E-grocer LocalBanya to raise Rs. 300 cr, expand ops beyond Mumbai

Mumbai: E-commerce wars are hotting up and food and grocery e-tailing seems to be the newest battlefield. While start-up e-grocers are raising more funds, organised brick and mortar retailers are also making plans for big online push.

Mumbai-based online food and grocery retailer LocalBanya plans to raise Rs. 250-300 crore to expand operations beyond Mumbai over the next couple of years.

And it is not alone. Its peers such as BigBasket are also scaling up.

Besides, the big daddies of organised retail - Reliance and Future Group - are also looking at e-commerce for growth.

The world's largest e-tailer, Amazon, which sells nutritional products online and recently started selling Coca-Cola's new product Coke Zero on its Indian marketplace, is also reportedly looking to expand its food and grocery offerings.

"We currently deliver within Mumbai up to Vashi, Thane and Borivali. We are expanding beyond to more suburban areas. Over the next two-three years we plan to start services in 8-10 cities, for which we will need more funds," Amit Bhartiya, co-founder of LocalBanya, told HT.

The company raised funds from real estate firm Karmvir Avant Group earlier this year.

Bangalore-based BigBasket last month raised Rs. 200 crore from venture funds Helion Ventures and Zodius Capital. Apart from technology upgrade, BigBasket, which currently offers e-grocery services in Bangalore, Mumbai and Hyderabad, aims to use these funds to expand to 10 cities by the end of next year.

According to analysts, these online grocery sites are seeing good demand, especially for nuclear families. LocalBanya, for instance, is servicing around 12,000-13,000 customers per month and the new customer base is growing by 20%, said Bhartiya. "What we have seen is that out of 10 first timers, 7 repeat orders and at least 4-5 of these customers stay and shop with us for beyond 3 months."

Mukesh Ambani-led Reliance Retail has been running a pilot e-commerce project for it's around 15,000 employees in Reliance Corporate Park in Navi Mumbai for about a year now. The company is likely to use the learnings from the pilot project and it's expertise in food and grocery retail through it's Reliance Fresh and Reliance Mart stores to start selling food and grocery online, sources said.

"Having invested in retail talent development and state-of-the art retail infrastructure, we are in a unique position to capitalise on the growing opportunity in India... ," Ambani had told shareholders at its annual general meeting this year.

"We will further expand the business in existing markets and explore newer markets and channels while leveraging our solid foundation," Ambani added.

The company, however, remains tight-lipped on how its exactly going to pan out.

While e-commerce penetration in India is currently low, it has huge potential to grow multi-fold, analysts said. "In India, e-tailing has the potential to grow more than hundred-fold to reach a value of $76 billion by 2021. The country's growing internet-habituated consumer base, which will comprise 180 million broadband users by 2020, will drive the e-tailing story," according to retail consultancy Technopak.

Future Retail, which runs Big Bazaar hypermarkets, is betting on this growing internet base to push its omni-channel strategy. It is already pushing its electronics chain e-Zone online from this month, with other formats expected to follow over the next few months. Once fully rolled out, a customer can order products in-store, or online across stores and formats and get it delivered home. Its franchisee programme, Big Bazaar Direct, is already operational.

"Today we can't stock everything in our stores... With the help of technology, we will be able to cater to the customer in a better way," said Kishore Biyani, CEO of Future Group.

The company opened its first food park in Bangalore recently and has big plans to manufacture and sell branded food products across multiple channels. Biyani expects this to be a big business over the next few years.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.