E-Commerce Grocery Companies Shift Focus to Large Packs to Drive Higher Returns

According to industry experts, online delivery platforms are now advocating for large packs of grocery products in order to increase returns per delivery. Companies say larger packs result in bigger ticket sizes and higher margins.

The growth category head at Dunzo, Mrunmayi Oke, opined their users are responding well to larger pack sizes. He said users who shop in bulk get the best deals. "The margins on such transactions create a win-win situation for users and the platform," Oke continued. 

The financial impact of serving customers with larger packs is less than their smaller counterparts, according to Kalpesh Parmar, Mars Wrigley's country general manager. The company sells Galaxy, Bounty, Twix, and Snickers at prices ranging from Rs 10 to Rs 200. "Besides, as chocolate buying is a planned purchase online, large packs sell well," Parmar stated.

Convenience

Larger packs are a convenient option for customers, a trend that became popular during the pandemic-induced lockdowns. It later accelerated with the rise of in-home utilization of discretionary and essential products, as most of the customers shopping on e-Commerce platforms feel more comfortable purchasing larger packs. 

 
Even with the low cost of instant services and high cost of operations, impulse buying and convenience are pushing high conversion rates. Manufacturers are advocating for larger packs on e-Commerce platforms, according to biscuit manufacturer Parle Products' senior category head, Mayank Shah. "We get higher margins as ticket sizes, and order values go up. For e-Commerce platforms, it leads to a reduction in the number of deliveries and turns out more viable with better economics,” Shah said.

A spokesperson representing Swiggy Instamart stated via email: "We list products in different quantity packs. Customers usually buy smaller packs when they need to try something new. During the purchase process, if they purchase many smaller packs, we help them discover combination packs or larger packs as an option to get the best value for their money."

Complaints from Traditional Distributors

More companies are pushing for larger packs to differentiate them from general trade. This comes amid an outcry by conventional distributors recently alleging that large fast-moving consumer goods (FMCG) manufacturers sell their goods at reduced prices to wholesalers. According to Shah, nearly all companies now differentiate packs with separate pricing in local and online stores. This is an effective method of avoiding conflict between trade channels, and a core reason store owners are pushing for larger packs online. 

Sweet Tips from Ally:
 
Fast e-Commerce stores that strive to deliver in a timely manner through small and micro-sized warehouses and delivery-only stores have grown in volume. Companies with long delivery times are thus losing popularity. Despite numerous challenges, the e-Commerce market could reach $5 billion by 2025, up from $0.3 billion today.