Although it may not yet be obvious to many, global retail experienced a major upheaval when a relatively new concept called “Community Grocery Buying” was adopted as an effective response mechanism to deal with supply chain disruptions. supply caused by Corona around the world in 2020. Retail historians will tell you that the chain has been around in parts of China and neighboring countries for over twenty years and its followers have pointed to its immense potential. But it was during the disruption caused by Corona that stakeholders at all levels realized the kind of benefits it brings to the table – in terms of scalability, economies of scale, additional revenue for the main stakeholders in the value chain, etc. And the practice is now clearly on a roll having started its journey to become a massive medium term retail channel in many countries including India.
Pinduoduo, XingSheng and Meituan in China are some of the big names that have become the flagships of this new retail chain which has seen phenomenal growth in recent times. According to one estimate, shopping by the grocery community around the world reached an annual sales level of $50 billion after Corona. That’s nearly five times the growth over a short period of just two years. Currently, this translates to 50 million orders per day or 1.5 billion orders per month for dedicated players. And, as many analysts believe, that might just be the tip of the iceberg.
Simply put, the model is an extension of any regular beneficial business activity undertaken by a group. Here, a group of consumers led by a well-known influencer form a group (you can even call it a leader), place collective orders with retailers, and regularly get modest to high discounts from retailers. And to achieve this, technology is becoming the key tool, with orders being placed based on app-driven solutions. The influencer plays a key role here and is responsible for ensuring smooth transactions in terms of collecting orders from their group members and placing them with retailers to manage the actual delivery to the end user. Local business units or small vendors in a specific locality, as evidenced by Chinese examples, are best suited for this role. Needless to say, forming such groups ensures a regular, bulk customer channel for retailers with the natural supply chain benefit of reduced inventory management. The practice also brings to the table the inherent benefit of eventually giving a more organized form to local commerce involving small producers, farmers, millers, etc., as the bulk of the items will come from them.
As in many other countries, preliminary steps have also been taken by some major Indian companies to tap into the large-scale opportunity that this channel promises to provide. And there are pitfalls to suggest that it’s not an idea whose time has passed. A report points out that today, more than 80% of e-commerce transactions occur in the consumer discretionary space, and it is primarily the top 30 cities that are responsible for the bulk of these transactions due to l advantage of technology adoption. But adoption of the technology is happening at a brisk pace in non-metropolitan circles across the country, and in the years to come, a gigantic consumer force of Bharat (estimated at 500 million) would align with new-age tools. to take advantage of their needs via e-Commerce. In this type of projected ecosystem, a concept like community grocery shopping will simply have a field day. Small local retailers and store owners are expected to enthusiastically participate in this scheme as it would give a boost to their earning potential.
The author is the business leader of Price Company – udaan’s community group buying initiative.