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Redefining fruit, vegetable shopping

Fresh and hygienic produce at competitive rates draws many to Greencart.in, but the company has to gain scale

Bs_logoGreencart
Aletta D'cruz
Last Updated : Aug 25 2014 | 2:01 PM IST
The Alam family had always viewed online shopping with scepticism, especially while shopping for fruits and vegetables. Their first order from Greencart.in, however, put all concerns to rest.

"Not only were the products fresh, they were also delivered within the promised period," says Samir Alam.

Specialising in delivering fresh produce and gourmet food, Greencart.in was co-founded by Rajiv Tevtiya, a former Tata Group employee. Kiran Tevtiya and Devidas Mule are the other co-founders.

While Kiran, earlier with Bank of America Merrill Lynch, primarily handles technology, Mule has years of experience in growing, sourcing and distributing fresh produce.

Their company, which went live last year, today offers about 15,000 food products across 30 categories. Recently, it secured about $1.5 million in its first round of funding from the Techno Group.

The beginning
The team with which Greencart began operations had about 40 years of experience in agriculture - growing, sourcing, exporting and importing. Initially, operations were based in and around Mumbai's Kandivli area. Now, the company's products are offered across Mumbai, Navi Mumbai and Thane.

"Today, Greencart is looking to fill a gap in the consumer space. Identifying and differentiating fresh, good-quality produce is difficult for the untrained eye. At Greencart, we aim to make our customers' job easier by acquiring fresh products directly from farms and grading them according to quality," says Rajiv Tevtiya, the company's chief executive.

Business model
Greencart acquires most products directly from farmers, with whom it works on a contractual basis. Through this, it can acquire products in large quantities, which are then sold to customers at competitive rates.

Some products, however, have to be acquired from select open-market suppliers, and these are available to customers at market prices. The company has a dynamic market pricing system - the selling prices keep fluctuating. Greencart claims this presents its customers with a win-win situation. "Today, if a customer places an order for apples at Rs 200 and, at the time of billing, the price of apples increases to Rs 220, the customer won't be charged the extra Rs 20. And, if the price decreases to Rs 180, Rs 20 will be deducted from the final bill," says Rajiv.

He adds though the pricing model seems risky, it is the company's selling point. "Our network of farmers and suppliers has been growing, and we believe this will help negate the losses we might incur due to our pricing model…We aim to generate revenue of about Rs 12 crore in FY14 and break-even in the second quarter of FY16. Our aim is to generate revenue, hitting the Rs 100-crore mark in the year to come," he says.

Greencart offer two separate delivery slots, for the convenience of their customers. However, an alternate address can be provided to the company, along with special instructions for delivery, incase of unavailability.

Jaydeep Mehta, chairman of Techno Group, says, "E-commerce in the agricultural sector, I believe, is going to pick up. Big players such as Reliance and Mahindra are beginning to make an entry into this sector, which will make it very competitive…Our business also focuses on farmer benefit - ensuring a good price for quality produce, which will help the economy."

Challenges
"Logistics is our own and, therefore, creating our delivery mechanism and providing training to employees was difficult. Greencart runs full-fledged operations, from sourcing products to packaging to showcasing and finally, delivering those," says Rajiv.

Alexander Jarvis, operating partner at Jungle Ventures, and an independent investor in start-ups, says, "For Greencart, logistics and fulfilment will need to be thought about in detail. Their orders have a shelf life and, therefore, cannot be left at the doorstep in case of customer unavailability at the time of delivery." He adds great inventory forecasting and reliable suppliers will help avoid negative margins from a possible bad stock.

However, he questions the estimated large market in the gourmet sector. Of the market size of $20 billion, even if 10 per cent moves online, the margins won't be very high.

"On the positive side, everyone eats food and that's not going to stop anytime soon," he says.
EXPERT TAKE: B S Nagesh

Greencart.in has chosen a niche area. With a market that caters to at least three-five million out of the 12-15 million of Mumbai's consumers, I see a huge opportunity for the company in this space.

The name Greencart signifies freshness, which goes very well with what the company has to offer. I believe it should also add perishable food items such as fresh paneer to its list of products, in keeping with its promise of fresh and quality goods. What concerns me, is apart from gourmet, organic and international foods, their offerings of fast-moving consumer goods, staples, beverages, etc, divert them from their USP. I believe they risk losing their business focus if they delve into this area.

Greencart comes with an advantage in that its founders have experience in the agriculture and farming sector. This makes it easier for consumers to trust them. I believe the company should use their expertise to its advantage and project it, as part its brand-building.

The company also offers a unique price model, a feature it should largely sell to consumers by putting it on the landing page.

As far as scalability is concerned, I believe for now, Greencart should aim to make itself one of the largest players in Mumbai, gaining at least 30-40 per cent of the market share. It could also consider developing a business model that allows the local fruit and vegetable vendor to be a franchise, deepening its roots within the city. This might also give it an advantage over the big players in this segment.
B S Nagesh is founder, Trust for Retailers and Retail Associates of India

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First Published: Aug 25 2014 | 12:47 AM IST

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