Once upon a time, Grofers controlled a massive 56% of the grocery delivery space by App installs (we’ll do a piece on transactions at another time). Big Basket had nearly 40%. ZopNow & Amazon Now were late to the party and no one really cared for them. After all this was a side project for Amazon right? A year later, Amazon Now controls one third of the market.
We always just assumed that it was Big Basket that took away Grofers market share in what’s been one of the most hotly contested spaces in the Indian venture scene. Between the two of them, they’ve raised over $400 Million, with Big Basket taking a larger chunk of that pie (approx.. $250 Million).
Amazon Now has gained about 29% market share over the last one year.Grofers lost just over 24% & Big Basket Lost 4% — all of it to Amazon Now.
Just can’t wait for them to seek government intervention protecting Indian startups from foreign competition.
This data raises some very interesting questions for the rumored deal between Grofers & Big Basket..
- Even if they were to combine & somehow integrate processes/ cultures & management — will they ultimately be able to take on Amazon Now?
- Post-Merger (if they do merge), the new entity will still need to raise external capital. Will investors be willing to bet against Amazon?
- Amazon is able to use its infrastructure across multiple businesses. Certainly, between e-commerce & groceries the logistics and warehousing infrastructure can be cross leveraged. Big Basket & Grofers need to build to serve. Will they be competitive?
- Amazon’s CAC will always be lower than Big Basket / Grofers and Big Basket + Grofers. Even if they were to raise additional capital. Will the unit economics ever be as good? Do they need to be?
By Order Volume, however Amazon Now still has catching up to do. With its install base increasing, my guess would be that it is a matter of time before order volume starts picking up.
A look at the play store downloads confirms, much of this. Amazon Now, Grofers & Big Basket are all within the 1–5 Million range. ZopNow is struggling to break out of the 100K-500K range and suffers from the highest attrition rate amongst users.
As the smallest player in this space, I expect the attrition rate for ZopNow to increase. Although they’re extremely focused (still operate only in a few cities and focus on 3 hour delivery as their USP) going up against players with such deep pockets is extremely difficult.
Where is the product market fit? Call me cynical (my friends do)but I feel to great extent we Indians, didn’t need an App for this. Mumbai had hyper local way before it had apps. Most of the people who order groceries online also live in housing complexes and neighborhood’s where your local kirana shop was delivering anyway. These are shops which give us credit and will deliver a bottle of coke if we ask them to. For them that’s simply the cost of retaining customers. And the delivery time is usually under an hour.
We’ve covered this space before — I continue to believe that an inventory led model will ultimately prove superior. The real battle for these companies is not amongst themselves but to get us to start transacting with them over our local kirana shop.
As with e-commerce, I really hope that all this money hasn’t been invested just to teach us how to use Amazon!
Thanks for your time,
Ashish
- Team KG
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You can reach me on ashish@kalagato.com
