There are 42 million SME in India which comprise of 95% of country’s industrial units contributing to 30% of country’s GDP (6.11% of manufacturing and 24.63% of Service GDP). Together these employ 106 million people, 40% of country’s workforce. Looking at the growth and job creation potential, SME should have good focus on their human resource, but there are many challenges relating to human resources that mar the growth of this industry. It makes it rather non- negotiable to work on the internal structure, HR processes and practices to ensure growth and attract talent. Enlisting some challenges that SMEs face relating to people that HR leaders, company owners and government should address.

Image source : HRSME

1. Absence of HR department in SMEs

According to a CII survey, 20% of medium and 80% of small-sized businesses have no HR departments. It is not possible to implement people related processes and policies without an HR function.  There are two most important reasons for the lack of HR department in SMEs. First, SME’s are more growth oriented. When the companies are startup stage of small, all their objective is how to grow first to be sustainable and reach bigger scale of business. So, human resource is no priority.

Secondly, SMEs operate under budget constraint and perceive having a proper HR department as an expensive burden on their company budget. As, many SMEs have smaller teams, promoters end up managing the HR functions themselves to save cost, rather creating more HR issues. So, the promoter’s culture, value system etc become SMEs culture and when the organisations grow with culture – related issues and no one there to handle these. This leads to lot of politics as when people don’t know where to bring their grievances, they start talking to each other. The recruitments, the appraisals and promotions, exits etc are very subjective.

Solution – SMEs that think HR is just another administrative function, need to correct their perspective. Organisations must include an HR system right in the planning stage and build various people related practices like talent management, engagement, policies related to compensation and benefits. A proper HR function with manual sets standards that helps SMES to take objective decisions related to people’s recruitment, job responsibilities, remuneration, promotion, attrition, company’s stand in case of difficult situations.

2. Challenge in hiring the right talent

SMEs biggest struggle is hiring people with specialised skills. Limited talent pool, inability to offer competitive salaries and fierce competition add to the misery of HR managers.

Secondly, SMEs want to have best of the talent and expect them to multitask at compromised salaries much lesser than those provided by larger organisations.So, many employees resort to working in smaller & riskier organisation but aspire to working in bigger and safer organisations. These will shift to the larger organisations whenever there are vacancies.

Thirdly, SMEs show lack of awareness about the legal hiring standards procedures and practices. Some consciously and unconsciously violate the common employment laws and regulations. These could be as small, but significant as the company not offering a valid employment letter with proper job description, salary and other details to their employees.

Image source : Economic Times

Solution: SMEs Organisations should consider human talent more as long-term investment and not immediate ROI. It takes time for a plant to grow into a fruitful tree. There is no other alternative than to have a pool of skilled employees. It is better to employ one employee with good skill sets at industry competitive salary than to have 2 -3 employees with lower skill sets. 

It is critical that all entrepreneurs even as small as a 3 member team should know and understand the employment law and try not to violate them. In case of low budget, SME should consider hiring the HR specialist/consultant to avoid facing the consequences. Having an employee handbook is the most desired element in company HR.

3. Challenge in Building and maintaining the Culture

An organisational culture is basically a uniformly understood set of principles along with non- negotiable organizational values that impact every individual in the company. But, many SMEs struggle in this area due to lack of proper organisational vision and plan and end up following the promoter- based culture.

E.g. StartUps, in the initial and initial growth stage, display full of energy and fast moving entrepreneurial culture in the organisation. The environment is often friendly with young and energetic teams working and interacting closely. There are exchange of ideas and feedbacks. It starts to die down as the company matures. This is when people start getting bored and lose interest. The structure firms up from informal interactions to formal monthly meetings.

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Solution – SMEs need to articulate long-term organizational HR objective for achieving the desired culture and should have a structured plan to get there. HR in turn, can play significant role to keep the culture by laying the standards and keeping everyone informed, engaged and involved. HR can run several initiatives to connect everyone through various platforms – Outdoor sports & picnics, Intra office blogging, social media campaign, coffee mornings where people can share their stories of gratitude towards the organisation and fellow employees. In fact many SMEs are working towards growing bonding among employees and making the employees feel like the part of a family.

4. Aligning Values – A Big HR Challenge

Another big challenge facing HR managers in SMEs is to see the founders’values are aligned with that of larger employee group. Many a time, employees bring in conflicting set of values not in alignment with those of founders. It requires a lot of unlearning on the part of employees and adjustment on the part of the founders. This misalignment often leads to lot of decision-making conflicts, employee dissatisfaction, lower morale and higher attrition rate.

In such challenging situation, HR needs to play a critical role by bringing the attention of founders and employees towards organisational vision and goals.Firstly, HR needs to make the new entrants aware about the SME objectives and set the right expectations right from the point of hiring and induction. Secondly, HR needs to  bridge the gap by inculcating a culture of transparent communication between the founders and employees.

5. Challenge in building capability- based organisations

The real challenge that lies in front of the SMEs is in building a capability-based organisation than individual based organizations, and not forgetting that individuals are the building blocks of the successful organisations. SMEs should implement effective training and development programs for employee upskilling and growth to build organisational capability. But, is it that simple? Due to the budget constraint, it is seldom feasible for SEMs to involve external vendors for upskilling of their employees. So, SMEs lag in case of specific skill-based training.

Thought the customised training and development programs are ideal for building organisational capability, SMEs can focus on developing good in house and on the job training programs.Mentorship programs can be one low cost option for training employees. Here, a senior employee mentors a junior on one on one. At least, this keeps both the levels in tune with each other. Juniors feel empowered by learning new skills and getting to know someone senior in the organisation.

6. HR Challenge in Retaining the Talent:

Small companies face great challenge in retaining employees, especially, at the lower level. Salaries are not too good, and teams end up multitasking and over working. Attrition rate in junior level is highest as they might change jobs for small increments without even giving prior notice. Middle and senior employees may find unclear role definitions and unknown career path frustrating and they change over for more clarity and more lucrative offers too.

SMEs should couple their equitable pay grade for employees with other intangible factors for retaining their employees. Consistent compensation package, job security, employee growth progression plan, employee care and bonding, workplace comfort, inclusive growth are some of the important factors why employees stick to the same organisation for long.In addition to this, how the company behaves with the exiting employees cast impression on those still inside. SMEs need to have more professional approach towards those choose to leave and treat them with equal respect. This will build a culture of mutual respect within the organisation too.

Way forward

More founders need to recognise these challenges that HR and their SMEs can work in tandem to solve and create HR healthy enterprises. When the founders will start viewing HR as a strategic role in the organisations they want to build and not just an administrative function, they will be raising the bars of their organisations. At the same time, employees perceive the enterprises with HR function more positively.

HR managers can also make use of technology and research various factors and trends to analyse satisfaction, performance, appraisals, attrition for getting best talent, the employee retention and SME growth.

So, you have been finally bitten by the entrepreneurship bug and are just about to press StartUp button. Your next question is how you will raise the funds. There are many options to finance your business. We are listing all these sources for you along with their pros and cons so that you can decide which is the best option for you. You may also combine two or more to strike balance.

1. Self-Funding – Your own savings

This is the first option most of the entrepreneurs try.  So, if you are planning to use your own saving,

Pros:You can straightaway start your business without being answerable to anyone.

Cons:There is a risk that you will lose your hard-earned money if your business doesn’t do well. And, you will suffer guilt for burning your money.

Clever entrepreneurs never use their personal savings for their businesses.

2. family and friends

Next good option you can use is ask your friends or family members to fund your StartUp. You may approach your well to do relatives, uncle, aunt, grandparents. 

Pros: Your friends and family members want to see you successful and will not exert pressure for returning the money soon. This is a faster mode of finance too.

Cons: Family members’ decision to support you is rather emotional and not business like. You may not need to show any projections to them. But, if you fail, you may be subject to humiliation.

You need to make up your mind whetherthe money you are borrowing is a loan with interest or you are offering them equity. Give a timeline when you will be able to return the money and make them aware about any risks involved.

3. Crowdfunding

When a large number of people contribute small amount towards your business providing you with the capital to start your business or a project, it is called crowd funding.

It is mainly a form of social funding where you as an entrepreneur can post your funding requirement for a project, product development,event or a cause etc on digital crowdfunding platforms like Ketto, Wishberry, Fuel A Dream etc.  This will be available to the members nationally and internationally. You can share with your network of friends and family too.

Many people who connect with your dream will pledge their funds without any expectations of returns. Many of these platforms charge small commission fee.

Pros:Get a pool of investors in one place to fund or expand your business.

Cons:Crowdfunding can’t be your long-term funding solution.

In India, there is a trend of people more inclined to give to the social cause unlike other countries where crowdfunding for the business is a usual method.

4. Angel Investor

Angel investors are high net worth individuals who offer you funds in exchange of equity.

It is easier to get angel investors if –

• Track record to show – If you have already started up and showing a growth sign tells your investors that you are serious.
• A sharp Business Plan with clear timeline – to show to the investors that you mean business
• Your Team Experience – Angel investors look for more experienced team. So, it will pay off if you can get a good team of 3-4 on board
• Get advisors/mentors on board – This will help bring the investors’ fears down.

Pros:A Good funding method with flexible terms. Angel investors come with their wisdom and experience and will guide you as they have invested in you.

Cons:You will be answerable to your investors, so be ready to control your decision making. But, you can negotiate and be explicit about your decision making freedom with them.

5. Venture Capitalists

You can approach a venture capitalist in case your funding requirement is huge and you are looking for scaling up. In turn, you will need to give equity in your business and returns if you go public or another company acquires you. Venture capitalists will be interested in your business only if it has the potential to give good ROI

Pros:Venture Capitals are sharp business people who can mentor you in growing your business. Getting a venture capitalist on board will give your business credibility and limelight too. It opens doors to future funds.

Cons: As the funding amount may be significant, the size of equity will also be sizeable.

6. Get an SME Loan

It is a very good form of funding for you if you still fall under the category of MSME as government recognises that this sector needs special support to become viable. The Government of India provides MSME loan schemes to micro, small and medium enterprises under various MSME loan schemes. These loans are disbursed through schemes and incentive platforms such as Mudra Loan, CGTMSE, etc.

Pros: Has longer than usual payback period.

Cons:For getting MSME has typical eligibility criteria. A lot of financial consultants, NGOs will tell you they can do the job for them in return they will charge a fee. But, it is better that

7. Bank Loan

You can also explore getting a bank loan for your start up. Before applying for a bank loan, it’s important to ensure that you are well educated about the various options available.

Pros:It is a fast mode of funding once you qualify. You will not lose any control on your business.

Cons:Loan has interest component and a pay back period in which you must pay back. You may need to pledge a collateral for security to the bank.

Bank loan application requires a lot of documentation and understanding of terminology which can be cumbersome. You many require help of a professional CA who will execute the job for you but will charge 1-2% of the loan.

8. Borrow from P2P Digital Platform

Peer to peer is a another good option for If you are not able to secure loan from the bank and time is running out you can try P2Ps. Digital Peer to Peer Lending platforms like Faircent and i2ifunding that connect individual lenders and borrowers allow you to borrow funds at low cost.

Pros: Very Quick process as compared to all above if your credit rating is good.Get funds at low cost interest rates.

Cons:You can’t borrow more that Rs.50,000 from a single lender across all the P2P Platforms.

You need to study all the above given funding options in detail, talk to your fellow entrepreneurs, discuss in forums before finally going for a particular funding option. Don’t depend on someone else completely but educate yourself well. After all, it is you who is responsible for the money.

Since 2017 when RBI recognised online P2P industry as financial service segment and allowed NBFC-P2P status to 11 P2P lending platforms in India, it has given new hope to the MSME sector.

The Credit Problem

Despite the fact the MSME’s contribution to the GDP is 30% and provides employment to 100 million of population, banks consider it risky to lend to SME. Lack of data makes it difficult for banks to assess the credit history and financial health of the concerned SME.

Image Courtesy: MoneyControl.com

This has led to a credit gap of $600 billion in India’s MSME sector (as per Omidyar Network and Boston Consulting Group’s report) with 60 million MSMEs where 40% of MSMEs are forced to turn to unorganised sources e.g. individual personal bankers/lenders at double the interest rates. Inability to get funds and funds at high cost leads to non viability of many SMEs. 

P2P – A good option for SME funding needs

Online P2P lending platform is an alternative form of financing when an individual can get loan directly from another individual without the involvement of a financial institution eg banks, NBFC, etc. The P2P lending that mainly targets unbanked has great relevance in India and increasingly getting popular with Small and Medium Enterprise who don’t have much credit history to show. 

One SME requirement, Multiple offers:

As an SME, you just need to place your requirement and wait. Based on your credit score, multiple lenders will get to view your requirement and auction for your need by sending you their proposals. It’s up to you to choose which proposal to accept. So, as compared to going from bank to bank, now you have many people competing to give you funds.

P2Ps offer faster credit:

P2Ps digital platforms being paperless and least human intervention are much faster. Your borrower profile goes through the credit rating procedure and background verification. Being the promoter of the SME, your profile is equally important. So, P2Ps use AI-Analytics based model to evaluate important data points about you and your company for the better assessment. As soon as your borrower profile is approved, you can have your P2P loan sanctioned and money transferred in a few hours.

P2Ps don’t require collateral:

Whereas banks require collaterals as security in order to sanction a loan, you don’t need to provide any security or collateral. All that you need is a good credit rating and your ability to repay the loan.

P2Ps are low-cost credit option:

Lenders on P2P platforms offer rates as low as 5% to 30% high depending on the credit rating of the borrowers. Also, you minus the intermediary costs, so you have cheaper credit. P2P loans are transparent without any hidden charges, fine print, no prepayment charges as well.

P2P – SME Challenges

According to the NBFC-P2P regulatory guidelines, a single lender’s combined exposure across all P2Ps cannot be more than Rs. 10 Lakh. Same way, a single borrower can max get Rs. 10 Lakh loan from all the p2p combined. Also, a single lender cannot lend more than Rs. 50.000 to a single borrower with loan maturity not to exceed 36 months.

With this kind of limitation, It is not possible for the P2P sector to derive volumes, hence hinders the sectoral growth. At the same time, it is impractical for an SME to borrow from different lenders. It will remain a challenge to help India’s SME unless Reserve Bank relaxes its P2P guideline.

SMEs due to lack of knowledge are also either not much aware of the P2P lending or don’t consider it as a credible source of funding. Many P2P operators that see MSME as an opportunity are trying to pull in more SMEs by engaging them via many awareness drives.

Way forward

P2P portals are seeing a huge opportunity in the SME sector and have the potential to support their funds requirements. Despite all odds, Faircent.com gave 64% of its total disbursement to SMEs in 2018. RupeeCircle, IndiaMoneyMart, paisadukan, LenDenClub, and CashKumarare some of the prominent players in India’s P2P sector. Whether SME also sees the same hope in P2P and RBI consider relaxing the regulation at least specifically for the SME borrowers will further help minimise the SME credit gap.

The ones for whom passion, creativity and freedom are important, are the ones who would rather start up and live their dreams than slog in nine to five jobs (hey it’s no more ‘nine to five’). These start up entrepreneurs have the energy and desire to contribute to the world. Though the idea of having your start-up may be quite exuberating – your own brain child, success, fame, dollar value, etc., but the ground reality is quite different. It takes sleepless nights, over working, firefighting, stress – physical, mental, financial for some initial years before the start up takes off. Here is a curated list of suggestions that prepare the Startup Entrepreneurs to avoid failures and minimize their risks to come up as successful businessmen:

1. Money should not be the ultimate goal

We are not saying that money should not be the goal. Of course, it is important for businesses to be viable. Most important objective of the business is rather in answering what value is it providing and how it plans to do that. Focusing on money can be misleading and potentially drift the startup owner to drift away from the plan given the financial struggle one may face. An entrepreneur by constantly focusing on the value proposition will not only develop your clientele in the long run which would increase revenues too.

2. Use Freedom Wisely

Freedom from the boss who breathes down your neck, now one is answerable to oneself. But it is a bigger responsibility. Freedom to work for any number of hours and from any location, is such a respite. This so-called freedom must be coupled with daily goals or else it would result in loss of the productivity. There are very good productivity apps to aid the working. As a start-up entrepreneur, one’s venture is a clean slate and how one pulls the reigns will decide the future of the start-up. Have a plan and execute it. Delegate proper work to the employees and see it gets finished on time. Procrastination SHOULD NOT BE part of an entrepreneur’s dictionary if he/she wants to achieve and establish credibility in the market

3. Growth Mindset

A Startup entrepreneur must assign a dollar value to his products & services and a growth plan for 1, 2, and 5 years right before he even starts. In addition, an entrepreneur who wants to grow should be open to new suggestions and ideas from his team, must be willing learn from others and his own mistakes and use different methods to make his products or services better over the period of time.

4. Creativity driven

A Startup entrepreneur is bombarded with different sorts of challenges and requirements. Unless one is creative enough to solve the problem even though it may mean designing impossible candies like Willy Wonka it is fair enough to survive the startup game. No no, one can’t afford to relax with the current success, it will get one complacent. Rather be creative and be proactive by improvising existing products and come with new ideas. A successful businessperson who is able to offer something new to the market will keep consumers happy and competitors on toes.

5. Brand building

The moment the market starts recognizing the brand, it means the startup has done a good job in establishing the brand. But, bigger question is how the startup wants the market to perceive its brand and for how long it remembers. Today, brand building of the start-up begins with the brand building of the entrepreneur himself. The name of the start-up and the name of the products must be unique and catchy to impress investors and clients. As an entrepreneur, you must be prim and proper in appearance for every meeting.

6. Prepared for instability

A job means security and stable income but for an entrepreneur, it’s more about instability than about security and stability. There would be highs and lows on his way of turning a startup idea into a big successful business. There will be days when there will be operational hurdles, market fall, and loss of investors or customers etc. Always be prepared for revamping your business strategies to deal with the uncertainties of the market. Your strategies must be in accordance with present market situations.

7. Plan – B

Having a plan B may prove as a big savior in the face of uncertainty and challenges. A Startup Entrepreneur should develop alternative offerings whether within the existing startup or a separate idea as a rescue plan or something to fall back upon because the one thing that everyone can related with is that we all are prone to failures when we are trying to do something new and a startup idea is always a new thing unless it becomes a successful business or a big brand.

8. Regular market research

A market research to start with, helps one know the customer better, who they are, what they want, what they like or don’t like, gives the right basis to build the business upon. Unfortunately, many entrepreneurs startup based on their capabilities and gut feeling. That’s ok. But, matching up with the real market research gives the true picture. Now the entrepreneur can build up on the accurate foundation, target the right customer, market the right way. Once the business starts rolling, startups should conduct regular market surveys to understand customer satisfaction and to improvise product and services.

This checklist will assist a startup entrepreneur to prepare for the success while working on these points to avoid mistakes and walk on the road of one’s dream venture. On the other hand there are times when failures are sure to come as in case you are trying to achieve something big. And if, failure does happen, remember that failure is just a stepping stone to success so, one must not take failure to one’s heart and get demotivated. Instead, entrepreneurship is all about learning from the failures and build a strong base for your dreams.

The concept of an online grocery store was based on the idea of making the life of people easy and comfortable. Shopping for grocery item is a routine job. It is something which people do to fulfill their household needs. Hence, came the concept of online grocery. Many local, as well as international players, came up with their websites and apps.

Even though grocery items constitute daily need items, still the online grocery stores are lagging behind as compared to other e-commerce businesses. Many online grocery stores did show tremendous growth in their start-up years, but with time, these stores failed to achieve set goals and started showing losses. Many big names like Grofers, e-grocers, Peppertap, etc.  are either shutting down their businesses in various cities or planning to quits in 2019. Now the question arises “Why grocery stores fail in India?” What are the Challenges faced by Online Grocery Store?

Below are the Challenges faced by Online Grocery Store in India

Buying grocery is a social experience: Buying grocery used to be a social event where families go to the market or a supermarket and buy their daily, weekly or monthly grocery needs. Many people enjoy browsing through those aisles of the supermarket and picking up the brands of their own choice.

Similar is the case of fruits and vegetables. Many people love to buy their fruit and vegetable in the traditional way as they can check each and every piece for its freshness. However, one neither smell the freshness of fruits and vegetable nor can check them physically. Among Convincing people about the freshness of the grocery items is one of the major Challenges faced by Online Grocery Store.

Delivery charges

There are many Challenges faced by Online Grocery Store. One of them is the buyer’s reluctance to pay delivery charges. Most of the online grocery stores are giving facility of free delivery only when the customer places an order as per the limit set by them. This minimum order limit varies from website to website. In some it may be Rs 500, in others, free delivery service may start at the purchase of Rs 1000.

In most cases, a customer needs to pay delivery charges on order of small amounts. Buyers keep on switching from one website to another till they find a grocery website which charges a minimum delivery charge.

Difficulty in reaching small towns

Among various Challenges faced by Online Grocery Store reaching the people in small towns is the most difficult one. Most of the small cities in India have their own local markets. Everyone knows everyone in a small town. Hence, they are just like one big family. People love going to market and buy their own groceries as it gives them the opportunity to meet other people. Small towns are free from traffic, that another reason that people are not afraid of going to their local markets. Above all this, at local markets, people can do bargain with shopkeepers.

Hence, convincing them to shop online for their grocery is one of the main problems for online grocery startups.

Fewer margins

No matter whatever the business, the main motto of any business is to earn a profit. Online grocery retailers work on a very thin margin of 5-7%. Making profits with these thin margin is one of the most difficult among all the Challenges faced by Online Grocery Store. Orders qualifying free delivery criteria further increase issues related to profit-making as the online retail store loses their delivery charge amount.

More focus on horizontal expansions

Online grocery retailing is very competitive. Hence, many online grocery startups start focussing on expanding their services to various cities. However, these horizontal expansions create various problems for online grocery startups like exhausting their VC money, etc. As a result in many cases, online grocery startups end up withdrawing services with time. Sustaining competition and running a business in various cities are some other major Challenges faced by Online Grocery Store.

Housewives are less tech-savvy: Sometimes the solution itself becomes a problem. Shopping grocery online aim at saving people’s time and effort of going to market and shop for their daily needs items. Well, most of the grocery shopping is done by housewives. Not all the housewives are tech savvy. For many housewives, apps and online grocery shopping is an alien concept.

Moreover, browsing through various sites and comparing prices doesn’t excite them. They prefer going to the market and do their shopping. Moreover, many housewives prefer bargaining over comparing prices on the internet. Among various Challenges faced by Online Grocery Store, attracting these housewives is the main issue.

Availability of preferable grocery item at the time of need

logistics and managing stocks for such a wide variety of grocery goods are other major Challenges faced by Online Grocery Store. Online retail grocery stores act as one large supermarket where the buyer can find numerous brands for one single grocery item. Most of the people are quite particular about their brand preference as far as their daily need items are concerned. Hence, when buyers fail to find their preferred brand or the grocery item they are looking for runs out of stock, it’s their local market which comes to their rescue.

Inability to master inventory management

Some of the online grocery startups follow the inventory-led business model. Under this model, the companies maintain their own inventories. This does provide them with various benefits as the company has complete control over managing stocks as well as its movement. However, the major drawback in managing a warehouse is its rental cost. The company needs to have a good financial backup to deal with the cost associated with warehouses and cold storages.

Infrastructure

Infrastructure is another important factor on the list of Challenges faced by Online Grocery Store. Different online retail startups adopt different business models. Some online retail shops have tie-ups with local grocery retailers, and some have their own stores to take care of the grocery needs of their customers. Companies with their own stores need to have a huge capital. Expenditures like the rent of shops, maintenance of shops, cost incurred for transportation and other logistic related costs, together consume a major part of the revenue earned. Hence in many cases failure to manage infrastructure turns out to be the major reason behind why grocery stores fail.

Competition

Online grocery market is highly competition driven. Among all the Challenges faced by Online Grocery Store, preventing customers from switching to the competitor’s website is the most crucial challenge.  With so many options available on the internet customer enjoys the benefits of browsing through various websites and select the product from a website which gives maximum benefits. Hence, staying ahead of the competition is very important for any online grocery startups. Online grocery stores need to keep a close watch on their competitor’s each and every move.

Another issue faced by online grocery stores is that they face the competition from both other online retailers as well as the retailers of local grocery shops. After all, a vegetable and fruit hawker also give door to door delivery. Surviving in such a competitive market is not an easy task. One has to keep on working on new and innovative ideas to attract new customers and retain their existing customers.

Freshness and quality of vegetables and fruits

Everyone wants to buy fruits and vegetable which are fresh. Different people have different ways to check the freshness of vegetables and fruits. Some check it by smelling, others may look it closely to see if it’s fresh or not and some may even prick them. People are quite selective for their vegetables. They do all the checks before purchasing them.

In case of online purchase, there is no way to check the quality at the time of placing an order. Hence, issues like delivering rotten vegetables or late delivery cause dissatisfaction among buyers. This may further lead customers to go back to their traditional shopping methods. Hence, delivering what has been promised is another major difficulty that makeup to the list of Challenges faced by Online Grocery Store.

Huge marketing expenses

Two of the biggest Challenges faced by Online Grocery Store are

Convincing shoppers to shift from their traditional way of buying grocery to the new, modern and advanced way of online shopping

Providing the best service possible while taking care of customer satisfaction.

To overcome the above-mentioned difficulties faced by online grocery startups, online grocery needs to spend a lot of money on marketing and promotional activities. These expenditures are added to total expenditures, and sometimes, the situation goes out of the hand. Expenditure to attract customers exceeds so much that it turns profits into losses.

Some online grocery stores even offered money to local retailers in order to have collaboration with them. Whereas others spend money on hiring famous celebrities for promoting their brand, for example, Big Basket hired Bollywood megastar Shahrukh Khan as their brand ambassador. These additional expenditures further reduced their profits.

Customer Loyalty

Another major problem faced by online grocery stores in India is to earn customer loyalty. To overcome loyalty related issues online grocery companies give various offers and discounts to their customers. However, the customer has become much smarter. Buyers browse through various sites and compare the discounts offered by these sites. Finally, they buy the product from the grocery retailer which give them the best offer.

Offers and discounts turn out to be a temporary solution. Companies do succeed in getting the customer’s attention by giving a various offer, but it does not provide any permanent solution as most of the customers keep on shifting from one site to another. There is no customer stability in case of online grocery shopping. Hence, gaining customer loyalty has become the most challenging job for online grocery stores.

Difficulty in keeping up with buyer’s product preferences

Online grocery retailers cater to a much larger customer base as compare to any local grocery retailer. Different people have different taste and preferences. For example, some prefer organic pulses over normal pulses, etc. In fact, different customers prefer different product within the product category of the same brand, example some prefer Colgate sensitive whereas others prefer Colgate total.

Even these preferences are not stable they keep on changing.

The term grocery is an umbrella for various kinds of household and kitchen related items which in itself forms an exhaustive list. Within this list, there are thousands of products, and for each product, there are numerous varieties available in the market. Hence among various Challenges faced by Online Grocery Store, keeping up to customer’s choice and preferences is very difficult. Till the time, the online grocery store keeps on fulfilling the buyer’s needs, and requirements there won’t be an issue. But, one small mistake and the customer will not think twice and shift to another website.

Issues related to training and operations

Other Challenges faced by Online Grocery Store are:

• Recruitment of delivery staff and their training
• Issues related to logistics
• Managing and handling cash
• Handling perishable food items
• Managing wastage
• Appropriate handling of returned products.

Conclusion

Change is always welcomed with a little bit of resistance. People take time to get adjusted to new technology. Similar is the case with online grocery stores. The concept was developed on the basis that people would be ready to pay a little bit extra if their regular grocery needs are delivered at their doorstep. Well, in reality, the situation turned out to be totally different from what was expected. With the availability of so many options, buyers want to buy grocery from stores which promises them goods at the most reasonable price that too with other additional services like offers, free delivery, and even cash back.

There is no doubt that the road to success is not easy for any online grocery retailer. As discussed above, there are numerous Challenges faced by Online Grocery Store. However, the idea of online grocery shopping has met with both denials as well as acceptance by the people. Some shoppers welcomed this concept as it suits their lifestyle whereas others still prefer the old traditional way of buying their daily need items from local markets.