As brands reduce promotions, online grocery prices increase.
Discounts on online grocery shopping are coming down with almost all e-grocery companies increasing prices in the last two months as brands have reduced offers due to inflationary pressure.
E-grocery companies have raised prices by 4-6% in October and November, while quick commerce platforms have undertaken 7-9% price hike, a research report by brokerageMotilal Oswal said.
B Krishna Rao, senior category head at the country’s largest biscuits maker Parle Products, said brands have reduced offers due to inflationary pressure, which appears as if there is a price increase.
“Overall consumer offers have come down both in modern retail and e-commerce,” he said. “This will continue for a while till some input prices cool down with the exception of big days like the Republic Day sales in January.”
Motilal Oswal said Tata-owned online grocer BigBasket and hypermarket chain DMart’s ecommerce site raised prices by 5% and 6%, respectively, last month. In the quick commerce segment, Dunzo and Zepto have raised prices by 9-11% on a month-on-month basis, it said in a report released on Tuesday.
It said price hikes will benefit companies, improving their revenues and gross margins.
To be sure, lowering in discount has not impacted the growth rate of e-grocery companies and modern retail chains, industry executives said.
Within e-grocery, quick commerce is continuing to grow at a rapid pace as consumers avail the benefit of instant delivery, they said.
FMCG executives said the contribution of ecommerce to overall sales is continuing to grow. Ecommerce accounts for 7% of overall FMCG sales for ITC, while it’s 9% for Dabur and Tata Consumer Products.
Dabur India chief executive officer Mohit Malhotra recently told analysts that the demand growth in urban India is being driven by emerging channels like modern trade and ecommerce.
The Motilal Oswal report said DMart, JioMart, Flipkart, and BigBasket have been the most aggressive in the last 4-6 months keeping prices competitive with a 2-4% price differential across baskets.
