Related post, from April 2012!! – The opportunity cost of an e-commerce purchase.
When all other factors are the same, how could brands still differentiate and be ‘the chosen one’ in the consumers’ minds?
Consider the grocery delivery segment in India right now.
The prominent players, who have amped up their efforts as a result of new, almost-permanent habits that kicked in during the pandemic are:
- Swiggy Instamart
- Big Bazaar
There may be some city-specific, local brands too, besides these well-known names. Or, they may be acquired by one of these eventually 🙂
The kinds of grocery items are the same across all these brands. Amazon (Vedaka) and BigBasket (bb Royal) have their own store-branded products too, incidentally. But largely, the products are the same, and these brands either store them in their own warehouses, thereby having a tighter control on the procurement and delivery or delivery from a grocery store near the customers’ place (hyperlocal model).
If you order a brand of washing powder from any of the above online vendors, you would get the same product. And that’s also the reason why ‘brand’ matters less in this category. The brand’s experience matters more than the brand name itself – or, the brand’s experience is the brand.
So, in terms of product, they are the same – you could pick any one of them.
Amazon’s Prime is a perfect example of why we choose Amazon over others. There is a price benefit and there are other added benefits (Prime Video, Amazon Music etc.) as well. Being treated better always works and if it happens for a fee, we weigh the overall benefits and stick with that brand.
I would choose Amazon Fresh (that picks up products from the nearest Star Bazaar and delivers to my place) given that I’m a Prime member. This equation may perhaps change when Tata gets a clearer idea of how to run BigBasket that it acquired. It could perhaps make access to Star Bazaar for hyperlocal delivery exclusive to BigBasket and Amazon would then need to look at other options to fulfil hyperlocal delivery. For now, this works best for us.
In any case, Amazon had picked up a stake in More retail chain from the Aditya Birla Group in 2019. So, it’s more likely to stick with that as a fulfilment model.
This is a bottomless pit that utilizes VC money. The more funding a company has garnered, the better it can offer deep discounts, accept the loss as a part of doing business and as a part of building a habit in users. But all other things being equal (particularly product range), there is only so much time this can work.
We started on the price war between the major e-commerce brands back in the early 2010s and then this has eased to a large extent. Most brands don’t try to differentiate on price at least in the grocery segment because the margins are already wafer-thin.
The price part is also extended to the delivery fee that may be waived off or reduced to bring in an advantage. Amazon Prime offers free delivery, incidentally – and hence, price is tied to loyalty factor there.
For grocery as a category that we tend to order more often per week/month, the delivery fee could be a distinct differentiating factor. We order vegetables more often through BigBasket’s bbDaily that delivers milk first thing in the morning. The choice of products in bbDaily is fairly limited but it is also quite adequate from a day-to-day grocery and vegetables/fruits point of view. We use Amazon Fresh for grocery items that are not urgent/regularly used – the monthly grocery variety.
Now, besides these three factors, there is a 4th factor – delivery time, and this plays within the brand experience!
This is interesting because this was started way back in the 80s by Domino’s, a pizza brand, in the US.
The advertisements back then used the catchy value proposition based on delivery time: “30 minutes, or it’s free”. Domino’s eventually scrapped this idea in the US in 1993 after mounting lawsuits because of accidents and reckless driving that the speeding delivery personnel were getting into to fulfil the delivery time promised.
But when Domino’s launched in India in 1996, there was no pizza culture here at all. Eventually, to win over the market as a first-mover, Domino’s launched the ’30 minutes, or it’s free’ policy in India too! The positioning is so very associated with Domino’s even in India that till today, that phrase is naturally connected with the brand even as they have stopped harping on it (and only allude to it indirectly).
For freshly cooked food like pizza, differentiating on delivery time makes immense sense. For a new food product like pizza, it incentivized trials because of the promise of freshness measured by time to deliver. It also reduced the lasting impact of poor experiences because a delay means the food is free.
The food delivery aggregators like Swiggy and Zomato continue to offer a delivery time but this is not a universal number like Domino’s because the choice of food is severely limited. The delivery time is based on specific restaurants which in turn is based on distance from your home.
But, outside of freshly cooked food, the delivery time as a differentiating factor is a strange proposition.
Most grocery products don’t necessarily need to be delivered in say, 20, 30 or 40 minutes.
I do remember a Saturday morning walk to a nearby grocery store to buy bread when I found another sleepy-eyed man asking for toilet cleaner! It was 7:30 am on a Saturday morning, and I couldn’t help wonder what kind of urgency he would be having at his bathroom that he had to walk out of the home and buy toilet cleaner at that hour. But I digress…
Of course, one can argue that vegetables are usually bought fresh in India and not necessarily stored over weeks in the fridge and they could be ideal, like fresh food, for the 20-30 minute delivery timelines.
But right now, most grocery delivery brands are using delivery time as the main differentiating factor. This system evolved from the earlier systems that we got conditioned into:
– order before 10 pm and get it delivered first thing in the morning along with milk and newspapers
– pick a slot from the many slots available the same day or in the next few days
– same-day delivery
Dunzo – 19 minutes (in Bengaluru), 30 minutes overall
Swiggy Instamart – 15-30 minutes
Flipkart – 90 minutes
Big Bazaar – 2 hours
BigBasket does not offer this promise yet but commits to ‘5% of bill value back if they are late’.
Amazon Fresh is still sticking to the slots system, even though they are experimenting with 2-3 hours pick-up from a nearby More Megastore.
Previously, we were educated on the ‘slots’ system where we are supposed to pick a slot among the many on offer and the delivery would be done within that slot. This worked quite well and we have learnt to adjust our orders around this system.
Now, the grocery delivery segment is obliterating the slots system and promising instant delivery within a specific time period, just like Domino’s!
Swiggy Instamart has even taken a giant swing at other players, particularly BigBasket, by mocking the slot system explicitly.
There could be two specific outcomes because of this new differentiating factor.
1. A new habit creation
The more we get used to the instant delivery for groceries (away from the slots system, order in the night-get it in the morning, and same-day delivery), the more we are likely to order impromptu. The slots system trained us to gather products needed and plan. The instant delivery system will condition us further into anything-anytime. This is broadly good for the grocery delivery brands, of course – more orders, more billing over many orders.
2. The focus on delivery personnel
Our roads are already filled with delivery personnel of all kinds of brands. On any given day when I drive out (mainly to recharge my car’s batteries, more than anything), I see at least a few Swiggy, Zomato, Dunzo delivery personnel, besides other brands like Licious – these are distinctly identifiable because of the uniforms.
But with delivery times as a differentiating factor, even without a penalty clause like ‘or it’s free’ like Domino’s, there is mounting pressure on the delivery personnel to deliver within a time limit! Even if we don’t penalize them, the brands would be using the delivery time as a yardstick to measure their performance simply because that’s a prominent external promise made a brand differentiator! Given the debilitating state of our delivery personnel and given the fact that drone deliveries are still a few years away, this is only going to worsen.
Or, this delivery time as a differentiator is a time-bound fad and may soon be relegated to a more rational system that doesn’t tax the delivery personnel unduly.