Emerging Selling Models in Vegetable and Fruit Retail Business in India

Dipan Kumar Sahu, KSRM, KIIT University

Introduction

In the last one decade, the predominated unorganized and traditional vegetable and

fruit retailing sector has undergone a paradigm shift. The organized retailing of fruit

and vegetable by the corporate sector is expected to expand in India in the coming

years. While retailers are experimenting with new business models for procuring and

connected with producers, simultaneously testing out new approaches to marketing

fruit and vegetables to reach the consumers and value creation for its customers. These

arrangements are still evolving. However, these new ways of marketing fresh fruit and

vegetable are currently creating capacities for innovation in the space of retailing. The

rising urban consumer demand in terms of quantity, quality, choice and convenience,

organized retail is bound to innovate and expand at the both front and back end in the

value chain.

The current organized retail sector in fruits and vegetable are generally governed by

private and state agencies to promote more or less a direct interface of producers with

the consumers. Majority of the organised retail business generally run by corporate

giants and local private entities. Whereas there coexist of organized ‘farmers’ market’

retail chains promoted by state agencies, producer groups and cooperative. Among

many, few successful organised retail farmers’ market promoted by such agencies are

Apni Mandi in Punjab, Raytu Bazaars in Andhra Pradesh, Uzhavar Santhai in Tamil Nadu

and Shetkari Bazaar in Maharashtra are more producer focused. Though farmers‘

markets have helped participating farmers become aware of the products required by

the markets and helped them improve quality and diversify their product portfolio,

besides resource use maximization, they have not made major impact at the consumer

level as they could not scale up due to credit investment, innovation in reach out to

consumers and farmers form only a proportion of the sellers in these markets with

many of these markets being dominated by local traders and vendors.

Presently, different business models of fresh vegetable marketing are tested by the

organised retailers and they are rapidly evolving. They are likely to adopt practices that

have inherent strength of local values and global practice advantages. Compared to

traditional retailers, modern retailers are evidently cutting themselves off from the

clutches of middlemen in different ways. More over to this, application of internet and

information technology have made tremendous contributions for retail business

transformation. This has given birth to E-commerce which encompasses several pre

purchases and post purchase activities, considered as a new frontier of application in

retail industry in selling of fresh fruit and vegetables over electronic systems.

A lot could learn from the experience of these models. In the next section, few such

innovative retail firms in fruit and vegetable selling were highlighted from the

perspective of service delivery to end consumers using information technology.

FreshnDaily

Fresh N Daily is Mumbai’s first online fruits and vegetable store. It delivers best quality

products and at the best possible prices at doorstep. Firm procure goods directly from

the farmers/ brand owners and ensure there are no intermediaries. Moreover, unlike a

physical store – supermarket/ neighbourhood kirana store/ sabziwala – it is working as

an online store.

Thirty-year-old Vikas Chauhan, who quit an IT company, has a delivery van that

procures vegetables from local mandi, brands them with FreshnDaily packets and

delivers to areas it has identified as key zones. It has just two delivery boys who supply

in key zones. For the rest, it has tied up with small nook and corner shops.

mandionwheels.com

Mandi on Wheels is operating in Surat, where urban consumers could buy F&Vs online

targeted mainly at working urban women. The company started first outlet in 2007 in

250 sq ft area in Adalaj locality of Surat city. Now, it had four outlets, each of 3,000 sq ft

area and aimed to create 10 more of 5,000 sq ft. It is a ‘mandi-styled‘retail outlets also

sold seasonal and exotic varieties of F&Vs. The mandi-styled shops provided the

customers the shopping experience of an organized retail outlet and a product display

similar to the traditional mandi. Mandi on wheels is an enterprise focused on bringing

the 'mandi' closer to customers‘home while keeping the essence of great range &

fabulous quality alive. The website is another one of the many ways in which it offered

door-step delivery of fresh fruits & vegetables. Orders could be placed in a 3 step

process which customer could begin by logging in, choosing the needed F&Vs, browsing

through offers and mentioning the correct address and phone number. The products

were delivered as per the need and on the time promised.

Veggi Bazaar

Veggibazaar is India’s first online vegetable & fruits store, launched in Chennai in the

year 2009, founded by R Venkatesan. It is the perfect environment for purchase of

fruits, vegetables. Its procurement begins at farms and maintains the freshness of

products till it reaches to consumers.

Veggibazaar.com takes orders online and delivers the very next day. This not only

ensures freshness of the products—an essential feature of the company—but also

means that firm does not have to worry about bulk storage space and associated

facilities, which is a huge saving. Clients can pay online through debit/credit cards or

pay cash on delivery. It also started providing additional facilities, such as nutritional

specific packages and loyalty points which customers can redeem against future

purchases.

HarraFresh

The HarraFresh Pvt. Ltd. Ahmadabad established in 2008 started the van based delivery

in Dec., 2008 dealing both at C2B and B2B level. The vans had a host of animated

characters like ‘Lalu Tamatar‘and ‘Raseela Nimboo‘among others. Business model it has

a unique model of involving traditional vendors into its operations where in they are

trained in customer and sales management and given uniforms. They are hired on a

monthly payment basis besides performance based incentives and medi-claim and

accidental insurance. The company avoids competing with existing vendors and has 3-4

major societies having 80-450 households and a total of 1000 households which are

regularly supplied F&Vs.

The retail vans are mostly air-cooled to keep the produce fresh and replenished once a

day. All retail sales are on cash basis and B to B on credit. Retail buyers are supplied

twice or thrice a week and the institutional buyers are supplied directly from

distribution centre in ordinary auto rickshaws. The institutions are supplied every day.

Exotics F&Vs are sold only to institutional buyers. The procurement for F&Vs was done

through 2-3 procurement centres located near the mandi. The company had APMC

license to operate in mandi.

Farm2Kitchen.com

Farm2Kitchen Team is lead by Seema Dholi (Founder & CEO), a woman entrepreneur

who is committed to betterment of lives for Indian families. She started Farm2Kitchen

with only one mission - To enhance the quality of life for Indian families and provide the

best customer service possible.

Farm2kitchen.com deals only in organic groceries and textiles, and caters to Gurgaon

and surrounding areas. Set up in 2011, Farm2kitchen supports organic farming &

agriculture as organic farming is a holistic approach to food production, making use of

crop rotation, environmental management and good animal husbandry to control pests

and diseases.

Heritage’s Fresh@

Heritage Foods India Ltd. started with Fresh@ in 2006 with a store in Hyderabad.

Fresh@ has about 75 stores in Hyderabad (32), Bangalore and Chennai. Fresh@ has two

formats of stores: Flagship store – Spread over 2500 sq. ft. with a merchandise mix

which fulfills all the essential home needs of the Indian housewife. This includes FFVs,

grocery, processed food, cleaning aids, general merchandise, bakery, dairy, beverages,

and frozen food. Daily format store – spread over 1000 sq. ft., is essentially a food store

with wide daily fresh needs and the immediate top up needs of the consumer. 30% of

all merchandise is F&V. The company focuses on home delivery unlike other retail

chains and this delivery is done through retail stores. The company wants to use this

service for building a unique brand identity. Infact, each stores name also includes the

name of the locality e.g. the one at Banajara Hills in Hyderabad is called Fresh@ Banjara

Hills. The customers can order at the store, at the call centre, at the milk distribution

centre or e-portal. As soon as order is placed, buyer is informed of the availability of the

product or its substitute. The buyer can pay on delivery by credit card.

KNIDS Green

KNIDS Green in Bihar Set up in the year 2008 by Mr. Kaushalendra with the help of

Agricultural Technology Management Agency (ATMA) as a public private partnership

and a loan of Rs. 5 lakh from Friends of Women‟s World Banking (FWWB). KNIDS

encourages farmers to produce vegetables and monitors the grading, sorting and

packaging of the products before supplying it to its partnered vendors for distribution

to residential, commercial and market places. It has 3000 supplying farmers and its

brand- “Samriddhi‟ has become popular in Patna, Ara, Jahanbad and Nalanda districts.

Due to cutting out of the middleman‟s commission, farmers receive 35% higher price

and consumer’s 15% lower price than the local vendors. It has 50 designer push carts to

sell vegetables and they also carry ads on payment basis. It also home delivers

vegetables in bulk and issues cash memos. It has achieved a turnover of Rs. 4 crore

within two years and is attempting production and export of exotic vegetables to Dubai.

Summarizing Emerging Selling Models

From the study of above examples of emerged retail firms in the vegetable and fruits

sector, it is clearly understood that, most of the firms have integrated their service

delivery mode with information technology and have adopted multiple methods to

reach out to end consumers.

E-commerce facilitates purchasing anytime, anywhere and for almost anything desired.

Busy consumers prefer this to the restrictions of when a store is open and the need to

physically travel to a store. The rapid growth of e-commerce in India is being driven by

greater customer choice and improved convenience. The “cash on Delivery” innovation

has really help unlock the potential as people can now order products and pay when

they get physical delivery of the product. These are likely to be rapidly developing

selling channels for the future.

Along with the development of E-retailing in fruit and vegetable selling, growing of E-

consumers base and purchasing behaviours have posited new emerging factors in fruit

and vegetable retailing. Innovation in this sphere is helping organised retailers to sell

end consumers both online shopping by offering benefits to customers and also through

conventional but organized version of retail stores and pushcart.

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