Coronavirus outbreak: E-grocery market may boom after lockdown lifts

“Grocery is a $700 billion industry and e-commerce forms only 1 per cent of that. The expectation is that 1 per cent will become 20-30 per cent. That is the kind of scale we need to build,” said BigBasket CEO Menon.
Online commerce companies and firms providing supporting infrastructure, including logistics and delivery, are expecting huge pent up demand after the Covid-19 lockdown is lifted.

They are also expecting huge changes in consumer behaviour even after the coronavirus situation stabilises, favouring e-commerce businesses. 

“There’s a lot of pent up demand and it will resurface immediately after May 3, assuming the lockdown ends then. That demand will take 2-3 months to clear out of the system,” said Sahil Barua, co-founder of logistics start-up Delhivery.

 
“The next six months to two years after this period will be challenging because the supply chain changes and reorganisations may hit outputs in the medium-term. But if start-ups survive that period, they will be fine in the long-term,” he said.

 
According to Hari Menon, co-founder and CEO, BigBasket, more and more consumers will shop online than depending on traditional means after Covid. Within e-commerce, online grocery will see a huge boost, he said.

“E-commerce will shift out from more express deliveries to more convenient deliveries. Community buying will continue and people will see that as a better method to adopt.”

The online grocery space, he said, would see emergence of a lot of new players. But given the massive scale of the segment, there would be enough room for all.

“Grocery is a $700 billion industry and e-commerce forms only 1 per cent of that. The expectation is that 1 per cent will become 20-30 per cent. That is the kind of scale we need to build,” said Menon.

Investors also feel short-term gains will be strong. “As an investor, we are more confident of the gains in the short term, especially after the first wave of relaxation comes in. However, the next one year after that will see a series of ups and downs,” said Kanwaljit Singh, managing partner at Fireside Ventures, which has investments in over 20 brands such as Yoga Bar, Design Café, and Bombay Shaving Company.

 
The VC firm said this is a great time for investing in strong businesses, which are built to last for over 6-7 years. “The concepts of fundraising will go back to basics. If you can build a strong narrative, create a strong value, valuations will follow,” Singh said.

 


Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel