D-Mart Tries Online Delivery As Amazon Looms

Billionaire Radhakishan Damani just entered Jeff Bezos’ turf.

His supermarket chain D-Mart is running a pilot that allows customers to order online, and have everything from staples to shampoos either delivered at neighbourhood kiosks free or at their doorstep for a fee. India’s most valued retailer has set up 40 such booths in Mumbai.

While it’s a pilot, D-Mart's scale could be a big advantage when rolled out across its network of 140 outlets in 10 states. Damani is betting on the ‘everyday low prices’ model that made him a billionaire in a blockbuster initial public offering of Avenue Supermarts Ltd. in March. Shares have since gained nearly fourfold.

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It’s also what Amazon is trying in Seattle to compete with Wal-Mart with its “click-and-collect” kiosks. That followed its $13.7-billion Whole Foods buyout, aimed at disrupting the brick-and-mortar grocers in the U.S. The American online giant has similar plans for India, having got clearance to invest $500 million in food retail.

D-Mart joins Flipkart that resumed online grocery sales to counter Amazon. Startups like BigBasket and Grofers too vie for a share in a nascent market estimated to be worth $300 million last year by emerging markets researcher RedSeer. And it grew at more than 120 percent.

D-Mart’s kiosks are located at places where the supermarket chain doesn’t have outlets. Customers can pick up products ordered online—both through the app and the website—at the booths. For home delivery, they will have to pay 3 percent of the bill or Rs 49, whichever is higher.

“This is D-Mart’s way of capturing an extra share of its existing customers’ wallet,” Devangshu Dutta, chief executive officer at retail consultancy Third Eyesight, told BloombergQuint. They don’t mind a delivery charge if convenience is involved, he said.

That won’t be easy though for Avenue E-commerce Ltd., Damani’s online retail arm. More than half-a-dozen startups, including LocalBanya and PepperTax, shut shop last year as they ran out of cash to acquire customers.

It’s an experiment all retailers are trying to increase their turnover. Also, if a delivery cost is involved, it becomes a deterrent for the consumer to shop online,” said Arvind Singhal, chairman of retail consultant Technopak Advisors. Also, D-Mart is not an aspirational brand, he said.

Also Read: Can Amazon Become India’s Everything Store?