How e-commerce companies are building strategies to spin-off grocery items: Lesson learned from e-commerce market leaders in Dhaka

ecomSeries- 2.0

Chaldal has achieved growth in non-perishable niche items

Launched in 2013, Chaldal positioned itself as the market leader in the online grocery business in Bangladesh. The number of daily orders has increased by almost 150% in the last two years. Interestingly, Chaldal has achieved high sales growth of non-perishable items such as Baby Diaper, Pet foods, etc, eventually, Chaldal captured ~10% market share of the diaper market in Dhaka. Chaldal is slowly building its strength in the supply chain, as they have 8 warehouses where three of them are added recently. They are eyeing on expansion beyond Dhaka, primarily targeting tier-2 cities where the middle and affluent class population is rising e.g. Sylhet. They also planning to build 50 nano-warehouse across the emerging cities Dhaka and beyond which will allow them to fulfill orders in 15 minutes. However, selling grocery online is a complex business considering the delivery on time, maintain product quality and higher business cost. Chaldal is now investing to achieve higher revenue growth by addressing the challenges as follows:

• Suitable and cost-effective space for warehouse expansion; in the metro cities commercial space rent is expensive and increasing
• Logistics remained the biggest challenges as Dhaka has the lowest average traffic speed of below 7km/h. Thereby, investing in the logistics is mandatory

Chaldaal also sells perishable items but the customer demographic is highly concentrated in few locations of Dhaka city such as Dhanmondi, Mirpur, and Banani. They sell around 4000 kg of fish every month.

Khaas Food is embedding omnichannel strategy riding on the popularity of safe foods

A common strategy that we will continue to see in online grocery business is building an omnichannel shopping experience. Khaas food started its operation as a safe food startup, has taken a strategy to run fiscal retail stores across Dhaka city. O2O (online to offline) is a very popular concept in US and china since it is helping the e-commerce companies in many ways. Khaas food entered in the online grocery market with an aim to deliver quality food with high nutrition value. They deliver around 200 orders every day, the average basket size is BDT 1000 and growing. Their main object is to deliver high-quality food which makes an obvious focus in authentic sourcing and efficient supply chain. Consumers are highly price-sensitive, and the competition has grown which also puts pressure to deliver cheap-price average products. In many instants, operational scale-up in the short run both back and front end is currently limited for Khaas food. Brick-and-mortar retail strategy is a way out for them, where they are offering a unique franchise model to reach the maximum number of customers who carry the value of safe food. We have seen Deligram tied up with local mom and pop stores to build a strong agent-led distribution channel for their e-commerce business. Khaas food’s franchise strategy will bring a win-win return both of their online and offline channels. Many customers now can purchase their desired product who has already recognized Khaas food’s brand value image.

Shwapno and meena bazaar the market leaders in modern trade business, have built the online presence but still in an experimental stage

Shwapno launched online grocery in mid-2016 as shawpno.com and Meena bazar launched meenaclick.com at the same time. Two modern trade giants used their chain supermarket space as an extra advantage to serve online customers in a particular area. From the beginning, exclusive deals and discounts are a key growth strategy to attract customers. As a result, Meenaclick.com has seen a growth of 5X in terms of deliveries per day from in just one year after lunch. Also, their revenue increased 2X with a total 11,000 of registered customers who place orders regularly. In an interview with the author, Mr. Jahid bin islam, the head of e-commerce, meenaclick mentioned that e-commerce is definitely a great opportunity for growth, but it also has a set of challenges. For example, the marketing expense hiked up to 8X in just one year, and with the digital market we cannot imagine online grocery business. Educating customers about online shopping is another area where we have to spend a lot of our money. Customers always have a desire to examine an item (especially perishable like vegetable, meat, fish) before buying it. A lack of trust is very common for any new e-commerce user and its very high in selling groceries. Last, it is tough to satisfy a regular offline customer with the quality of the products even we deliver our best of the bests. In the long run, shwapno has a plan to go beyond grocery in e-commerce. The new digital grocery consumers not just only shop online, but they also use the online option to research products, compare their prices, locate stores, and read users’ reviews. Among the new age consumers “ROBO-research offline, buy online” became very norm, this practice allows them to visit physical stores to get a touch and feel of the products and then buying them online at a lowest available price

to be continue……