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The Rise of E-Grocery: Transforming the Way We Shop for Food

A Trariti Group Case Study by Kirti Sachdeva


With the emergence of e-grocery, the retail sector has undergone a substantial upheaval recently. Ordering food and other grocery products online and having them delivered right to one's door is known as e-grocery. This cutting-edge method of food purchasing has completely changed how people meet their grocery demands.


One cannot exaggerate the importance of e-grocery to the retail sector. It has become a game-changer, upending conventional brick-and-mortar food stores and providing customers with many advantages. E-grocery has gained pace and is quickly changing how we buy food thanks to the development of technology and the rising popularity of online platforms.


An in-depth analysis of the e-grocery phenomenon's effects on consumer behavior, convenience, and the retail industry as a whole is provided in this article. The convenience of shopping from home, a broader selection of products, and individualized product recommendations are just a few ways that e-grocery is revolutionizing the conventional grocery shopping experience.

RedSeer experts have examined how India's grocery market fared during the Covid-19 crisis and how it will perform over the next five years in their most recent research. By 2024, the size of India's grocery market was predicted by a RedSeer analysis from 2020 to be $790 billion. According to a recent projection, this amount will reach over $850 billion in 2025, growing at a compound annual growth rate (CAGR) of 8%.

Market Growth and Adoption

Source: RedSeer Consulting

Figure 1: Indian Grocery Market Size (in billion U.S. dollars)

Since groceries and snacks can now be delivered with the simple tap of a button on an app, the weekly or monthly ritual of walking outdoors to get food from the neighborhood Kirana or small grocery store is a thing of the past. According to Statista, in 2022, 21 percent of India's economy was made up of grocery spending.

 Factors Contributing to the Rise

There are several variables at play. Indian consumers are increasingly willing to spend more for a better experience and are gravitating towards convenient foods, healthier foods, and unique international cuisines. In the background, rising income levels are contributing.


E-grocery platforms use AI-powered recommendation algorithms to create customized product recommendations based on consumer data and buying habits. The buying process is made more fun and consumer satisfaction is increased by this personalized experience.


Customers can simply organize and schedule their deliveries through e-grocery based on their preferences. Modern consumers' hectic lifestyles are accommodated by the flexibility it offers in selecting delivery time slots, rescheduling orders, and even set up recurring deliveries.



It is expected that online grocery ordering will become the new standard, even when people shift their shopping patterns and move a portion of their purchases offline. One of the key reasons for its growth is the COVID-19 pandemic. It required consumers, particularly those in urban areas, to use online platforms for regular grocery shopping to comply with lockdown-related laws and preserve social isolation.


Customers found it simpler to buy food online during the pandemic thanks to programs like "contactless delivery" and the ability to make payments online. Additionally, a lot of people who work from home try to combine work and personal time while still easily ordering groceries online with a few taps on their mobile devices.

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Source: RedSeer Consulting

Figure 2: E-Grocery Market Size Growth in 2020

While the industry as a whole is expanding, the focus of this article is on e-groceries, a sector that has benefited from all that happened in 2020. Before the crisis, tech-savvy Indian customers increased their use of online groceries, as seen by a startling 60% CAGR for e-groceries between 2016 and 2019.

Will It be The End of Kirana Stores?

The development of India's e-grocery market has made traditional Kirana stores more difficult to operate. E-grocery platforms have grown in popularity as a result of their practicality, extensive product selection, affordable costs, and home delivery options. These platforms have benefited from India's rising smartphone and internet adoption rates.


E-grocery is unlikely to replace Kirana outlets in India, though. Since they can offer individualized service, are aware of their customer's preferences, and may offer credit facilities, Kirana stores have played a significant role in the development of the Indian retail sector. They frequently serve the immediate requirements of nearby neighborhoods and have strong relationships with the community.


Given their special relationship with clients, interest-free credit line, and resiliency in the face of difficulties like the Covid-19 outbreak, numerous studies by major consulting firms suggest that Kirana stores are here to stay. Here are the main conclusions:

  • Almost 65% of Indian consumers still favor Kirana stores for their daily and urgent grocery needs.

  • According to Kedar Lele, Executive Director of Hindustan Unilever Ltd., Kirana stores are regarded as the foundation of the Indian grocery ecosystem. They have demonstrated resiliency and agility in responding to shifting conditions, controlling supply chain interruptions, and providing for customers in trying situations.

  • Even if e-grocery platforms are expanding, Kirana stores are not expected to go extinct. Their ongoing presence is a result of both their solid market position and devoted clientele.

  • The percentage of internet commerce in the Indian grocery industry is relatively low, at 1-2%. Comparatively, the penetration rates of digital commerce are substantially greater in other large international markets like China, the US, and the UK. (Figure 3)


These results imply that Kirana stores remain a crucial component of India's grocery industry. They have a competitive advantage over e-grocery platforms thanks to their individualized service, dependability, and capacity to meet the needs of a variety of customers. Although the digital commerce market is expanding, Kirana stores continue to be popular among a sizeable segment of Indians.

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But one new twist in this tale is that quick commerce has taken down the market share of e-commerce, highlighting the need to speedy fulfill grocery demand.

Quick Commerce takes the Fast Lane

Within 10 to 30 minutes, Quick Commerce or Q-commerce providers will deliver necessary groceries to your door.

According to a  recent survey by Trariti Consulting Group in tier 1 and tier 2 cities among a TA with age group 20 - 40(above), we found out that Zepto and Swiggy Instamart are the leading players in the market of quick commerce with 26% and 25% whereas, BlinkIT by ZOMATO, JioMart Express by Reliance, and BigBasket were also emerging in Tier 1 cities specifically in Bangalore.

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Copyright of Trariti Consulting Group

According to some estimates, the Q-commerce market will increase from $0.3 billion in 2022 to $5 billion in 2025. According to one consulting company’s analysis, however, offline grocery stores have a positive EBITDA of 5-8 % whereas all the major participants in Q-commerce continue to have negative EBITDA. For internet grocers, profitability has been a major obstacle. High cash outlays for urgent delivery don't just occur in India. Worldwide, a lot of online last-mile delivery competitors have also failed to turn a profit.


Q-commerce services rose to prominence in the startup scene as more consumers emerged to shop online over the previous two pandemic years. Since Q-commerce is a quicker and more practical choice for purchasing necessary groceries, these customers won't be reverting to their previous behaviors anytime soon. Q-commerce is situated at the nexus of last-mile delivery advancements and e-commerce apps. Due to the convenience of buying and the availability of last-mile delivery, this shift in consumer behavior during the pandemic is anticipated to be persistent.


Growing e-commerce penetration in semi-urban India, rising income, youth comfort with technology, increased urbanization, shifting consumer lifestyles, and affordable delivery fees are all growth factors for Q-commerce groceries. Competitors provide same-day delivery of replacements due to poor quality or shipping damage, liberal returns policies, and cash-back programs. However, compared to next-day delivery, 10 to 30-minute quick delivery typically necessitates a higher last-mile delivery cost and a smaller selection of products that may be delivered.

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Copyright of Trariti Consulting Group

Key Players and Business Models

A 10-minute delivery service is provided by Q-commerce businesses like Zepto by utilizing dark storefronts that do not accept walk-in clients. For a 10-minute delivery from a dark store, delivery partners reported that they could only travel up to four or five km in either direction. According to Zepto, the average delivery distance is 1.8 kilometers, and the typical delivery time is 10 minutes. With delivery partners traveling at an average speed of 12 km/h, more than 90% of deliveries arrive at the door in less than 10 minutes.


In 2021, Blinkit tested two-hour delivery in Gurugram. Their express delivery conversion rate was almost twice as high as their standard delivery rate, showing that a faster delivery time influenced customer choice. Big Basket began operations as an online grocery business in 2011, but it didn't launch its first dark store until December 2021 in Bangalore.


Dark stores, which are placed in high-traffic regions with high demand, function as miniature warehouses. The use of technology makes it easier to swiftly locate ordered items in a dark store. The store employee divides and packs food and non-food products separately. Cold storage products or glass containers receive special consideration. Every crate has a distinct barcode that corresponds to a single consumer.


Zepto asserts that it can wrap items in less than a minute. The delivery partners then gather the items and present them to the billing desk, where two receipts are generated after they double-check the quantity and expiration date. To make quick deliveries, delivery partners use geospatial data, maps, and traffic patterns together with location intelligence. All significant competitors in Q-commerce that deliver within 10 to 15 minutes have a similar business strategy.

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Copyright of Trariti Consulting Group

Impact on the Economy

A variety of positions is needed for e-commerce grocery platforms, including those for delivery drivers, customer care agents, and technical support workers. These fields now have more employment opportunities thanks to the expansion of e-commerce. The growth of new companies and businesses in the e-commerce industry has also led to job creation in adjacent industries including marketing, technology, and logistics.


Apart from that platforms like Kisankonnect are dedicated to delivering safe, fresh, delicious fruits & vegetables directly from farmers to your doorstep. Thus creating rural employment opportunities and making sure that farmers get fair trade prices


Employees with specialized knowledge of technology, logistics, data analysis, and customer service are needed for e-commerce platforms. The labor market may be impacted by this change in skill needs because people may need to learn new talents or modify their current ones to satisfy the demands of the e-commerce industry. Programs for retraining and upskilling become crucial to ease the transition and lessen its detrimental effects on employment.

Challenges Faced by E-Grocery Industry
  • Inventory management: Due to issues including perishable commodities, fluctuating demand, and keeping an accurate real-time inventory, managing inventory in e-grocery can be challenging. It might be difficult to maintain the freshness and accessibility of products while reducing waste and stockouts.

  • Order fulfillment: E-grocery requires the labor- and time-intensive process of picking and packing individual goods from a variety of products. Order fulfillment must be efficiently managed, especially during times of high demand, which calls for streamlining procedures and optimizing warehouse operations.

  • Last-Mile Delivery: In e-grocery, the delivery of the final mile is vital because it directly affects consumer happiness. It can be difficult to manage delivery logistics, and several delivery time slots, and ensure fast and dependable delivery while coping with traffic congestion and address complexity.

  • Profitability and Break-even: For e-grocery businesses, achieving profitability continues to be a significant problem. Profit margins are under pressure due to high expenses for logistics, warehousing, last-mile delivery, and technology infrastructure. Due to fierce competition and the necessity to provide cheap rates to draw customers, e-grocery businesses sometimes have low-profit margins.

Potential Solution and Future Development
  • Advanced Inventory Management Systems: Using data analytics and machine learning algorithms, advanced inventory management systems can be used to optimize inventory levels, forecast demand trends, and cut waste. Automated replenishment procedures and real-time inventory tracking can increase productivity and reduce stockouts.

  • Expansion of Subscription Models: E-grocery platforms may use subscription-based business models that provide advantages like limitless deliveries, first-choice time slots, and special discounts. This could improve demand predictability, boost consumer loyalty, and boost the company's overall profitability. For instance, Swiggy Instamart has varied subscriptions targeting different customer bases.

  • Expansion of the Delivery Network: To extend coverage and assure prompt deliveries, e-grocery companies might invest in growing their delivery networks by collaborating with regional merchants and independent delivery partners. Crowdsourcing and gig economy methods can be used to enhance last-mile efficiency and optimize delivery routes.

  • Increase in delivery fee: By raising the delivery fee, e-grocery businesses may be able to increase profitability. For instance, Blinkit successfully applied this tactic in Gurugram while ensuring swift delivery. Businesses can boost their profit line by compensating for the costs of last-mile delivery.

  • Balancing Economy of Scales: E-grocery enterprises might look into further options and potential future improvements in addition to delivery fee adjustments. This entails utilizing economies of scale as they grow their businesses and bargain better rates with logistics partners, optimizing delivery routes using cutting-edge technology and data analytics, and establishing strategic alliances with nearby retailers or third-party logistics providers to streamline delivery networks and cut costs.

Continued technical development, greater automation, and novel methods of inventory management, order fulfillment, and last-mile delivery are likely to characterize the future of e-grocery. The e-grocery sector can overcome current obstacles and offer consumers seamless, effective, and profitable shopping experiences by integrating emerging technologies like artificial intelligence, robots, and data analytics.

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