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Online grocery startups in Tier 2 cities thrive despite BigBasket and Grofers

Athira A Nair
posted on 16th April 2018
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Here is a list of five grocery startups that have mushroomed in places that are not Tier I cities.

With rising internet penetration and increasing number of mobile internet users, startups in tier two cities are bringing grocery online. (Photo by Melissa Viiron on Unsplash)

A hard nut to crack, online grocery is a sector which has seen the death of quite a few well-funded startups  – Peppertap. Askmegrocery, and LocalBanya among them.

Even Paytm, in 2015, had forayed into the grocery sector with Paytm Zip, only to shut it down in three months. Ecommerce market leader Flipkart also burnt its hands a while ago, and has been trying to rebuild it in the past one year.

Presently, the online grocery sector is ruled by BigBasket, Grofers, and Amazon, with a major chunk of their revenue coming from tier one cities. But in India’s online grocery market worth $1 billion, tier two cities are not much behind in potential for online grocery’s growth. Already, BigBasket and Grofers are expanding outside the metro cities.

With rising internet penetration and increasing number of mobile internet users, startups are mushrooming in state capitals which are not Tier 1 cities. Most of them are bootstrapped, yet reaching out to the masses despite the big-pocketed players establishing themselves. Find out more:

  1. Flipfresh, Hubballi

    Launched under Shaandhaar E-Commerce Pvt. Ltd. at Hubballi, Karnataka’s second largest city after Bengaluru, Flipfresh serves fresh vegetables, fruits, groceries, and household items to the online shopper. Founded by Amruthashva T, Suresh Nekkanti, and Manjunath Najaladinni, Flipfresh follows inventory model. Based out of the Tier 2 city, Flipfresh buys fruits and vegetables directly from the farmers in and around Hubballi. This benefits farmers, as there are no middlemen, and customers as they get access to fresh products.

    Fresh fruits and vegetables are the major attractions for online grocery customers. (Photo by Sonja Langford on Unsplash)

  2. ShopitDaily, Indore

    Launched in August 2014, ShopitDaily serves in Indore, and Vadodara with more than one lakh orders per month. It recently launched in Bengaluru too. ShopitDaily offers a 90-minute-delivery proposition to customers within 25 kilometres of city limits. The service also caters to canteens at corporate houses and companies along with retail segment. Apart from online, the service can be availed over phone and WhatsApp. Co-founded by Abhishek Bhatt and Saurav Shrivastava, it is targeting Tier II cities like Bhopal, Udaipur, Dewas, Ujjain, Surat, Rajkot, and Jaipur.

  3. PinkCityKirana, Jaipur

    Launched in April 2014, PinkCityKirana is an ecommerce, phone-commerce entity specialised in grocery home delivery including kitchen essentials, pet food, and toiletries. Software engineers Sudesh Patodiya and Sandeep Agarwal founded PinkCityKirana along with Sandeep’s brother Rahul Agarwal, a commerce graduate, who was in the wholesale grocery business in Jaipur.

    For a minimum order value of Rs 800, it delivers with online payments, cash on delivery, and card on delivery options. PinkCityKirana’s average basket size is Rs 1500.

  4. GharBaitheBazar, Lucknow

    Founded by Surendra Chouhan in November 2015, this startup follows Just in Time (JIT) model rather than inventory led model to deliver grocery, sweets, fruits, vegetables, dairy products, personal care products, household products, baby care products etc. Customers can order goods over the phone, website, and over WhatsApp. Once the order is received the customer gets a confirmation message, and the order list is sent to the delivery boy who procures the order from the partner-kirana store and delivers it to the customer within 60 minutes.

    Amazon online grocery kermit
    Online grocery market in India is worth $1 billion.

  5. Kada, Thiruvananthapuram

    Co-founded by techies Krishna Prasad, Anoop G. Kumar, Shan M. Hanif, Shinoj S. and Jenu Joseph, Kada was launched in 2012 to cater to the grocery needs of techies at Kerala’s largest IT campus Technopark in the capital city. Now serving the entire district, Kada offers grocery, fresh fruits and vegetables, bakery items, organic products,  along with fresh meat and fish. None of the biggies: BigBasket, Grofers, or Amazon – have entered Kerala for online grocery yet. Although Kada has not scaled outside Thiruvananthapuram, the company offers more than 10,000 products through the inventory model.

Online grocery is not a sector where the winner takes all. In the US, InstaCart and Amazon-owned Whole Foods continue to rule the sector. But in India, since the market is in its early stages, the endgame of the tier two startups is yet to be seen.

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