain tech helps to reduce cost & inventory and predict user behaviour

Everyday, I learn something new,” says R Rammurthy as he picks up a netbook, an Android tablet and a paper-clip file before climbing onto the driver’s seat of a white Maruti van loaded with four neatly packed baskets of grocery and vegetables. As he slips into first gear, he pointed to the netbook screen which displayed a map where the vehicle’s number flashed. The on-screen status of the vehicle changed from idle to moving and the address to which the baskets needs to be delivered popped up.

Rammurthy’s trip ended nearly twenty minutes later at the doorsteps of a customer– mother of a three-year-old who hates to spend the little spare time she gets during weekends at the supermarket. During the drive, the 28-year-old management graduate, who now handles a small team for online retailer Bigbasket.com, started explaining how his company manages to keep near-zero inventory and fulfils hundreds of orders everyday.

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 wellfunded 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 brickand-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.

Shoppers, whose experience of buying grocery online has been good, tend to very loyal. For example, Asha Liju, a clinical research professional from Bangalore buys her grocery online. “This is the second time I’m buying online because its simple and saves me nearly 10 kilometres of travel,” she says.
Here again, technology plays a key role. Grocery buying is mostly a repetitive task something technology is known to do well. For instance, when a shopper logs into the account, a history of previously bought items makes it easier to pick instead of going through the motion all over again. “At each step, simple technology is helping us save time and money,” says Abhinay Choudhary, co-founder of Bigbasket.com. Bigbasket.com, which now has 100 people on its rolls, will supply anything from milk products to fresh fruits among 7,000 other items at your doorstep at competitive prices within a few hours of placing an e-order. “Our delivery vans even have cold storage facilities. This is very new but if we do it right, it will be big,” says Choudhary. His earlier venture was shopasyoulike, a similar food and grocery store catering to residents in Whitefield, Bangalore.

25-year-old Jhunjhunwala’s Mygrahak.com now claims that they process nearly 15,000 orders a month. “The average order size is Rs 1,250- Rs 1,300 . We can at least grow 30 times in Delhi alone,” he said. He recently introduced “card on delivery,” where a customer can swipe their cards at the time of delivery to pay for the order. Jhunjhunwala comes from a family of entrepreneurs and returned to India after graduation learning how to do business from his family, the promoters of BSE listed REI Agro.Chennaionlinegrocery.com, Town Essentials and Atmydoorsteps.com also operate in this space. Scale might not be an issue as demand from a large working population, which finds frequenting supermarkets an irritant, grows.
Investors also seem to be buying into the grocery e-tailing story. Last month, private equity firm Ascent Capital invested $10 million when Bigbasket.com co-founded by a team of eight which includes Fab-Mall co-founders Hari Menon, VS Sudhakar, Vipul Parekh, VS Ramesh and Abhinay Choudhary, raised its first round of institutional funding.

The food and grocery market accounts for over two thirds of the $505 billion Indian retail market. According to retail consultancy Technopak, the retail market is projected to touch $725 billion by 2017. The organised food and grocery retail market in India is estimated at $ 12 billion in 2012 and grow at a compounded rate of 30% over next the five years. “Though e-tailing is still a very small part of retail in India it is projected to grow at a fast pace and over the next decade its presence will be significant,” said Pragya Singh, Principal Consultant, Retail & Consumer Products, Technopak. Headroom for growth comes from the fact that that e-tailing accounts for a measly. 2% or $1 billion of the overall retail market and it is expected to reach $13 billion by 2017.
But retailing food and grocery online is not an easy task. Though there are success stories, the monumental failure of Webvan in the United States back in 2000 is enough to act as a damperner.

The challenges include being able to give consumers a large number of products to choose from, achieving consistency in quality especially when it comes to perishable goods and the cost of logistics. For instance, Mygrahak’s Jhunjhunwala has already invested $1 milllon in the firm and anticipates an expense of $4 million to $5 million every time it moves to a new city. While critics often cite the example of Webvan, the story may not repeat in India. Webvan may not be the best benchmark, argues Singh. “It is an example of a company that grew too fast in middle of the dotcom boom, rapid expansion to multiple cities, gigantic infrastructure including warehouses but not enough sales to back the same,” she said.

Even as its spends Rs 150- Rs 400 to acquire each customer, Mygrahak.com will break even this Diwali, claims Jhunjunwala. Despite the rosy numbers, e-tailers looking to sell food and grocery might have to expand cautiously, suggests Technopak’s Singh.
The Challenges 

* Achieving standardisation in quality and quantity when a large part of grocery items are still sold loose in India

* Having a comprehensive product range that covers all possible variations

* Delivery across large parts of urban and semi-urban areas

* Sensory needs of consumers are not satisfied through online channels
Fulfilment and logistics costs

IBM and Huawei hook up to start Chinese takeaway

MWC 2012 IBM’s enterprise consultancy, IBM Global Business Service, has joined up with Huawei to create enterprise solutions, initially for Chinese companies but with global aspirations.

Huawei wants its smartphones embedded into businesses, and to give those businesses a reason to buy its tablets too. IBM wants to push its Chinese presence and tap into the expediently expanding market, which it hopes to do with Huawei’s help, but to Huawei this is just another step on the road to global domination.

The jointly developed platform is called “Smart Workspace@Mobile” though at the moment it is little more than slideware and aspirational statements. It will involve Huawei’s device management systems, and apply IBM’s experience with enterprise resource planning, customer relationship management and supply chain management, to create a combined solution to be pushed heavily into the energy and retail industries.

Both companies reckon enterprises are posed to make greater use of mobile workers and want to be ready to exploit that market in China and beyond. Huawei pins its plans to a projection which sees a 80 per cent of businesses making their staff work on the move by the end of next year.

But this alliance with IBM is also important in painting Huawei as a full-service company, not just a manufacturer of networking kit and Android handsets. There are dozens of high-volume-low-price manufacturers in China and Huawei is desperate not to be lumped in with them. Launching a quad-core Android handset is one part of that – the Ascend D being anything but low-cost – but sitting on stage alongside IBM is equally important. ®

British supermarket chain tests iPad-ready shopping carts.

Want a side of Apple with your supermarket runs?

Shopping Cart with iPAD interface

Shopping Cart with iPAD interface

British grocery store chain Sainsbury’s is testing out new shopping carts with solar-powered iPad docks and speakers (iPads not included).

The trial, first rolled out at a Sainsbury’s location in Kensington, West London, will allow customers to watch live sports and sports-related news after docking their tablets to holders affixed to their shopping trolleys, the Telegraph reports. A built-in battery with a self-charging solar panel keeps the tablets from running out of power, and a sensor on the front bumper will beep if an engrossed shopper gets close to crashing into another cart.

The carts have been developed by broadcaster Sky TV to shine a light on its Sky Go service, which serves up television on the go on Apple devices (an Android app is reportedly coming soon).

Sainsbury’s said in a statement that the shopping carts, which may be rolled out to other stores in Britain if successful, could convince more shoppers to patronize a store.

“We strive to make our customers’ lives simpler, which is why we’re looking at these new trolleys,” said Brett Hart, the supermarket chain’s shopping cart buyer.

Mobile payments at retail to explode.

Google Executive Chairman Eric Schmidt is bullish on the growth of mobile payments in the coming year.

Speaking at the Cannes Lions International Festival of Creativity today, Schmidt said he believes one-third of all restaurants and retail outlets will allow for mobile payments within the next year, the Financial Times reports him as saying. He reportedly told those in attendance that that number should be enough for widespread adoption of mobile payments.

“I judge that based on how long I think it takes, because the terminals are available now, the software is available now or this summer,” the Financial Times reported Schmidt as saying. “How long does it take an infrastructure player to upgrade a significant percentage of their infrastructure–it’s on the order of a year, it’s not a week, it’s not a month but it’s also not five years. It’s an educated guess.”

Schmidt, who stepped down as Google CEO in April, has a vested interest in seeing more establishments allow for mobile payments. Late last month, his company unveiled Google Wallet, a service that uses near-field communication (NFC) to let users pay for purchases with their Android-based devices. Google said it will be partnering initially with Sprint, MasterCard, Citi, and FirstData on the service.

Google Wallet will be available on the Nexus S and will work with “a PayPass-eligible Citi MasterCard and a virtual Google Prepaid card.” The search giant was quick to point out that there are currently more than 124,000 PayPass-enabled merchants in the U.S. and more than 311,000 operating around the world.

Google said last month that all future Android smartphones will be NFC-compatible. Rumors suggest the next iPhone will also feature NFC technology.

But as Schmidt pointed out today, support for NFC in devices is just one piece of the mobile-payment puzzle; payment processors must also double down on the technology. However, Schmidt isn’t worried about that happening for one major reason: “fraud rates are so much lower” with the use of NFC, he said.

“Nobody knows how quickly this will occur,” Schmidt said of credit card companies updating payment terminals with mobile-payment support, “but it’s in their interests to convert as fast as they humanly can.”

 

Borders to offer five free books with e-book software

Borders Group Inc. said Friday it will offer five free books, including a Dean Koontz novel, to customers who download the bookseller’s free electronic-book reading software.

Through July 14, customers who download the software will receive Frankenstein: Prodigal Son by Dean Koontz; One Shot by Lee Child; The Alchemyst by Michael Scott; Julia Child’s Julia’s Kitchen Wisdom and Master your Metabolism by Jillian Michaels. The books are worth more than $40 collectively, Borders said.

Customers will also get a chapter of Danielle Steel’s forthcoming novel Legacy, which isn’t available anywhere else.

Borders launched its e-bookstore earlier this week, entering the fray along with competitors Amazon.com and Barnes & Noble.

Borders e-book reading software is available across an array of platforms including e-book readers and mobile devices such as the iPhone, Blackberry and Android phones with its partner Kobo.

Handango First Retailer to offer both Paid and Free Apps for the Android(TM) Platform

Texas, — Handango Inc., the leading retailer of smartphone apps globally, announced today it will be the first retailer to offer both paid and free apps for the first Android smartphone device anticipated to launch on October 22.

“Handango has always offered its customers the widest variety of smartphone apps available on the market and on all major operating systems,” states Bill Stone, CEO Handango. “Handango is now offering developers the opportunity to sell the paid apps they create for the Android platform as well as offer any free apps when the first Android device launches. Customers can purchase apps via the Web and then download them to their device.”

Developers can now add Android applications directly to their Handango developer accounts and sell them in one of three ways: Continue reading

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