Online groceries are set to grow, but they should solve their customers’ problems first

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This is a Discuss post, where we feature short but insightful opinions from the Asian tech community on startup, entrepreneurship, and tech topics. Got a topic or question to suggest? Drop us an email or leave a comment.

Will we ever see a majority of us doing groceries online? For now, we see a lot of things happening in terms of who’s funding who and partnerships involving big names like Amazon, Flipkart, and JD.com. But we also see several online grocery startups struggling with profitability and other inherent challenges. Where is the industry headed?

We hear from EVC Ventures and Kalaari Capital.

Editor’s note: Answers have been edited for clarity.

Anjli Jain, managing partner at EVC Ventures

I believe the online grocery market is the upcoming battleground for the ecommerce industry. Around one-fourth of online buyers are shopping groceries online, and this is believed to go higher in the coming years. One of the most exciting things about online groceries is the user experience. People like it because of the convenience, availability, value for money, and comfort.

Moreover, we see names like Peapod, Thrive, FreshDirect, and Instacart raising massive funding from leading investors. Amazon acquired Whole Foods in 2017 and Alibaba invested US$300 million in Bigbasket, yet some are skeptical of the industry’s growth. I believe the online grocery space is one of the most promising sectors to invest in.

I don’t think the industry is over-hyped, especially if we can clearly see big numbers supporting its growth. It’s time for retailers, be it online or offline, to start connecting to online grocery businesses for sustainability. The future is pretty much pointing toward the revolution of traditional grocery shopping.

Profitability and challenges

Assuming startups already know the nitty-gritty of the online space, grocers must take the following into consideration to ensure profitability:

• Building tie-ups with wholesalers
• Developing a sturdy delivery system to ensure good customer experience
• Keeping an eye on revenue

Let’s discuss