BackMTR Foods to build own e-tailer platform
Bengaluru-based ethnic packaged foods company will spend `50 lakh to build its own e-commerce portal over the next two quarters
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Bengaluru: Bengaluru-based ethnic packaged foods company MTR Foods Pvt. Ltd will spend ₹ 50 lakh to build its own e-commerce portal over the next two quarters, said a top executive at the 90-year-old brand.
The company is looking to sell its 300-plus products—ranging from spices to oats idli mixes, multigrain dosa and gulab jamun batter—to more Indian shoppers. Initially, the online delivery will be tested in Karnataka in the third quarter of the current fiscal.
The firm sells its products across general trade at its own two branded outlets, Namma MTR, in the city and via online grocery websites such as Bigbasket.com. Online sales generate close to ₹ 40 lakh annually for the firm.
“The idea is to replicate the variety of products available in our two outlets in Bengaluru to an online store," said Sanjay Sharma, chief executive officer at the ₹ 600 crore company. He said existing websites are highly discerning about the products they choose to put online.
“The challenge there is that they want to hold selective inventory. We want to service demand for our entire portfolio through e-commerce," he added.
MTR currently retails packaged variations of popular household dishes such as breakfast mixes for Rava idli, upma, poha and sweet mixes such as vermicelli payasam to 150,000 outlets across 150 cities.
The move to sell online comes after the company started selling via third party online grocery stores two years ago. Bigbasket, for instance, does a business of ₹ 8 lakh a month for MTR.
“We see the evolution of online to be similar to that of modern trade, in the sense that it will be 5-6% of our sales over the next decade," said Sharma.
He said the company is still finalizing plans on delivery models to service online shoppers. “We are working out the semantics for the delivery process. We will in all probability use our existing distribution network to cover online orders," he added.
The cost of starting online delivery is not very high, and it has a far-reaching impact, analysts said. “It might not be a very big revenue spinner or lift margins but for any B-to-C (business to consumer) company, online will help give direct access to consumers for companies that have traditionally relied on general trade," said Anand Ramanathan, associate director at consulting company KPMG. “It’s not just about selling your product, but also showcasing your entire portfolio," he added.
Even as online consumers continue to shop in popular categories such as electronics, fashion and household goods, online grocery retailers, too, are seeing a rise in popularity. The likes of Sequoia-funded PepperTap.com, a grocery delivery start-up, and Bigbasket.com have gained traction in local markets, as consumers look for convenient ways to shop for goods for daily use. Sharma hinted that the firm will continue launching more products, especially in the breakfast range, its fastest-growing segment.
In 2007, Norway-based foods company Orkla acquired MTR. Since then MTR has diversified its portfolio, selling more convenient and familiar Indian desserts, beverages and snacks, and sold its ice cream business.
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