Amazon Fresh, the online grocery service of e-commerce giant Amazon, has expanded to over 50 cities in India, up from just 22 cities a year ago, according to Srikant Sree Ram, Director of Amazon Fresh. Sree Ram added that more than 50% of the company’s customers are from Tier-II and III cities in India, which suggests a growing demand for online grocery services in smaller cities as well.
The company aims to further penetrate the Indian market by ensuring availability of full basket products. Amazon Fresh, which was launched in 2007 as an add-on grocery service for Prime members, has now become a standalone store for grocery items in India. The company also launched Amazon Pantry in 2016, but pivoted to launch Amazon Fresh in 2021 to become hyperlocal.
Currently, Amazon Fresh offers free delivery on orders above INR 249 for its Prime members. The service follows the model of slotted grocery deliveries and claims to have doubled down despite stiff competition from players like BigBasket and those following the quick-service delivery model such as Blinkit, Zepto, and Swiggy Instamart.
Srikant said that Amazon Fresh’s focus has been on ensuring high-quality products, especially in fresh fruits and vegetables, and offering the best value to customers through pricing and offers. He added that grocery has been one of Amazon’s fastest-growing categories nationally.
The demand for online grocery has been increasing in India, but the execution of such business models poses a challenge for players due to the need for smooth inventory management, managing dark stores, and technology. For example, Zomato-owned Blinkit has been experiencing disruption due to ongoing protests by delivery personnel over slashed delivery fees. As a result, around 100 BlinkIt dark stores have been shut down.
However, a Blinkit spokesperson said that the company has introduced a new payout structure for its partners that compensates them based on their effort to deliver an order. The spokesperson added that although some locations have experienced disruptions, the company is actively engaging with its partners to get the stores back up and running for customers.
In India, the online grocery market is highly competitive, with players like BigBasket, Grofers, JioMart, and Flipkart Supermart vying for a share of the market. Despite the challenges, the online grocery market is expected to continue to grow, driven by factors such as increasing smartphone penetration, rising disposable incomes, and changing lifestyles.
