The online grocery market in India, propelled by quick-commerce platforms and experiencing a surge since the COVID-induced lockdown in 2020, is now showing signs of decline. The primary reason behind this downturn is the increasing reluctance among consumers of fruits and vegetables, attributed to diminishing discounts and a decline in the quality of products, as revealed by a recent survey.
Out of the 12,207 individuals included in the survey conducted by community media platform LocalCircles, merely 7% express a preference for buying fruits and vegetables online, whereas 66% opt for local or weekly markets.
Covering 297 districts in India, the survey gathered data from 24,000 households. Among the respondents, 61% were male, while 39% were female.
At least 45% of respondents indicate a preference for buying from local markets, with 21% favoring weekly markets, 3% opting for wholesale markets, 19% choosing local vendors, and 5% preferring organized retail stores.
In most metros across the country, the online grocery landscape is predominantly controlled by established platforms such as Big Basket, Amazon Fresh, and Jio Mart. Subscription services like Big Basket Daily and Milk Basket, along with rapid delivery platforms such as Swiggy Instamart and Blinkit, also play a significant role in shaping this market.
In the last 10 months, despite the availability of various online options for ordering fresh produce with doorstep delivery, a significant number of consumers have reverted to buying groceries from local stores and markets. This trend is anticipated to endure in the upcoming months, according to the findings.
Among the 11,964 respondents surveyed, 73% highlighted “low quality of produce” as a significant concern, while 56% expressed dissatisfaction with “high prices,” and 51% encountered problems with “difficult returns/grievance redressal processes.” Additionally, 37% faced issues related to “inconsistent stocking/availability,” and 7% experienced “long delivery times.” Although 12% reported no issues, there is a discernible shift in consumer sentiment, with more individuals turning to local markets due to reduced discounts and improved COVID conditions.
Sachin Taparia, the founder of LocalCircles, emphasized the historical acceptance of average quality driven by competitive prices. However, he pointed out a current trend wherein consumers are increasingly turning to local market purchases. This shift is attributed to dissatisfaction with return processes and impractical refund requests, particularly for small quantities of fresh produce.
LocalCircles conducted a ratings evaluation in Noida spanning from July 1, 2023, to November 20, 2023, appraising different online platforms specializing in fruit and vegetable delivery. Notably, Zepto and Blinkit emerged as the swiftest options, boasting delivery times as short as 10-30 minutes.
Amazon Fresh and Jio Mart garnered the highest value/price rating, earning a score of 3.5/5. In service ratings, Amazon Fresh and Milkbasket took the lead with a score of 3.5/5. Milkbasket achieved the highest overall consumer rating with a score of 14 out of 20, followed by Bigbasket at 13.5, Amazon Fresh at 13, Bigbasket Now at 12.5, and JioMart at 12. Other platforms surveyed received a score of 11.5.
Following a period of substantial funding in recent years, the quick commerce sector in the country has encountered some challenges in recent times. Dunzo, under the leadership of Kabeer Biswas, has confronted various issues such as financial challenges, workforce reductions, strikes among delivery partners, and significant resignations. Consequently, Dunzo has undergone a retreat from the quick commerce landscape.
Reliance Retail’s JioMart has reportedly ceased the operations of JioMart Express, its quick commerce delivery arm that was launched in March last year.
Meanwhile, Zomato, the owner of Blinkit, announced its achievement of profitability in the first quarter of the financial year 2023-24 (FY24), reporting a consolidated profit after tax (PAT) of INR 2 Cr.
Read More: Zomato turns profitable in Q1 FY24, reports INR 2 Cr consolidated PAT
Also Read: Zomato reports remarkable surge in profit, achieving second consecutive profitable quarter in FY24
In August, Zepto successfully raised $200 million in a Series E funding round at a valuation of $1.4 billion, establishing itself as the sole unicorn of 2023. Subsequently, the Mumbai-based startup secured an additional $31.25 million in funding within the same series from Goodwater Capital and Nexus Venture Partners, affirming its commitment to going public by 2025.