HomeShop18 had recently introduced a food and groceries category to their existing product range. We spoke to Narasimha Jayakumar, COO & Business Head, e-commerce at HomeShop18 to find out more about the launch of this category. In his interaction with us, he speaks about the logistics, challenges of setting up this category, scaling, margins in this category and sale of perishables.
Logistics for food and groceries category
Medianama: How has your warehousing and logistics changed to suit the introduction of food and groceries section?
Jayakumar: It has been a well thought out move. We have 14 million products, both across television and online. The initial launch focus for this category is on long shelf life packaged food, so clearly there has been some changes in terms of warehousing but not too many changes since we are not looking at perishables at this point of time. In tier II & III cities, we see a need for gourmet, packaged and continental food. This is one of the opportunities in packaged non-perishables food items. Kochi, Coimbatore, Ludiana are some of the towns that have shown very good adoption since the launch of this category.
Medianama: What are some of the changes made to logistics?
Jayakumar: I think there is far greater need for dust free environment for food, so we have looked at air-conditioning. Other than that, we have had to train people, make sure that the delivery is fast and are done through air shipments.
Medianama: How fast do you deliver?
Jayakumar: It depends on where the customer is located. If it is a metro customer located in one of the top 20 cities, we deliver within a day. Else, it typically takes anywhere between 2 to 3 days for the rest of the country.
Medianama: What is the additional price added for shipping the product, considering that gourmet products are already expensive and your deliver is through air?
Jayakumar: We are offering free shipping to customers.
Medianama: What are the challenges that you presently face in offering more products in this category? How are you addressing them?
Jayakumar: One of the challenges is identifying which particular product is packaged and has a long shelf life. Timely delivery is critical. We use a number of third party logistics to ensure timely delivery. We make sure that our partners have products that have shelf life and the delivery model is one that will cater to customer expectations.
Sale of Perishables
Medianama: When and how do you plan to add perishable products to the food and groceries category?
Jayakumar: We have just ventured into this category so it is too early to comment. It is a completely different kind of category with different logistics and we currently see packaged non-perishable food products as an opportunity right now. Additionally, we are a pan India player, so it does not make sense for us to get into one or two local markets but we would rather get into something that has national demand. We are looking at products that can be shipped through air as opposed to getting into perishable groceries that you can get from retailers in your town.
Medianama: Why are you not launching perishables? How do you plan to keep this category viable without perishables?
Jayakumar: We have a full range of products including ready to eat items, pasta, olive oil, condiments and others that we want to explore. These are early days. We want to listen to our customers and then grow the category. The value proposition is one of importance here. It should be uniqueness about something that you can’t get and offering the convenience of ordering them on the phone or Internet.
Cost & Revenue
Medianama: How do the margins on food and grocery category match up to the cost of setting up and running this category? How viable is this category compared to other categories like electronics and gadgets?
Jayakumar: I think each category has a role to play and one of our advantages is that of being a multi-category platform. The advantage of the food category is that it gives us repeat customers and business even though the average basket size may be small. This is because food is consumed more often as compared to other categories and there is opportunity to cross sell and up sell, which are very important to us as a multi-category player.
Medianama: How do you plan to scale this category further?
Jayakumar: We have just launched it and we are still looking for new areas to expand. We are not considering groceries. We want to be careful and get it right, so we are going to clearly expand this category in stages. The country is clearly under served as far as niche packaged food category is concerned and that is going to be our focus.