Online grocery shopping: Survival strategy of local retailers

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Over the years, with the deluge of international retail chains and the spurt of modern retail format stores in every conceivable location across towns and cities, the conventional, neighbourhood kirana store has struggled to stay relevant. However, one such entrepreneurial venture that seeks to reverse the tide for these local grocery stores is AaramShop.com, an online grocery retail format.

‘Aaram’ shopping
AaramShop is a hybrid retail platform, which promises to provide not just an alternate platform to the independent retailers, but also, as the name suggests a convenient and modern solution to other members of the ecosystem; the discerning consumer and the brands. The online portal offers sales and marketing of essentials like FMCG and Consumer Packaged Goods (CPG) brands. The consumers can shop for the brands listed on AaramShop’s website, choose their nearest kirana store from the ones that are on the portal’s network, that will then home deliver the order.

The website essentially targets urban men and women upwards of 20 years and this year’s report by AaramShop on the state of online grocery shopping seems to conform to this positioning. This report highlights consumer’s buying behaviour while purchasing groceries and daily essentials online and has been compiled after gathering actual data on shopper’s brand purchases over a period of five months ending February this year. According to the findings of the report, 24 years and above age-groups constitute over 75 per cent of the actual online grocery buyers.

With the core proposition of the venture centering on providing a digital gateway to these traditional kirana stores and engaging a larger customer base, AaramShop has also developed a unique consumer engagement initiative at the point of purchase to further drive sales. To strengthen the last mile environment of the local retail stores, it has set up Aaram TV’s in slightly larger stores, which see a daily footfall of minimum 250 people. These net-connected screens run infomercials, advertisements and promotional offers of FMCG brands thereby creating a direct engagement with the buyer at the point of purchase.

Vijay Singh

Vijay Singh, MD & CEO, AaramShop

According to the Managing Director and CEO of AaramShop, Vijay Singh, kirana stores do not facilitate an enjoyable shopping experience due to the clutter of brands and limited space; and Aaram TV is a communication strategy to better the experience. While such TV’s are currently present in close to 217 stores across the city, the company also has plans of expanding to other markets.

While AaramShop offers vouchers and discounts on the brands available on its portal, which can be redeemed both through online orders as well in the offline aaram shops; it is also planning to introduce local commerce deals this month onwards. Singh goes ahead to explain that in contrast to the pan-India deals and discounts that are led by brands, the company sees scope in coming up with retailer-led offers to increase traction in the local stores.

The business model
AaramShop, which claims to be the lone player in the hybrid retail platform for groceries, has since its inception in August 2011, tied-up with around 3,000 local retailers across 28 cities and is targeting to reach 25,000 stores by the year-end with primary focus on metros and state capitals. While Singh refuses to divulge details about the daily traffic, he has a long term goal of the venture being able to contribute 10 per cent of the retailer’s overall sales in the next two years.

However, with free services being offered to both consumers and retailers and no transactional costs being charged, what is the revenue model for AaramShop? According to Singh, the revenue comes in from the premium services, consumer behavioural patterns, and analysis and insights on the buying habits of people that it provides to the brands.

The company has forayed into different areas in the digital space to encompass a wide range of consumer segments. It has applications for mobile phones and tablets as well as an aggressive social media strategy. It has recreated its website on facebook so that users can browse through the brands and place orders on the company’s facebook page itself, without having to exit the social networking site. While 7 per cent of the overall traffic for AaramShop comes from its mobile application, 6 per cent of the online transactions are made from facebook.


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