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Where are Iran's Online Supermarkets?

Energy Desk
The domestic online shopping sector is facing multiple obstacles in its quest for growth
Shahrvand is the second most popular online supermarket in Iran.Shahrvand is the second most popular online supermarket in Iran.
Online supermarkets continue to struggle due to factors like a lack of trust among the general public in buying fresh produce

Supermarket chains like the US’ Wal-Mart, Britain’s Morrisons and France’s Carrefour are all getting in the act to offer consumers online delivery.

But in Iran, the process of creating a viable online supermarket has floundered on several occasions. Sites like Sabzaloo.ir, Kandoo and 2398.ir have all fallen by the wayside, with logistics, funding and poor management being the main reasons for the early demise of these online startups.

Still, there are a few online supermarkets like HyperKa, Rocoland, Shopty and iBiar, which are not affiliated with the brick and mortar stores and are becoming increasingly popular, but face serious competition from new outliers that have a different business model.

The service works thus: users download the app or log into the site and select the groceries they want. Either the company itself or a partnering local store will then give them a delivery time following which the items are delivered at the door.

Payment can be made online, but in some instances, users can pay cash on delivery. The majority of these deliveries come with discounts for customers depending on how much they buy.

Rocoland.ir leads in online supermarkets, according to online analytics, but it faces serious competition.  

 Entirely Different Model

However, online retailers face strong competition from companies with huge financial backing that have charged ahead with an entirely different model imported from Europe.

That industry is the “hard-discounter” store.  

Firms like Ofogh Kourosh (OK), Canbo and Haft, which have all entered the fray in the past three years, are backed by local firms with cash to spend on retail outlets in good locations. In some instances the firms are food producers and able to offer larger discounts.

Meanwhile, large stores like Carrefour’s Hyperstar brand and municipality-owned Shahrvand are beginning to change their business model to keep pace with consumer habits.

Citizens spend on average 62 million rials ($1,653) annually on groceries and cigarettes according to the Statistical Center of Iran, and the larger supermarkets apparently are adamant in grabbing a bigger share of the pie.

 Online Struggle

The advent of heavy discounters in the past few years like Ofogh Kourosh has disrupted the natural development of online supermarkets.

One source who studied the discounter store model told the Financial Tribune, “These firms intend to have up to 10,000 stores in total by 2018. They are aggressively buying and renting retail space in perfect locations on high streets across Iran.”

Also, it may be due to cultural factors. Going to the supermarket is still novel to many in Iran. The 300,000 corner grocery stores remain the main source most people get their home products, and as such, going to the large supermarkets still has some cultural cachet. In a sense, it’s a day out for many families.  

Moreover, online supermarkets continue to struggle due to factors like a lack of awareness among the general public, as well as not trusting the items delivered.

Kasra, a Tehran resident, says he does not use the online supermarkets due to concern about the quality of products they deliver.

“You need to be able to check the quality of vegetables when you purchase them.”

He added that buying pre-packed products like tomato paste and tuna is fine when ordering online, but his concern was the quality of fresh produce.

These concerns are echoed by many in Tehran who rightly notice the difference in quality of fresh produce in greengrocers and supermarkets.

Online supermarkets like Tesco in the UK have managed to get round this problem by using large chiller rooms and computerized stock taking to make sure the freshness of food produce is maintained. However, to date no company in Iran is using this advanced method, may be because of the high costs involved and investment needs.  

Until online supermarkets in Iran can get round these logistical hurdles, people may continue to order only non-perishable items.

Meanwhile, the real test will come in the next few years, as companies like Shahrvand continue their push into the digital market so as not be left behind.

According to our own research, Shahrvand.ir is the second most visited site for online shopping and is taking on the leader and rival in online orders, Rocoland.com.

 

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