TITLE

A study on the impact of online grocery delivery services on the sales of conventional
grocery outlets in Bangalore.

RESEARCH QUESTIONS

RQ1: How does the increasing popularity of online grocery stores affect the sales of the
conventional grocery retailers?

RQ2: What are the factors that influence customers to use online grocery services over
conventional retail stores?

RQ3: Who are the major customers of online grocery delivery services?

RESEARCH OBJECTIVES

To identify the effect of online grocery stores on the sales of conventional grocery stores in
Bangalore.

To identify the key factors that influence customers to use online grocery services over
conventional retail stores.

To identify the key characteristics of consumers who use online grocery delivery services.

INTRODUCTION

India is the sixth largest grocery market in the world with the food and grocery segment
constituting about 70 per cent of the $470 billion retail market in India. While only 5-8 per cent
of this market is organized, the rest is actually disorganised mom and pop shops run by family
members. But the trend is fast changing. More and more food and grocery stores are falling in
line and growing at a rate of 18.4 per cent year after year. Now with the growth in nuclear
urban couples, internet friendly shoppers, rising disposable incomes and rising ecommerce
reliability, shopping behaviours of consumers are also changing. Online grocery store is one of
the new verticals where many start-ups have spawned in the recent times. Customers are
thinking on how to reduce the effort of grocery acquisition. The online grocery providers
believe that they offer a solution to this by providing means for consumers to shop from home
and get them delivered to the door. While online shopping may offer superior advantage to
some consumers, many other consumers still find value in store shopping.
LITERATURE REVIEW

Consumer’s preference for online or retail stores vary upon a variety of reasons. (Sreeram,
Kesharwani , & Desai, 2017) identified consumer’s physical effort in offline grocery shopping
includes transportation from home to the grocery store and carrying the bought grocery back
to home. Putting efforts to park the vehicles or if the consumers use public transportation, it is
more tiresome to carry the bought grocery. OGS reduces the efforts of the consumer as
selection, order and to receive the bought grocery completes just by sitting at home. Shopping
for grocery online save time and reduce effort as the bought grocery gets delivered to home.

(Alamelu & Meena, 2015) identified two business models that initially existed in the Indian
online grocery space. The first is referred to as “pure-play”. These online grocers were
companies that did not own or associate with any brick and mortar grocery company. Instead,
they maintain their own warehouses and a fleet of trucks to stock and deliver orders directly to
their customers. An example of “pure play” online grocery company is Milkbasket. The second
model is a hybrid or partnered online grocery store in which inventory is held by a brick and
mortar store or warehouse. Thus, this type of model allows the grocer to sell its central
inventory through two channels.

(McClatchey, Cattell , & Michell , 2006) conducted a similar study in Cape Town, South Africa
and found out that online grocery retail is affecting the ability of food anchors to generate foot
traffic in shopping centres. They also commented that the online grocery market is of sufficient
magnitude to pose a threat to traditional retail shopping.

(Lee Chin & Nee Goh, 2017) studied the key factors influencing customers to use online
grocers and found out that trust was an important driver. When serving or communicating with
online buyers, online vendors must show their honesty, capability and kindness to customers
in order to increase the level of trust. Establishing trust for new online consumers is very crucial
towards developing ongoing trust.

At the same time, the sustainability of such a business model is also under risk. (Jayasree, 2017)
identified that the accruing cost of manpower, transportation and storage results in a
considerable burden on the expenditure, while the income remains the same. The net inflow
being less than the outflow in a crowded market segment may not sound like a solid business
model.
Therefore, with these contradicting views it is essential to come to a consensus regarding the
effect of these online groceries on conventional retail shops.

Based on the study of the above mentioned articles, the following hypotheses were made.

H1: The rising popularity of online grocery services has a significant negative impact on the
sales of conventional retail stores.

H2: Trust and Perceived Risk of consumers affect the purchasing decision in online grocery
space.

H3: The major customers of online grocery services are women with a job.

RESEARCH METHODOLOGY USED

The research follows a mix of causal, descriptive, and exploratory research methodology to
arrive at a conclusion regarding the research questions. The causal approach investigates the
effect between sales of both types of stores. The descriptive study aims to describe the major
customer segments for both type of stores.

The research uses primary data as a source by using questionnaire distribution as the data
collection method. Also a proper sampling method will be used to determine the respondents
due to the limited time available to collect data for analysis. The questionnaire will be mainly
aimed to acquire demographic information of customers using online grocery stores. The
demographics consist of gender, age, financial background, purchasing patterns; modes of
purchasing, time spend during purchasing, rational and irrational purchasing etc.

Secondary data will also be used to collect the relevant information that will help aid in
conducting this research and also in understanding the and analysing the data collected. The
data regarding the sales carries out in the retail grocery sector will be used along with other
useful databases.
BUDGET

The estimated budget for this research is Rs.4000. This include the amount to be spent on the
printing out and circulation of questionnaires, fee required in purchase of required databases,
transportation cost and other miscellaneous expenses.

TIME FRAME

The project is expected to be completed within two months from the start of the research.
References
Alamelu, R., & Meena, L. (2015). Store and Online Grocery Shopping- A Customer Value Perspective.
TSM Business Review, 54-68.

Jayasree, P. (2017). Consumer behavior-Online grocery shopping in India: An overview. International

Journal of Advanced Research in Science and Engineering.

Lee Chin , S., & Nee Goh, Y. (2017). Consumer Purchase Intention Toward Online Grocery Shopping:
View from Malaysia . Global Business and Management Research: An International Journal ,
221-238.

McClatchey, J., Cattell , K., & Michell , K. (2006). The impact of online retail grocery shopping on
retail space: a Cape Town case study. Emerald Insights.

Sreeram, A., Kesharwani , A., & Desai, S. (2017). Factors affecting satisfaction and loyalty in online
grocery shopping: an integrated model. Journal of Indian Business Research .